Topic: Submission of the internship report on 'Analysis of Credit Management System of Ut-tara Bank Ltd: A Study on Azimpur Branch, Dhaka'. I even have my internship report on 'Analysis of Credit Management System of Uttara Bank Ltd; A Study on Azimpur Branch, Dhaka'. I am pleased to certify that the post report on Analysis of Credit Management System of Uttara Bank Limited: A Study on Azimpur Branch, Dhaka, conducted by Tayaba Akter with ID number of MBA Program, Department of Business Administration has been approved for presentation and defense.
The objectives of the study are set out to know the different types of credit schemes, credit granting procedure and approval process, credit assessment and risk management process, identify problems related to credit management and make some recommendations to solve these problems of UBL. The third chapter describes in depth the analysis of credit management system of Uttara Bank Limited. These descriptions highlight different types of credit arrangements, credit granting procedure and approval process, credit disbursement process, documentation system, risk assessment steps, risk management process and risk management tools with credit monitoring and recovery process.
Throughout this report, the discussion of credit management system in Uttara Bank Limited is designed step by step. BBLC-Back to back letter of credit LIM-Loan against imported merchandise LTR-Loan against trust receipt.
Introduction
Origin of the Study
Rationale of the Study
Objectives of the Study
Methodology of the Study
Limitations of the Study
There are various pieces of information that the bank employee cannot provide due to security and other corporate obligations. Due to time constraints, many of the aspects cannot be discussed in this report. As the bank staff were very busy, they could not provide me with enough time.
Due to lack of experience, there is a chance of having an error in the report, although best efforts have been made to avoid any kind of error. With the initiation of some famous Bengali businessmen, it had been established for the relief of the underprivileged individuals of the then Bangladesh and started its banking business formally on 28 January 1965 under the name of "Eastern Banking Corporation" only.
Mission
Vision
Some Notable Features of UBL
TYPES OF CREDIT IN UBL
- Uttaran Small Business Loan (USBL)
- Nari Swanirbor Rin Prokalpo (NSRP)
- House Finance for Freedom Fighters)
- Fixed Term Loan to Enterprise
- Uttaran SME Sector Development Project Loan (USSDPL)
- House Hold Durables
- Lease Finance
- Loan for Foreign Employment
- Travel Loan
- Working Capital Loan
- Education Loan
- Uttaran Home Loan
- Car/Motorcycle Loan
- Car/Motorcycle Loan
- Trade Finance
- Green Financing
- Agricultural Credit
Uttara Bank Limited is going to introduce the above-mentioned loan product to provide housing to the Freedom Fighters of the country with the following conditions. Company guarantee of the related business concern(s).. E) Repayment: equal/unequal monthly/quarterly/semi-annually/annual installment F) Interest rate: market competitive. Personal security of the spouse/parents and an individual with a minimum solvency/income not lower than that of the borrower, supported by proof of income.
Other guarantee acceptable to the bank E) Repayment : Equal monthly installment F) Interest rate : Competitive in the market. Three times the proposed limit (calculated on the basis of a contract with a foreign company). Maximum BDT 2.00 Lac (Taka Two Lac) D) Loan to Value Ratio: 70% of the cost of the stated expenditure to be paid by the borrower.
IBP (Advance against Inland Accepted Bill).. A) Objective: To facilitate import and export of the country B) Eligibility of customers. Accessibility and availability of financing is one of the barriers to providing housing to low- and middle-income people in the country. The annual income must be at least three times the total annual payment amount of the loan applied for.
Personal security of the Spouse/Parent or any other person acceptable to the bank must be obtained. Annual income must be at least three times the total annual installment amount of the applied loan. Annual income must be at least three times the total annual installment amount of the applied loan.
IBP (Advance against Inland Accepted Bill) .. C)Purpose: Easier import and export of the country D)Customer eligibility. Corporate guarantee for the related business affairs .. Other securities acceptable to the bank E) Basic document requirements (not limited to).
Sources of Risks at UBL
CREDIT RISK
Importance of Credit Risk Management
These policies have been approved by the Board and are designed to satisfy the structural requirements that currently exist and to provide flexibility to the extent that UBL recognizes that an essential prerequisite for the bank's continued profitability and stability is its effective risk management capabilities. UBL secures its risk management strength and strives to endlessly promote a proactive risk management culture in the bank. Effective measures are currently being taken to comply with Basel II risk management standards.
Banks and different financial institutions are typically faced with risks that are generally of economic condition. For a bank to own a large consumer base, it should provide loan goods that are reasonable enough. In terms of equity, a bank should have significant amount of capital on its reserve, but not an excessive amount of it that it misses the investment income, and not a deficit that it itself leads to monetary instability and to the chance of regulatory- compliance.
To determine the risks associated with lending and investment practices, banks must assess the risks. Credit risk management should then play its role in helping banks comply with the Basel II Accord and alternative regulatory authorities. Credit risk management for banking could be an incredibly useful system, especially if the risks are aligned with banks' survival in the business world.
Credit Risk Management Process of UBL
Pre-Credit Application Activities
Identification of sector-wise Credit Limit
Post-Credit Application Activities
Evaluation of 6C’S
Conditions or Terms of Loans
Loan Sanction and Disbursement
After Credit/Loan Disbursement
Monitoring Loan Performance
Collection of Installment
Recover the Losses
CREDIT PROPOSAL AND SANCTION PROCESS OF UBL
Step-5: After reviewing the entire loan proposal file, the GM will approve the loan. Step-6: after the approval of the proposal at any level in the board of administrators. The bank sends the proposal file along with the required mortgage documents and to verify the validity of the possession of the property.
CREDIT RESTRICTION IMPOSED BY CENTRAL BANK
- A)General Strategies
- B)Direct facilitates
- Term Loan:Short term industrial loan, midterm industrial loan, and long term
- Short /mid/long term industrial loan
For financing for BMRE, where B stands for balancing, M for modernisation, R for replacement and E for expansion.
APPROACHES FOR SAFETY OF CREDIT IN UBL
Pre-Sanction Appraisal
Post-Sanction Control
In general, all forms of financial assistance are extended on a fully secured basis, with the coverage of the bank's exposure with acceptable tangible assets at no time being less than 1.5 times the principal exposure. In principle, the bank does not participate in credit transactions where it has a worse security position compared to any other existing or proposed new lender. In the case of limited liability companies, all directors must enter into a joint and several guarantee agreement to fulfill the terms of the loan and other loans.
The Bank requires its security to be fully protected against risk where applicable (eg fire, riot, strike) by a duly accredited insurance company. Furthermore, such risk coverage is always valid until all obligations are fully met. Regular inspections (ie monthly, quarterly, semi-annually and annually) must be carried out regarding the general condition of the securities.
OVERALL CREDIT POSITION OF THE BANK
- Agriculture loan
- SME Financing
- Poverty alleviation sector financing
- Financing in Women Empowerment Development Scheme
- Syndicated Finance
- Lease Finance
The outstanding balance in this sector amounted to Tk 76.4 million. by the end of the year 2017.
CLASSIFIED LOANS OF UBL DURING 2017
The outstanding balance in this sector amounted to Tk. 145.3 million at the end of the year 2017. The outstanding balance of identical to the top of the year 2017 was Tk. 183.2 million.
RECOVERY OF ADVANCE OF UBL
Recovery Procedure
Recommendation
The average number of days needed to enable and disburse the loan against a given loan proposal should be reduced. The compliance system should be more active to take care of classified credit at a minimum level. The pay scale should be increased to inspire highly disgruntled staff and reduce bad behaviour.
Conclusion
