It is my great honor and pleasure to simultaneously do my internship in the first generation bank in the country 'The Premier Bank Limited' under your supervision. Please be advised that a report titled "Credit Appraisal Processes at The Premier Bank Limited" has been created as part of the internship requirements.
Overview of Internship
Internship Information
- Company Information
- Internship Organization Supervisor’s Information
- Job Scope
- Job Description
- Job Responsibilities
The very first month I worked in the General Banking department to learn the basics of banking. In this section, I first learned about the definition of credit, and how The Premier Bank Limited's credit policy works.
Internship Outcomes
- Students contribution to the organization
- Benefit to the student
- Difficulties
- Recommendation
Assigned supervisor did not get enough time to attend to intern's performance due to heavy office work.
Company Overview
Organization's mission and vision
- Mission
- Vision
To ensure a high level of transparency and ethical standards in all transactions carried out by the bank. The bank has a clear vision of its ultimate destiny – to be the best among top financial institutions.
Strategies and Priorities of the organization
- Strategies
- Priorities
To create congenial atmosphere that will attract skilled workforce who will be proud and eager to work for the Bank. To be socially responsible and strive to raise the quality of life by making an effective contribution to national development.
Corporate Information
Managerial Structure
Human Resource Planning
- Pay Structure, Benefits and Compensation for Employees
- Learning and Development Program for Employees
Introduction
CAMEL rating is the foundation of banking industry standards and Premier Bank Limited does not compromise. The bank evaluates and rewards their employees based on 'Performance Driven' culture to inspire their employees and get results from them more effectively. Premier Bank has used a statistical performance culture that motivates and rewards its employees for better career growth.
Each employee used to pay on a monthly basis with the combination of their basic salary. The bank makes decision to distribute KPI based on the productivity of their employees, facts and figures of annual performance. The bank is equipped with a Learning and Talent Development Center (LTDC) with all neoteric teaching materials and textbooks.
The primary objective of this course is to provide practical learning and work experience as a professional to perform on various practical tasks. I was assigned the topic 'Credit Evaluation Processes' by The Premier Bank Limited to complete my internship report. Purpose: The main purpose and objective of this report is to provide an intense overview of how Premier Bank Limited evaluated their credit processes while approving credit facilities.
Objective
- Specific Objective
- Origin of the report
BUS400' is a four-credit course that lasts for three months or twelve weeks where the student has an opportunity to complete their internship.
Methodology
- Primary Source
- Secondary Source
Evaluation Process
- Credit
There should be a strong, predetermined schedule for repayment, depending on the borrower's ability and willingness. If we believe that it is in the borrower's best interest to repay the debt on time, this is one of the most important factors in gaining the lender's trust. To investigate the true fact of the borrower, there must be an official investigation by the officials.
The Premier Bank Limited provides two types of credit based on the organization's financial stability.
Funded Credit Facilities
This type of loan is also known as a 'perpetual loan' and has a fixed lease age; usually one year but can be extended until the due date. Cash Credit (Hypo): For retail or wholesale or for industry, it must meet some of the bank's prerequisites for working capital requirements as opposed to the primary security of the inventory mortgage that comes under this type of credit. This type of credit is also continuous credit and there are two different segments.
This is recognized as pre-payment method whereby both bank and customer can make prior connection with import and this kind of credit facility is also known as 'post-import financing' by bank. OD (Export)/Packing Credit (P.C.): When the customer has prior permission to get the L/C facility for export purpose or organization packing contract for their goods for export, this type of credit facility comes under this. For export and packing, this credit facility is very popular to sustain a business which also acts as back to back L/C.
FBP: When the payment made by the customer through purchase/negotiation of foreign bills is known as FBP credit facility. House building loan (staff): This type of credit facility is only applicable to Premier Bank employees, as the purchase of flats/houses is considered a staff house building loan. Agricultural Finance: Production units directly involved in fishing, cultivation, agriculture, forestry are considered as an agricultural credit facility.
Non Funded Credit Facilities
- Credit Investigation
This process is verified in different dimensions to collect information and evidence (if necessary) which helps the bank authority to take decisions about the credit facility. Like other banks, the Premier Bank Limited also has their unique credit assessment process which helps the CRM board to select quality borrowers. Bank's dedicated credit officer must look at the borrower's indivisibility, how the borrower's honesty behaves, the retention preparation and intention to repay borrowed money, how the obligations are maintained, etc.
