An Analysis of Credit Risk Management of Rupali Bank

Limited

Submitted to:
Md. Arif Hassan
Assistant Professor
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University

Submitted by:
Niloy Bhuiyan
Major: Accounting
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University

Date of Submission: 27/09/2020

 Letter of Transmittal

Date: 22/09/2020

To,
Md. Arif Hassan
Assistant Professor
Faculty of Business and Entrepreneurship
Daffodil International University

Subject: Submission of Internship Report on “An Analysis of Credit Risk Management on

Rupali Bank Limited”.

Dear Sir,
With due respect, I am submitting my internship report on the topic entitled “An Analysis of
Credit Risk Management on Rupali Bank Limited” which was assigned to me as a partial
requirement to complete my BBA Program.

Through this study, I have tried to accommodate information and relevant issues as much
possible and also tried to follow your instruction as you suggested.

Therefore, I hope that you will appreciate my effort and I shall be grateful if my report is
accepted for the appropriate purpose.

Sincerely Yours,

Niloy Bhuiyan
ID: 171-11-5427
Major in Accounting
BBA Program
Department of Business Administration
Faculty of Business & Entrepreneurship

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 Letter of Acceptance

This is to certify that Niloy Bhuiyan, ID:171-11-5427 is a student of Daffodil International

University. He has prepared his internship report entitled “An Analysis of Credit Risk
Management on Rupali Bank Limited” under my supervision. The data and findings presented
in this internship report seem to be authentic. Thus, it is accepted for the presentation in the
internship defense.

I wish him every success in life.

Md. Arif Hassan

Associate Head & Assistant Professor
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University

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 Acknowledgement
I am Niloy Bhuiyan and might want to offer my heartiest thanks to the individuals who helped
me all the route through to finish my Internship report “An Analysis of Credit Risk
Management on Rupali Bank Limited” At the absolute starting point, I need to thank god,
whose inviable direction helped me to finish this assistant report.

I especially acknowledge my academic supervisor Mr. Md.Arif Hassan Associate Head &
Assistant Professor of Daffodil International university, for giving me all the fundamental
partners for the finish of this report. Without his standard watching, it was difficult to complete
my report.

Secondly, I am very much grateful to Rehana Parvin, Faishal Ahmed, Abdulla-Al-Mamun,

Salauddin Ahmed who helps me a lot. I would convey my special thanks to my parents whose
inspirations have enabled me to complete this report.

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 Executive Summary

Rupali Bank Limited is one of many private banks who are operating properly with abiding by
all the rules being set by Bangladesh Bank. The whole bank is divided into many sub-committees
who divides the whole work in different segments. At the top they have Directors and later they
got different committees such as Credit Committee, Finance Committee etc. Along with the
directors there is CEO/Managing Director who has centered all the works and kept a harmony in
all departments for the betterment and efficiency of the bank.

The objective of this study is to gain information about the credit branch of Jamuna Bank Ltd. To
set up this report both essential and optional wellsprings of information have been utilized.

The main segment of this report comprises of an initial part that has been created for the correct
execution of the whole report. The subsequent segment portrays the organization profile
including Jamuna Bank's set of experiences, their vision, mission and methodology, items and
administrations, and operational organization organogram. Section three spotlight on the credit
branch of RUPALI BANK LIMITED. This is the primary piece of the task. It incorporates credit
strategy, credit standards, and FICO score of RUPALI BANK LIMITED. It additionally
incorporates loaning models and loaning standards of RUPALI BANK LIMITED. It additionally
portrays in detail the methodology of endorsing credit, advance recuperation strategy, and
execution, stepping observer, and other legitimate customs. It likewise depicts the credit hazard
evaluating framework. The fourth part has clarified the working experience of my temporary
position period at various divisions of RUPALI BANK LIMITED. Discoveries and investigation
of the data are in Part five of the report. It incorporates monetary information examination of
RUPALI BANK LIMITED. By utilizing 5 years of information here we assess the monetary
exhibition of the RUPALI BANK LIMITED credit division. The excess part comprised of
suggestions and an end. At long last, I saw that Rupali Bank Limited will guarantee better
administrations to the individuals of Bangladesh and they will be more add to the improvement
of the economy of Bangladesh.

