Mazarul alam, I declare that the presented internship report titled “Credit Appraisal and Management of MTBL” has been prepared by me after completing three months of work in Mutual Trust Bank Limited. I am pleased to confirm that the Internship Report on “Credit Rating and Management of MTBL” prepared by Md. Mazarul Alam with ID no. Department of Business Administration, approved for presentation by Md.
Introduction
- Introduction
- Objectives of the Report
- Origin of the report
- Scope
- Methodology
- Limitations of Study
- Introduction
- Objectives of the Report
In a developing country like Bangladesh, the banking system as a whole has a vital role to play in the progress of economic development. Banking plays an important role in the business sectors and in the industrialization of a country.
Main Objective
Specific Objectives
- Origin of the Report
- Scope
- Methodology of the study
- Research Design
- Selection of the topic
- Population Size
- Sample Size
- Sources of Data: Sources of data are given below
- Primary Sources
- Secondary Sources
- Method of Data Collection
- Collection of Secondary Data
- Data Analysis and Reporting
- Limitations of Study
A descriptive method was used in this study to gain an insight and understanding of the performance of MTBL loans and credits. Essential sources of data, both primary and secondary, were identified which were required to complete and practice the study.
An overview of Mutual Trust Bank Limited (MTBL)
- An overview of Mutual Trust Bank Limited (MTBL)
- Background of Mutual Trust Bank Limited
- Profile of MTBL
- Mission
- Vision
- Capital Base
- Slogan
Mutual Trust Bank Limited is the growing private sector bank in Bangladesh offering full range of Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market Services. Mutual Trust Bank Limited is the preferred choice in banking for friendly and personalized services, cutting-edge technology, solutions tailored to business needs, global reach in trade and commerce and high return on investment, ensuring excellence in banking services.
Manager
- Business Philosophy of MTBL
- Corporate Governance
- Products and Services of MTBL
- Financial Performance of the MTBL
- Reserves
- Profit and Operating Results
- Branch Expansion
- Information Technology (IT) & Automation
- Foreign Correspondents
The bank aims to mobilize the country's unused money and prudent use for productive activities in the form of lending at competitive interest rates/loan rates. The bank also provides loans in the form of trade finance, industrial finance, project finance, export and import finance etc. Efforts are being made to further increase the bank's deposit base through promotion of business and exploration of potential opportunities.
The Bank has set up a complete IT division to keep abreast of the latest IT developments for better service in the days ahead. The number of foreign correspondents and agents of the bank in 2012 was over 300, covering important business and commercial centers in the world.
CREDIT APPRAISAL &
MANAGEMENT OF MTBL
- Mission and Vision for Credit Management of MTBL
- Credit Policy of MTBL
- Laws and Norms
- Lending Guidelines
- Product Range/ Types of Loan Facilities
Credit will be based on an assessment of the customer's character, integrity and willingness to repay. Loans are only made to customers who are able and able to repay. The possibility of default will be examined before the loan is granted. Credit will be extended in areas whose risks can be sufficiently understood and managed.
Credit will be granted in a manner that will in no way compromise the Bank's standard of excellence and to customers who will not compromise those standards. Instead, credit proposals and loan approvals will be based on sound fundamentals supported by thorough financial and risk analysis.
3.6 .2 Over Draft (OD)
3.6 .3 Cash Credit (Hypo)
Commercial Lending 2. Working Capital
3.6 .4 Cash Credit (Pledge)
Commercial Lending 2. Working Capital
3.6 .5 SOD (General)
3.6 .6 SOD (Imports)
3.6 .7 PAD
Advances allowed for withdrawal of shipping documents and release of goods imported through L/C without effective control over the goods delivered to the customer fall under this section. The goods are transferred to the importer under trust with the agreement that the sale proceeds will be deposited to settle the advances within a specified period.
3.6 .9 IBP
3.6 .10 FDBP
3.6 .11 LDBP
3.6 .12 Micro Credit
Present products of MTBL at a glance
Payment against import documents drawn at sight import LC opened against pledge in export LC refinanced by Bangladesh Bank under EDF system. 08 Loan against pledge/pledge on savings certificates WEBD & other financial assets issued by MTBL. These sectoral rates have been introduced by the head office of Mutual Trust Bank Limited.
In the case of Microcredit, since the loan amount is not that big, that is why the scheduled rate is maintained by the Bank. Actually the lending rate is based on the prescription given by Bangladesh Bank.
Features of different credit & eligibility of customer
- MTB Personal Loan
- MTB Home Equity Loan
- Auto Loan
Loan amount up to 80% of the property value Financing at various stages of construction work Partial disbursement facility of approved loan Aggregation of co-applicant's income. Owning a car is everyone's dream and part of contemporary life, improving living standards and quality of life. The Car Loan Program is designed to make your long-cherished dream of owning your own car come true.
This loan scheme was introduced with the aim of providing financial support to small entrepreneurs. It is designed to get business loans on easy terms and without hassle.