Capacity: The ability to repay the loan is the most important criterion used to assess the creditworthiness of the borrower. To assess the capacity of the borrower, the lender will take into account various factors such as the identity of the customer and the guarantor, the legal structure of the organization, the board of directors, their operational behavior, the product manufactured and the target customers and suppliers of raw materials for a business borrower, business ability. , experience and business attitude, technical knowledge, maturity, etc. Capital: Business risk, Business capital, debt holding, earning capacity, ability to pay more, payments per person, turnover and accounts payable inventory, etc.
Condition: The general economic environment refers to the condition of the borrower's industrial activities and economy as a whole, which affects the borrower's ability to repay the debt. Cash flow: The loan provided is ultimately repaid from the company's cash flow. Common sense: The loan officer must use his/her common sense to assess the overall condition of the borrower.
Information for Credit Investigation
- Assessing Collected Information
Public report and press conference on the borrower's previous purchases, sales and pending cases (if available). Credit assessment helps the bank's credit department to choose the right type of proposal and quality borrower. When a customer approaches with a request for a credit facility, the branch's Relationship Management will go through the loan application submitted by the customer and collect the required information, papers and documents, review the merits and prepare a fully documented credit proposal for approval of it. of appropriate authority.
The credit department must evaluate the collected data with the utmost care, which will ultimately help the administration in making the right decision in selecting a borrower. The purpose and type of the request, the suitability of the loan, the amount of the loan, the justification of the specific amount, the term, whether it is logical in relation to the nature of the object and the cycle of the conversion of funds in the client's business, the source. It is the credit officer's job to identify likely risk mitigation factors or suggest corrective actions for deficiencies.
The method of disbursement of the loan must be in accordance with the drawing requirements of the customer for proper utilization. The method of repaying the loan is in accordance with the asset conversion cycle (can be continuous or in a lump sum or in equal installments.). It will help to provide loans in a timely and efficient manner, which will ultimately help the bank to successfully manage credit risk, maintain a healthy portfolio and ensure sustainable growth of the bank.
Preparation of Credit Proposal
- Credit Appraisal
Depending on the situation, appropriate changes to the credit proposal may be needed to address the specific business. 01 Purpose of Request State the purpose of the request, nature of the facility, proposed limit, maturity and pricing. 04 Total Group Exposure Enter the existing limit, outstanding, proposed limit, expiry date of sister issues (if available).
Mention the name of the bank and branch, name of the account, limit, outstanding, status of the account. State the name of the company, the nature of the business, the shareholding, the turnover, the net profit, the net assets. In addition, there is an evaluation process through the bank to know the creditworthiness and credit risk assessment of the debtor.
Generally, the review includes credit proposal and purpose, business analysis of the debtor, industrial environment analysis, raw material supplier analysis and their targeted customer, financial history analysis of previous credit facilities, predetermined financial performance, and more. On the other hand, when the bank wants to issue syndicated loan, all participating banks in addition to the main bank also only rely on their internal review, analysis and investigation of the denomination of the syndicated loan based on their unique and identical credit risk rating management. Based on the assessment, the credit department proposes a dossier to submit to the competent authority for approval, which includes the amount and type of loan to be borrowed, loan purpose, loan structure, security device etc.
Credit Risk Rating
- Credit Approval
- Credit Adminitration
- Disbursement
- Custodial Duties
- Compliance Requirements
- Credit review, monitoring and recovery
When a risk deterioration is observed, the risk rating assigned to the borrower and the borrower's facilities must be reviewed immediately. The sanction sanctions of branches in the month should be forwarded to the Credit Department / Credit Risk Management Department, Head Office to consider the proposals as. Credit applications must be submitted for approval by the branch management committee/RM team and forwarded to the approval team in the CRM and approved by individual managers.
Then based on the decision (approved/rejected) as per the authority delegated by the recommended department. ZCO assists and forwards to Head of Corporate Banking (HOCB) or authorization for approval and to Chief Credit Officer (HOC) for further approval or recommendation. The CEO advises on appropriate decisions with the authority delegated to the HOC and HOCB.
Loan terms and conditions are supposed to be monitored, financial activities from the borrower should be collected regularly, any unusual activities should be referred to the credit risk management authority and the regional manager for timely follow-up. An early warning account is an account with potential risks or weaknesses of a material nature that should be monitored, monitored or brought to the attention of management. The RM completed an early warning report and sent it to the CRM approval authority for any accounts showing signs of internal deterioration.