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Table of Contents
Letter of Transmittal.....................................................................................................................................i
Letter of Acceptance....................................................................................................................................ii
Acknowledgement......................................................................................................................................iii
Executive Summary....................................................................................................................................iv
Chapter-1....................................................................................................................................................1
1.1 Introduction.....................................................................................................................................2
1.2 Origin of The Study...............................................................................................................................2
1.3 Objectives of The Study........................................................................................................................2
1.4 Methodology of the Study.....................................................................................................................3
1.4.1 Primary Sources:.............................................................................................................................3
1.4.2 Secondary Sources:.........................................................................................................................3
1.5 Scop of the Study...................................................................................................................................3
1.6 Limitation of the Study..........................................................................................................................3
Chapter 2....................................................................................................................................................5
2.1 About Rupali Bank Limited...................................................................................................................6
2.2 Vision of Rupali Bank Limited..............................................................................................................7
2.3 Mission of Rupali Bank Limited............................................................................................................7
2.4 Products and services of Rupali Bank Limited......................................................................................8
2.5 Types of loan of what are offered by RUPALI BANK LIMITED.........................................................9
2.8 Management Hierarchy of Rupali Bank Limited.................................................................................10
Chapter 3..................................................................................................................................................11
3.1 Credit...................................................................................................................................................12
3.2 Different Advances Offered by RBLBL..............................................................................................12
3.3 Overdrafts............................................................................................................................................13
3.4 Cash Credit..........................................................................................................................................13
3.4.1 Cash Credit (Hypothecation).........................................................................................................13
3.4.2 Cash Credit (Pledge)......................................................................................................................14
3.5 Loans...................................................................................................................................................14
3.5.1 Loan General.................................................................................................................................14
3.5.2 House Building loan......................................................................................................................14
3.5.3 Loan against imported merchandise (LIM)...................................................................................14

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 3.5.4 Loan against trust receipt (LTR)....................................................................................................14
3.5.5 Loan against Packing Credit:.........................................................................................................15
3.5.6 Consumer finance scheme:...........................................................................................................15
3.5.7 Lease finance scheme...................................................................................................................15
3.5.8 Small business loan.......................................................................................................................15
3.5.9House renovation loan...................................................................................................................15
3.5.10 Personal loan..............................................................................................................................15
3.5.11 Festival Small Business Loan Scheme (FSBLS) :...........................................................................16
3.6 Credit policy of RBLBL......................................................................................................................16
3.7 Credit Sanctioning Authority of RBLBL..............................................................................................16
3.8 Security loans......................................................................................................................................17
Chapter 4..................................................................................................................................................18
4.1 Credit Risk Grading.............................................................................................................................19
4.2 Functions of Credit Risk Grading..........................................................................................................19
4.3 Procedures of Credit Risk Grading (CRG).............................................................................................19
4..3.1 Analysis of Financial Risk..............................................................................................................19
4..3.2 Analysis of Business Risk..............................................................................................................19
4..3.3 Analysis of Security Risk...............................................................................................................20
4.4 Lending Process...................................................................................................................................20
4.4.1 Pre-sanction Stage........................................................................................................................20
4.4.2 Pre-sanction Stage........................................................................................................................21
4.5 Five C’s of Analysis Credit....................................................................................................................21
Chapter-5..................................................................................................................................................22
Financial Performance...............................................................................................................................22
4.1.1 Loan and Advance:.......................................................................................................................23
4.1.2 Loan to Deposit Ratio:..................................................................................................................23
4.1.3 Standard Loan...............................................................................................................................25
4.1.4 Sub-standard Loan........................................................................................................................26
4.1.5 Doubtful Loan..............................................................................................................................27
4.1.6 Bad/Loss Loan..............................................................................................................................28
4.1.7 Sector wise Distribution of Loan and advances:...........................................................................29
Chapter 5...................................................................................................................................................31
5.1 Findings of the Study...........................................................................................................................32

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5.2 Recommendation.................................................................................................................................33
5.3 Conclusion...........................................................................................................................................34
References.................................................................................................................................................35

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 Chapter-1
Introduction

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1.1 Introduction
The most significant and the final part of their curriculum for a student internship is. It is the
location where a student encounters the working environment and knows the way of working
with official discipline in the real workplace. Students learn theoretical knowledge in the long
four years of study life, but in the internal curriculum they can acquire realistic knowledge.

As a BBA program student, I will need to prepare my internship paper. In the accounting and
finance department, I did my internship program at National Credit and Commerce Bank
Limited, Mirpur Road branch. As a major finance student, a subject for my thesis is "An
Analysis of Credit Risk Management of Rupali Bank Limited" assigned by the bank
authority. This subject was accepted by my operational supervisor, Mrs. Rehena Akter
(Executive Officer of Rupali Bank Limited) and my administrative supervisor, Sayed Mahfujul
Alam, Daffodil International University Lecturer. Since credit is a problem for every financial
institution, I have attempted to clarify all the details about RBL Bank's credit management
system in this article. I reviewed five years of financial accounts, and I also addressed the
financial status of Rupali Bank with the officers. I have also made several proposals to improve
their system of credit management by incorporating modern technical approaches.

1.2 Origin of The Study

This thesis was created in order to receive a Bachelor of Business Administration (BBA) degree
from Daffodil International University and the essayist wants to work in Credit Risk
Management as a temporary position at Rupali Bank Limited.

1.3 Objectives of The Study

The primary objective of this report is to get an overview about credit risk Management of
Rupali Bank Limited.
Specific Objectives:
The other objectives of this study are as follows:
1. To assess the lending and recovery procedure of Rupali Bank Limited. for the period of
2011-2015 
2. To analyze the trend of loan and advances of Rupali Bank Limited.