Features
SME LOAN
- MTB Bhaggobati
Features and Benefits
- MTB Mousumi
- MTB Digoon
- MTB Revolving Loan
- Information about Loan Customers
- Credit Analysis
Such an analysis begins with a review of the information provided by the borrower in the loan application. This usually involves a detailed study of six aspects of the credit application - character, capacity, collateral, terms and control. The loan officer must be convinced that the customer has a well-defined intention to seek a bank loan and a serious intention to repay.
The loan officer must be certain that the customer requesting credit has the authority to request a loan and has the legal standing to sign a binding loan agreement. The loan officer is particularly sensitive to characteristics such as the age, condition and degree of specialization of the borrower's assets.
Control
Can the Loan Agreement Be Properly Structured and documented?
The process for recovering the bank's funds – when and where the bank can take action to get its funds back – must also be carefully spelled out in a loan agreement. Form-Ka duly signed and sealed by the owner/partners/directors for obtaining CIB report from Bangladesh Bank. Brief description of the applicant and its sister concerns regarding nature of business, products of business, sources of raw materials, market channel, production procedure, organizational chart, existing and future buyers etc.
Group information and performance eg name and address of sister/allied concerns, nature of business, last year's sales/turnover, profit, total group debt, total group equity, export-import performance etc. Sources and amount of income and expenses, in case of SME & Real Estate Company.
Security documents
- Credit Approval Process of the MTBL
- Ap proval Process Flow Chart
The primary factor that determines the quality of a bank's loan portfolio is the ability of each borrower to repay on time. The bank will send a statement to the customer to Bangladesh Bank, their CIB (Credit Information Bureau) will find out whether this customer is a defaulter or new. The bank will take collateral from the customer and analyze how much it will cover the entire loan.
At the headquarters, the board of directors and the general manager will approve the loan.
Chart: 05
Loan Disbursement
- Analyzing the Year Wise Loan Disbursement by MTB
After completing all the necessary steps to sanction loan, the bank will create a loan account in the name of the party and deposit the money in that account. The bank will give check books to the party and advise them to withdraw the money and spend it as soon as possible because when the money is transferred to the account, interest will accrue from that point. This can be a good sign for the bank, because the loan payment is increasing or constantly not decreasing.
Loan-Pricing Policy Used By MTBL
Loan Classification of MTBL
- Signs for Classification
- Steps to Follow for Classification
- Classification Process
And look closely at assets and liabilities to determine who has the prior right to those assets. If grantors are involved, review the net worth statement and send demand notice. In order to determine the "classified" status of an account, the following guidelines must be observed.
The process of classifying an account will start with strict application of the risk assessment ie. However, unpaid interest or principal or expired limit for a period of 180 days or more or recurring overdue dues will remain the main rules for classification.
3.18.3 (A) CLASSIFICATIONS AS SUBSTANDARD
Recheck the account for any outstanding amounts, including any outstanding amounts with an affiliated or sister company or the personal names of the owners, partners or directors. If a loan has been extended or rescheduled at least three times but is not yet delinquent, and the required payments for the required period have not been made by the due date, the loan is classified as substandard.
3.18.3 (B) CLASSIFICATION AS DOUBTFUL
3.18.3 (C) CLASSIFICATION AS BAD
Ratio of classified Loans to Total Loans of MTBL
The success is due to the combined and concerted efforts of the bank's management and staff under the able leadership, support and protection of the members of the Board of Directors. According to international rules, a bank may have a maximum limit of classified loans of 5% of total lending. The MTBL's main problem was that it could not implement a good lending policy.
After MTBL took some good loan policy, which improves the percentage of classified loans, that is to reduce the percentage. It can note that although the percentage of classified loans decreases every year, but the total amount of classified loans.
What are the main reasons behind classification of MTBL?
- Recovery Performance
- MTBL Introduced a New Recovery Policy In 2003
- Early Warning System Department (EWSD)
Because the bank was established recently and the management was new and inexperienced in banking. As a matter of priority in its policy, the bank wishes to ensure the quality of its loan portfolio by strengthening post-disbursement recovery measures as well as by prioritizing the Early Warning System (EWS) to control the growth of non-performing assets. Then they send letter to inform them that they (the bank) will sue the customer.
MTBL has a special department called EWSD that is responsible for all accounts classified in the bank's portfolio.
MTBL’s Recovery Probability Categories to be assigned To All Classified Loans
- Category
- Notes for assessment of category
- Why Recovery takes so much time
Assess the cost of continued collection efforts against any monies that can reasonably be expected to be recovered. Now the bank cannot sell the land without the court's permission, even though the land was registered as a mortgage in the bank. Then on a new date a person came to the court saying that he is the brother of the client and the land is their father's property.
Finally, if the court gives an order in favor of the bank, they have a problem selling the land. Finally, the interesting thing is mostly the same customer, but the land in a different name.
Findings and Recommendations
Findings
Recommendations 4.3 Conclusion
In most cases the bank tries to provide quality services to known customers, if it may lead to loss of general customers. Most of the customers think that the terms and conditions are very difficult to get the loan. The interest rates of some loan products seem to be high, so it may not be possible to compete with other banks for such a loan.
The authority of Mutual Trust Bank Limited should introduce more innovative ideas and products such as education loans. The bank should reduce the harassment and take some time to process the loan application.
Conclusion
Bibliography and Appendix
