Credit Policy and Risk Management A Case Study On Bank Asia Limited

1.1 Introduction
Bank is committed to provide high quality financial services/products to contribute to the
growth of the country through stimulating trade and commerce, accelerating the pace of
industrialization, boosting up export, creating employment opportunity for the youth,
poverty alleviation, raising standard of living of limited income group and overall
sustainable socio-economic development of the country. In achieving the aforesaid
objectives of the Bank, Credit Operation of the Bank is of paramount importance as the
greatest share of total revenue of the Bank is generated from it, maximum risk is centered
in it and even the very existence of Bank depends on prudent management of its credit
portfolio. The failure of a commercial Bank is usually associated with the problem in
credit portfolio and its less often the result of shrinkage in the value of other assets. As
such, credit portfolio not only features dominant in the assets structure of the Bank, it is
crucially importance to the success of the Bank also.

Bank can lend upto 84% of the total amount of its total time and demand liabilities. The
rest 16% is kept as Statutory Liquidity Reserve (SLR) with Bangladesh Bank. But in
practice banks do not lend the whole 84% and a certain portion is set to meet up the day-
to-day banking operations and also meet up the liquidity requirement of the depositors.
Bank can lend upto 15% of its paid up capital without the approval of Bangladesh Bank
but above that level approval from Bangladesh Bank is required.

1.2 Origin of the Report

The internship report is a basic requirement for the BBA program. The proposed topic is
“Credit Policy And Risk Management A Case Study On Bank Asia Limited”. The topic
is assigned by Mr. Azharul Islam, Asst. Vice President & Sub Manager of the Corporate
Branch and supervised by Dr. Laila Anjuman Ara assistance professor Southeast
University.

Alamgir Islam 2
ID#2003010000097
Credit Policy and Risk Management A Case Study On Bank Asia Limited

1.3 Objectives of the Report

The objectives of the study are as follows:

Broad Objective
 The broad objective of the report is to have an overview on credit approval and
risk management techniques adopted by Bank Asia.

Specific Objectives
 To develop knowledge about credit risk management of Bank Asia.
 To identify the strengths and weaknesses of the credit approval and monitoring
process in Bank Asia.
 To make recommendations regarding the Bank’s credit risk management
activities.

1.4 Scope of the Report

This report consists of the writer’s observation and on the job experiences during the
internship period in the credit department of Corporate Branch, Bank Asia. The report
mainly emphasizes the sequential activities involved in credit approval process, analytical
techniques used by Bank Asia for credit analysis as an integral part of the credit approval
process. The report also focuses on the loan risk management techniques adopted by
Bank Asia both in pre-sanction and post-sanction period of a credit. Finally the report
incorporates an evaluation of the different aspects of the lending process and monitoring
techniques and findings problems and makes some recommendations.

Alamgir Islam 3
ID#2003010000097
Credit Policy and Risk Management A Case Study On Bank Asia Limited

1.5 Methodology

Sources of Data Collection

Information used in this report has been collected from both primary and secondary
sources. Primary data were collected mainly through the writer’s observation of the
approval process and monitoring techniques, informal interviews of executives, officers
and employees of Bank Asia.
Majority of the information were collected from the secondary sources, which include
books, publications, reading materials and various circulars and reporters published by
Bank Asia.

Data Analysis
This is a descriptive report mainly aiming to depict the credit approval process and
monitoring techniques of Bank Asia. The data gathered from both primary and secondary
sources were arranged orderly to get a clear picture of the Bank Asia’s credit
management policy regarding lending process and monitoring. The study includes both
qualitative and quantitative analysis of loan approval process and monitoring tools. Based
on the observational information writer also tries to evaluate and analyze the problems
involved in various phases of the credit approval process and Risk management
techniques.

Presentation of Results and Recommendations

Recommendations are made based on the critical evaluation of the different phases of
process and techniques involved in credit approval and monitoring.

1.6 Limitations of the Study

There were certain limitations regarding the study that is summarized below:
 Deficiencies in data required for the study.
 Inaccurate or contradictory information.

Alamgir Islam 4
ID#2003010000097
Credit Policy and Risk Management A Case Study On Bank Asia Limited

 Field practice varies with the standard practice that also created problem.
 Time provided for conducting the study is another important constraint.

1.7 Report Preview

This report is divided into two parts. These are:
 Part-A: The organization Part of Bank Asia Limited.
 Part-B: Job rotation during internship.
 Part-C: The Project Part “Credit Policy And Risk Management A Case On Bank
Asia Limited”.
The Part-A focuses on different services, management structure and practices, and
financial conditions of Bank Asia. Part-B mainly focused on the job rotation during
internship. Part-C, The Projected Part discusses credit functions of the Bank, products,
policy, strategy, lending process, credit analysis using Financial Spread sheet Analysis,
Lending Risk Analysis and quantitative and qualitative techniques of credit approval,
evaluation of the various components of the lending process.

Alamgir Islam 5
ID#2003010000097