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 3. To scrutinize the sector wise and geographical location wise concentration of loan and
advance of Rupali Bank Limited.
4. To analyze the non-performing loan & advances of Rupali Bank Limited.
5. To compare Credit to Deposit Ratio, Capital Adequacy Ratio, Cost to Income, Return on
Asset, Return on Equity of Rupali Bank Limited with industry average.
6. To suggest better ways for enhancing the credit performance of the Bank.

1.4 Methodology of the Study

In the preparation of this article, both main and secondary information was used. The subtleties
of the origins of data are as follows:
1.4.1 Primary Sources:
i. Direct conversation with respective officers and staffs.
ii. Confrontation Clients in Interview.
iii. Direct & Practical desk task.
1.4.2 Secondary Sources:
i. Data from Annual Report of RBLBL.
ii. Data from the Monthly transaction record of this bank.
iii. Ratio data collected from the Banks financial statement.
iv. And the main sources of data from the Official Website of RBLBL.
All the collected data and relative information have been tabulated, processed, analyzed and
graphically showed in order to make the study more informative, useful and acceptable.

1.5 Scop of the Study

The analysis covers the board of Rupali Bank Limited's financial leadership, organizational
organization, credit offices, and credit risk. This is the thesis paper using the executives of Rupali
Bank Limited. with a loan risk.

1.6 Limitation of the Study

Working in Rupali Bank is a great opportunity. but for some internal policy I couldn’t collect all
the necessary information for the report. The limitations I faced are –
i. They have some rules, regulations, norms, restrictions. So, the officers did not disclose
much information.
ii. Annual reports were not that much informative.

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 iii. Could not take interview of higher-level authority.
iv. As the branch as ne and the officers just joined, they could not help many of the times.
v. Given time to prepare a report as not enough
vi. Could not get chance to visit other branches to take interviews

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 Chapter 2
Organizational Overview

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2.1 About Rupali Bank Limited
National Credit and Commerce Bank (RBL) Limited has a history of its own that is distinctive. It
was founded as an investment firm in the name and style of National Credit Ltd (NCL) on
25.11.1985, with its head office at 7-8, Motijheel C/A, Dhaka-1000. This institution came into
being.
The Bank gives a wide range of help to exchange, trade, industry, and the general business of the
nation. RUPALI BANK LIMITED's accounts are likewise accessible for the business people to
set up promising new pursuits. The bank was built up by a gathering of neighborhood business
people who are all around rumored in the field of exchange, trade, industry, and business of the
nation.
The company's effort to leverage money from within and spend them in such ways as to grow the
industrial and trade sector of the country and to play a catalyst role in the development of the
stock market was to develop the industrial and trade sector of the country and play a catalyst role
in the formation of the capital market as well. The business also gets membership of the Dhaka
Stock Exchange to accomplish its mission. This bank began initially as an investment firm and
then eventually transformed into the banking business. This company (NCL) TK was the original
pay-up capital. At that particular time point, 5 Heart. Its membership with the glance through
supported the organization in this respect to a great degree.
Until 1992, the business started mainly with just 16 branches in Bangladesh, and subsequently
with active inactivity by the members of the Board of Directors and Management and with the
approval of the Central Bank. It was transformed into a full-fledged private commercial bank in
the name and style of National Credit and Commerce Bank Ltd (RBLBL) on 17.05.1993 with
Taka 75.00 corer authorized capital and Tk. paid-up capital. 19.50 which paved the door for a
larger forum to represent the country. All activities are carried out by this bank under three main
heads-General Banking, Foreign Exchange and Advance Banking, to set up a banker-General
Banking customer relationship has a broad or substantial contribution. Advances are one of the
key sources of revenue from finance, with banks receiving benefit from this platform. This
department plays an important part in growing and improving the growth and profits of the bank.
Another source of bank profit is foreign exchange. In promoting exports and imports, foreign
exchange plays a crucial role.

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Since its invention, Rupali Bank Limited. has acquired a commendable reputation by providing
its customers with true customized support in a technology-based environment.
In the field of corporate finance, the Bank has set up a new standard for private trading and
foreign exchange and public enterprises. Rupali Bank has attracted customers, both corporate
and individuals, with its numerous deposits & credit items, only for those who felt comfortable
doing business with the bank.

2.2 Vision of Rupali Bank Limited

To become one of the cute commercial banks by putting credit & trade together to represent the
country as a modern and socially conscious financial institution for enhanced shareholder value
and economic development.

2.3 Mission of Rupali Bank Limited

The Rupali Bank will be at the forefront of national economic growth in order to continue to
contribute financial services from within and abroad to the development of agriculture in
Bangladesh and also to play a catalytic role in the creation of the stock market.

i. Providing all consumers with a company approach and innovatively supplying them
beyond belief.
ii. Setting the benchmark of the world-class industry in providing consumer satisfaction
across the full range of goods, customer support and all operations.
iii. Team-based working climate that creates an exciting enterprise that recruits, grows and
maintains outstanding workers who help celebrate the performance of the company of the
bank, the clients of the bank and national growth.
iv. Maintain the highest professional expectations and collective accountability deserving of
a leading citizen of a business and a stable citizen as well.
v. The goal is to boost competitiveness and sustainability on an ongoing basis and thereby
increase shareholder value.

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2.4 Products and services of Rupali Bank Limited
The Bank has a number of modes of planning for financial products and administrations. These
goods focus on monthly savings schemes, consumer credit schemes, women's lease finance and
personal loan and shop finance schemes, etc. Rupali Bank Limited, also known for its esteemed
customers with Q-money ATM cards, offers 24 hours of debit card banking administration. RBL
provides to respected clients the accompanying administrations. The Bank offers different kinds
of management. Some of them are listed below in the:

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2.5 Types of loan of what are offered by RUPALI BANK LIMITED
 Loan (General)
 House Building Loan (General
 House Building Loan (Staff)
 Other Loans to Staff
 Cash Credit (Hypo.)
 Cash Credit (Pledge)
 Corporate Social Responsibilities of the Rupali Bank Limited
 Hire Purchase
 Lease Financing
 Time Loan
 Cons SOD (General)
 SOD (Others)
 SOD (Export)
 PAD
 LM
 LTR
 IBP
 Export Cash Credit (ECC)
 Packing Credit (PC)
 FDBP
 IDBP
 FBP

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2.8 Management Hierarchy of Rupali Bank Limited

Chairman

Vice Chairman

Board of
director

Managing director

Deputy Managing Director

(DMD)

Executive Vice president

(EVP)

Senior Vice president

(SVP)

Vice President
(VP)

Senior Assistant Vice

President

Assistant Vice President

(AVP)

Senior Executive officer (SEO)

Executive officer (EO)

Senior officer (SO)

Officer

Junior Officer

Figure 1 Organizational Hierarchy

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 Chapter 3
Overview of Credit Management

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3.1 Credit
Credit discovers from "credo" the sense "I believe" Credit comes from the Latin term. It's a tool
for a bank that handles funds by supplying the borrower with the loan and earning money that it
spends. A bank supplies the client with funds against the interest customer who can back the
money with interest calling loan or credit to the bank. The Rupali Bank Limited usually issues
short-term loans and advances, which are used to satisfy the borrower and lender's working
capital needs. Tiny portions of a bank's demand and time liabilities are advanced on a long-term
basis through daily repayment by the creditor in installments, where the banker typically insists
on a bank.

3.2 Different Advances Offered by RBL

Advances

Types of Loan Overdrafts Cash credits Types of Discounts

Loan General SOD (FO) Pledge Inland Bills Purchased

Housing SOD (G) Hypothecation Foreign Bills Purchased
Loan FDBP & Discounted
Loan against Payment against document
Imported
Merchandise
Housing loan LDBP
Loan Against
Trust Receipt
Loan Against
Packing Credit
Transport Loan
Project loan
Demand Loan
Consumer Finance

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 Lease finance
Small Business
Loan
House renovation
Loan
Personal Loan
Festival small
business loan

3.3 Overdrafts
Overdraft is all about a contract between a client and a banker in which the buyer is allowed to
cancel the letter over his credit balance. Only this service will bring the holder of the current
account up to an accepted limit. Typically agreed against such shares, it is a topical land position.
It is still appropriate for the creditor to draw and pay any number of times, given the cumulative
sum drawn and not the full amount approved.
 Secured overdraft: It is one kind of loan that, in the form of a lien, has collateral. There's
one kind of mortgage lien.
 Unsecured overdraft: This is one form of unsecured credit. When a client borrows a tiny
amount of loan, these forms of loan are us.

3.4 Cash Credit

Cash credit is one form of short-term progress that is continuing. The banker has set a cap in this
scheme, which is referred to as the "cash credit limit" for each and every customer, until all
customers have a positive borrowing permit against the protection of visible properties or
guarantees. In Rupali Bank Limited, there are two kinds of cash credit available,
3.4.1 Cash Credit (Hypothecation)
Hypothecation is one form of debt expense for a company, but neither ownership nor possession
passes to the creditors. Both rights and possession remain under hypothecation, under debtor and
not borrower.

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3.4.2 Cash Credit (Pledge)
Possession of commodities transfers to the bank in cash credit (Pledge). It is permitted to support
the country's trade, trade and industries against the commitment of stock of trade under the
supervision of the Bank.

3.5 Loans
Credit is granted for a definite reason and for a predetermined duration under the loan scheme.
These loans are usually repayable in instalments. Some of the bank's key loans are listed as being
under:
3.5.1 Loan General
If an advance is made in lump sum, repayable either in fixed monthly increments with no future
debit is generally permitted to be expected by means of interest, incidental costs, etc., called a
general loan. Generally, it is called "Loan General" because the advance cannot be grouped into
either category. ‟
3.5.2 House Building loan
The bank provides this loan to middle class citizens in order to overcome the financial
incompatibility of making a home. The initial loan term is 5 years. The loan volume cap depends on
the partnership with the consumer banker.
3.5.3 Loan against imported merchandise (LIM)
LIM is a temporary credit for manufactured products and is approved. At the request of the
importer, LIM can be produced when it is not in a position to take delivery of import bills by paying
the full bank dues.
3.5.4 Loan against trust receipt (LTR)
LTR is often a temporary loan which makes the customer only on the basis of trust, which is
usually based on strong customer-banker relationship, against their application. Import bills are
treated after sanctioning LTR to the importer who clears the goods from the customs authority by
paying payment tax, VAT and other costs.

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3.5.5 Loan against Packing Credit:
Packing credit is a short-term advance given to an exporter by the bank to assist him in the
procurement, sorting, storage and shipping of products. The debt is being expanded progressively
to accommodate the payment of freight, handling fees and insurance and export duty.
3.5.6 Consumer finance scheme:
The goal of the Scheme is to boost the quality of life of the fixed income community. Here,
customers can obtain simple instalments of loan facilities to purchase household amenities. It
satisfies service holders' household requirements: furniture/TV/refrigeration & other household
durables.
3.5.7 Lease finance scheme
Under this scheme, an entrepreneur can use leasing facilities to obtain industrial machinery
(without having to buy it by down payment) with a simple repayment plan..
3.5.8 Small business loan
This loan is created for the smooth business expansion of genuine, sincere & aspiring small
entrepreneurs. With the time needed, it diversifies bank lending. Up to tk is the "Credit Ceiling".
Lac 5.00 and word 2-5 years.
3.5.9House renovation loan
The aim of the loan is to assist legitimate owners of houses or flats to perform maintenance or
reconstruction work for improved living or enhanced rental income. The loan's 'credit cap' is up to
TK. 5.00 Lac and Term is a five-year term.
3.5.10 Personal loan
The loan is meant to cover the emergency financial costs of service holders, such as medical care,
marriage, pregnancy, child enrollment, bank acquisition, review fees, etc. The Loan Credit Cap is
Up to Tk. 1.00 Lac and Period is 6 months at least, but not longer than 3 years at least.

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3.5.11 Festival Small Business Loan Scheme (FSBLS) :
One of RBLBL's creative goods is this. This loan, which is fully valid for festival purposes and
exclusively for small businesses, is the key element 2 of this loan. The loan requirement is not
very high, but it has beneficial effects for the small businessman who wants extra funding to
stock the products to cope with market demand, especially during the festival season to run
their company smoothly.

3.6 Credit policy of RBL

The RBLBL Credit Policy contains the views of the country as a whole's overall macro-
economic stability through the provision of financial assistance to commerce, trade and industry.
RBLBL goes to every possible corner of society in its credit activities. They finance companies
and markets on a wide and medium scale. At the same time, by working from organizational
perspectives, they also take care of entrepreneurial growth, it is observed that as a policy matter –
 In selecting borrowers, it placed focus on the client, „Man “and „Business not only on the
Security “.
 Diversity in the loan portfolio is taken care of.
 It takes steps to maintain a proper "mix" in its credit portfolio with short, medium and
long-term financing.
 Based on the insistence of the proposal and the consumer, the charge of interest is
adjustable.

3.7 Credit Sanctioning Authority of RBL

RBLBL believes in power and jurisdiction decentralization. The Bank has built a mechanism to
ensure that the delegated authority exerted by the executive can be measured in a practical and
qualitative way in order to successfully enforce the system of delegation of power and to derive
the desired value for both the bank and the executive concerned.

The basic guidance they obey to accomplish the delegation of authority target is—the
 The Managing Director is eligible to wield all the rights vested in other bank executives.
 Other than the Managing Director, executives exercise the allocation of powers only
where that authority is allocated.

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  The Managing Director can, by particular or general order, suspend the exercise of
delegated authority by any executive.
The approval process confirms the segregation of the authorizing authority from Partnership
Management/Marketing (RM). The credit was then accepted by the required approval
committee. For all the company divisions, the process is seen under:

Credit Application Recommended By

RM

Zonal/HO Credit Risk Officer

Head of Credit Risk (HOCR) &

Head of Business Units (HOBU)

Credit Committee

Executive Committee/Board

3.8 Security loans

Protection given against credit could be different. The securities will range from gold and silver to
different kinds of goods, immovable objects, life insurance contracts, stock market securities,
promissory notes, etc. A cautious banker often seeks to secure his rights by taking real assets as
securities.

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 Chapter 4
Credit risk Management of Rupali Bank Limited.

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4.1 Credit Risk Grading
As a key overview predictor of risks associated with a credit exposure, A Credit Risk Ranking
deploys a number/ alphabet/ sign. The basic framework for designing a Credit Risk Management
method is Credit Risk Scoring. It allows RBL to consider multiple risk variables that are included in
various credit transactions. A clearer estimation of the quality of RBL's credit portfolio can be
accomplished by aggregating all classifications across borrowers, operations and business lines. In
order to take decisions both at the pre-sanction and post-sanction level, the credit risk grading
system is important.

4.2 Functions of Credit Risk Grading

By promoting rational decision-making, well-managed credit risk grading systems foster bank
protection and soundness. Credit risk is calculated by rating schemes and the risk they pose
differentiates individual credits and classes of credits. Which allows for the tracking of changes and
developments in risk levels by bank management and examiners. In order to maximize returns, the
mechanism also helps bank management to control risk.

4.3 Procedures of Credit Risk Grading (CRG)

4..3.1 Analysis of Financial Risk

4..3.2 Analysis of Business Risk

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4..3.3 Analysis of Security Risk

4.4 Lending Process

The key role of the commercial bank is to take the deposit and spend the money in it. Yet it must
protect the depositor's cash as well as the bank's business in the course of lending. Proper oversight
and control of management is also very critical in the process of lending and recovery. In order to
track and monitor the loan and recovery process, RBL strongly practices a three-step process.

Pre-Sanction

Post Sanction / Pre

Disbursement

Post-

4.4.1 Pre-sanction Stage

During the pre-sanction point, the very regulation of loans begins. Credit analysis is very relevant at
this point as it includes choosing the correct and qualitative borrower. To ensure that the loans are
authorized to the correct people, the following procedures are carried out.
Recollection of knowledge:
 Bangladesh Bank Credit Records Office.
 Declaration of the group as to the responsibility of all banks and financial institutions.
 Performance of the account, integrity, track record, redemption potential from internal
sources from RBLBL.

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4.4.2 Pre-sanction Stage
At this point, adequate documentation and securitization are very necessary for expanding the
protection of the credit facility and allowing RBLBL to liquidate the credit obligation in the event of
a default by the borrower.
RBLBL performs three basic functions with proper documentation:
1. Unqualified properties of the credit facility used by the creditor.
2. The legal right created by the bank for securities offered as a loan.
3. In the event of default, it is possible to put the records before the court for a decree to accept
the dues.

4.5 Five C’s of Analysis Credit

Character: Often attempt to judge a client's credit background in a character stage bank. He
correctly preserves his former credit in the past or he commits errors. The bank judges this side
generally.
Capacity: Capacity means that the client will repay his loan in time or not, normally this side of the
bank at this point.
Collateral: Capital means the basis of investment, where a consumer needs to spend his credit in a
particular field, that this sector is lucrative or basically not measured by banks.
Collateral: For example, I receive an Rupali Bank Take 40000 credit. I have to hold anything
collateral with the bank against these 40000 takas whose value has to be equivalent to 40000. This is
regarded as leverage.
Conditions: A customer has obeyed these conditions during the borrower take loan bank often offer
certain conditions to the customer for the protection of their assets.
After calculating this 5 CS, a bank will then determine whether or not the bank will offer the loan.
The client is assessed by the below grading scale.

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 Chapter-5
Financial Performance

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5.1 Loan and Advance:
When it is willing to react to the challenges that the world hurls and turn them into a desired role, the
true nature of an association is tried. Despite the declining loan cost trend, interest on private portion
credit has largely stayed low despite the fact that we have prevailed to continue the positive trend.
Year Total Loan and Advance Growth rate
2015 140,915,255,805.00  
2016 173,939,298,062.00 19%
2017 205,835,173,526.00 15%
2018 247,114,202,842.00 17%
2019 305,732,273,604.00 19%

Total Loan and Advance

350,000,000,000.00

300,000,000,000.00

250,000,000,000.00

200,000,000,000.00

150,000,000,000.00

100,000,000,000.00

50,000,000,000.00

0.00
2015 2016 2017 2018 2019

Total Loan and Advance Growth rate

Interpretation:
The total loan and advance of Rupali Bank Limited are increasing every year. In 2015 the total loan
was TK. 140,915,255,805.00. It was increased to tk. 173,939,298,062.00 in 2016. In 2017 it was Tk.
205,835,173,526.00 and that is increased Tk. 305,732,273,604.00 in 2019. From the chart, it very
well may be seen that complete credit and advances of RBL are expanding a direct result of their
alluring and adaptable advance bundles

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5.2 Loan to Deposit Ratio:
Loan to deposit ratio refers the liquidity of a bank by comparing a bank’s total loans to its total
deposit at the same time periods. In the event that the proportion is excessively high, it implies that
the bank might not have enough liquidity to cover any unexpected store prerequisites.
Year Total Loan & Advances Total Deposit Loan to Deposit Ratio
2015 140,915,255,805 253,829,634,016 55.52%
2016 173,939,298,062 279,116,013,508 62.32%
2017 205,835,173,526 319,718,789,701 64.38%
2018 247,114,202,842 389,549,479,401 63.44%
2019 305,732,273,604 414,624,250,170 73.74%

Loan to Deposit Ratio

80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2015 2016 2017 2018 2019

Interpretation:
Here we see that loan to deposit of RUPALI BANK LIMITED are increasing every year. This is
because of their attractive and flexible loan packages. In 2015 the total loan to deposit ratio was
55.52%. It was increased to 62.32% in 2016. In 2017 it was 64.38% and that is increased 73.74% in
2019. From the graph it can be seen that total loan to deposit of SEBL are increasing because of
their attractive and flexible loan packages RBL’s deposit also increasing year by year.

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 5.3 Standard Loan
Standard loan is an unclassified loan. Such credit accounts are performing alluringly
in the provisions of its segments and no past due is occurred.

Amount of
Total Loans and Ratio of
Year Standard Loan Growth Rate
Advances (BDT) Standard
(BDT)
2015 140,915,255,805 109,024,330,500   77.37%
2016 173,939,298,062 130,307,159,912 16% 74.92%
2017 205,835,173,526 152,158,211,915 14% 73.92%
2018 247,114,202,842 192,974,461,730 21% 78.09%
2019 305,732,273,604 245,710,333,259 21% 80.37%

Growth Rate & Standard Loan Ratio

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2015 2016 2017 2018 2019

Growth Rate Ratio of Standard

Interpretation:

Above the bar charts showing that standard loan of Rupali Bank Limited between 2015
to 2019. In 2015 their standard loan amount was 109,024,330,500 which ratios of
standard is 77.37% and the next years its growth was lower than the last years which
was ratio rate is 74.92%. And after two year it was an high growth in 2019which
standard ratio was 80.37%

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5.4 Sub-standard Loan
Sub Standard is a classified loan.
Amount of
Total Loans and Ratio of Sub-
Year Sub-standard Growth Rate
Advances (BDT) standard
Loan (BDT)
2015 140,915,255,805 1,248,457,536   0.89%
2016 173,939,298,062 802,868,494 -55% 0.46%
2017 205,835,173,526 368,370,818 -118% 0.18%
2018 247,114,202,842 346,737,154 -6% 0.14%
2019 305,732,273,604 844,510,088 59% 0.28%

Growth Rate & Sub-Standard Loan Ratio

100%

50%

0%
2015 2016 2017 2018 2019
-50%

-100%

-150%

Growth Rate Ratio of Sub-standard

Interpretation:

From the above table it is identified that in 2019 their substandard loan growth rate is
59% which is higher than others year

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5.6 Bad/Loss Loan
Bad/Loss Loan is a specific credit and advance fall in this class when it appears to be that this
advance and advance isn't collectible or useless even after all the security has been depleted. This
sort of advance isn't recovered inside more than 360 days. Such credit is another instance of
orchestrated development.
Percentage of
Amount of
Total Loans and Bad/Loss Loan
Year Bad/Loss Loan Growth Rate
Advances (BDT) in Total Loans
(BDT)
and Advances
2015 140,915,255,805 21,915,607,517   15.55%
2016 173,939,298,062 31,473,856,650 18% 18.09%
2017 205,835,173,526 43,021,694,533 13% 20.90%
2018 247,114,202,842 43,221,837,366 8% 17.49%
2019 305,732,273,604 44,820,361,496 4% 14.66%

Interpretation:

From the above graph it represents that the overall Bad/loss Loan and its growth rate was
fluctuating. In 2016 it was 18% and in 2017 it was 13%. So, the average growth rate of bad/loss loan
is satisfactory. In 2019 the amount of Bad/loss loan is not much increased. So, it was good for the
bank.

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5.7 Liquidity Ratio:
Particular 2019 2018 2017 2016 2015
Loan (Gross) to Total Deposit 0.91 0.93 0.94 0.95 0.96
Liquid Assets to Total Deposit 0.13 0.12 0.11 0.09 0.08

Liquidity & Leverage

1.20

1.00

0.80

0.60

0.40

0.20

0.00
2019 2018 2017 2016 2015

Loan ( Gross) to Total Deposit Liquid Assets to Total Deposit

Interpretation:
Loan to total asset ratio showing it is reducing slowly from 2015 to 2019. The Loan to total deposit
ratio in has been increased 2019 to 2015.

5.7 Profitability Ratio:

Particular 2019 2018 2017 2016 2015
Return on Assets (ROA) 0.80% 0.80% 0.90% 0.93% 0.98%
Return on Earnings Assets (ROEA) 0.90% 0.80% 1.00% 1.00% 1.05%
Return on Equity (ROE) 11.00% 10.30% 10.70% 10.37% 10.22%

Interpretation:
The return on asset has been fluctuated over the year a little bit and showing rate of slam 2015 to
3019. The banks return on equity was positive stream and also it is increasing from 2015 to 2019.

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 Chapter 5
Findings, Recommendations and Conclusions

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5.1 Findings of the Study
By analyzing the credit risk management practice of Jamuna Bank and their performance in last
five years the following:
1. The RUPALI BANK LIMITED bank's loan and advance were increasing gradually
which was 177,278,780,000 in 2019 were much more than the previous four years.
2. Though the RUPALI BANK LIMITED bank loan to deposit was also increasing year by
year and the ratio was 73.41% in 2015 is the lowest in five years.
3. The standard loan was 96.30% in 2019. Where 2018 it was 96.23% standard loan. It
should be 70% -75%.
4. The sub-standard loan ratio also fluctuating. In 2015 to 2016 it was decreased 1.88% to
0.12%. But in 2017 it increased 0.12% to 0.23% after that it was again decreased.
5. The proportion of doubt full loan is fluctuating. In 2015 it was highest than other years
but in 2016 it was the lowest which was 0.16%.
6. The bad loan of RUPALI BANK LIMITED also increasing year by year. In 2019 was
much more than other four years.

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5.2 Recommendation
To improve credit risk management further, Rupali Bank Limited should improve in some
areas. Those are:
1. Need to expand the store of credit proportion. RUPALI BANK LIMITED bank needs to
make community who will unsurpassed screen the credit chance administration
framework.
2. Need to elevate their movement to make mindfulness in individuals of the bank. It tends
to energize the general population for taking advance.
3. Standard advance proportion RUPALI BANK LIMITED bank ought to present and
enhance data arrangement and should screen that the guidelines of credit the executives
are entirely pursued
4. For diminishing sub-standard advance RUPALI BANK LIMITED bank can grow more
redone parameters for credit endorsement process under the general rule of Bangladesh
bank.
5. For enhancing the dicey credit's execution and stable business condition securities must be
esteemed appropriately.
6. To decrease the terrible and misfortune credit, RUPALI BANK LIMITED bank ought to
make weight on to the customer for opportune reimbursement and make the essential
legitimate move against the obstinate advance defaulter. It ought to be in the legitimate
way.

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5.3 Conclusion
Jamuna Bank Ltd. is a business bank that dispatched its activity in 2001. It has just evolved
altruism among its demographic by offering its phenomenal administrations by various divisions.
This achievement has come about because of the devotion, responsibility, and dynamic initiative
among its administration over the periods. The working climate of Rupali Bank Limited is
animating. During the limited capacity to focus season of its activity, the bank has been effective
to situate itself as a reformist and dynamic monetary foundation in the nation.
Credit strategy is an advantageous financial apparatus for the business world. The estimation of
this administration is tremendous. It has accumulated such a situation in the financial area that
individuals at created and furthermore creating districts are a lot of subject to this administration.
In Bangladesh, credit offices or advances began to turn out to be exceptionally appealing in
ongoing periods. Yet, loads of enhancements in administrations and offices must be made in this
office.
Credit Division of Jamuna Bank has a certified and committed gathering of officials and staff
who are continually attempting to offer the best assistance to the customers. They generally
screen credit in various areas and their position. Prior to giving the credit, they investigate
whether the advance will be beneficial and whether the customer is sufficient to reimburse the
advance inside the given timeframe.

The principle upper hand RUPALI BANK LIMITED is appreciating that it has web based
banking while other nearby business banks can't yet accomplish that advantage. However, all the
business banks are currently attempting to accomplish this. In this bank, the representatives are
exceptionally energetic by their compensations and different advantages. Here, all the workers
are a lot of helpful with their clients, partners, and essentially guests..

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References
1. Chowdhury, L.R., A Textbook on Bankers Advances, 2nd Edition, Fair Corporation, Dhaka.
2. Rose, P.S.,Commercial Bank Management, 5th Edition, McGraw –Hill, New York,
USA,2002.
3. Bangladesh Bank, Managing Core Risk in Banking: Credit Risk Management, Dhaka, 2013.
4. Bangladesh Bank, Credit Risk Grading Manual, Dhaka, 2012.
5. Rupali Bank Limited, Credit Operational Manual, Dhaka, 2012.
6. Rupali Bank Limited, Synopsis of Workshop on Documentation and Legal Aspects in
7. Loan Sanction & Disbursements held at Bank’s Training Institute, 2012.
8. Karim, Md. Enayetul, the Weekly Industry, Vol-146, Issue-44, July 2, Dhaka, 2013.
9. Website: http:// www.jamunabankbd.com), accessed on December 9, 2014.
10. Website: (http:// www.bangladeshbank.org), accessed on December 13, 2014.
11. Basel II Accord, (from http://en.wikipedia.org/wiki/Basel_II), accessed November 23,2014.
12. Published Document & Banking manual
13. Credit Division Manual of RUPALI BANK LIMITED
14. Several Booklets from Rupali Bank Limited
15. Other internship reports of RUPALI BANK LIMITED

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