What do you mean by problem loan? Discuss the indicators of problem loan.

What are the

causes of problem loan? Discuss the steps that are taken by banks about problem loans.
What are the considerable factors of loan review?
Problem Loan
Any loan that cannot quickly be recovered from borrowers is called a problem loan. When these
loans can't be repaid according to the terms of the initial agreement—or in an otherwise
acceptable manner—a lender will recognize these debt obligations as problem loans.
A central piece of credit management is the early recognition and proactive management of
distressed loans, protecting a lender from exposure to undue risks. Carrying problem loans on
their balance sheets can reduce lenders' cash flow, disrupting budgets and potentially decreasing
earnings. Covering such losses can reduce the capital lenders have available for subsequent
loans.
Indicators of Problem Loan
Quantitative Indicators
 Preparation of irregular and delayed financial statements.
 Refusal of a large insurance claim.
 Creating hindrances to the main source of income.
 Diminishing deposit balance.
 Inability to pay the debt of creditors other than the bank.
 Non-repayment of the loan installments as repayment dates.
 Entering into big loan contracts frequently with institutions and persons other than the
existing bank.
 A continuous decline in the market price of the shares of the borrowing company.
 Sudden rise or fall of large size deposit withdrawals.
 Excessive cash dividend payouts from reserve fund or even front capital.
 At the end of the cycle, creditors are not completely paid out.
 Concentration changes from a major well-known customer to one of lesser stature.
 Loans are made to or from officers and affiliates.
 Unable to clean up bank debt, or cleanups are affected by rotating bank debt.
 Investment in fixed assets has become excessive.
Qualitative indicators
 Sudden death or accident of chief executive of the business.
 Avoiding communication with the lending bank.
 The borrowing organization is not operating smoothly due to some conflicts among the
executives and among the board members.
 Bitter relationship between borrower and lending bank.
 An occurrence of theft, fraud, robbery and/or hijacking in the organization of the
borrowers.
  Conflicts among the heirs of the owners of the borrowing organization.
 Pretending in the manner that payables are paid.
 Financial reporting is frequently “down tiered” due to changes in financial management.
 Delayed responses of financial transaction.
 Suppliers cut back terms or request cash on Delivery (COD).
 Distribution or production methods become obsolete.
 The company has grown dependent on trouble customers or industries.
 The board of directors is no longer active in making crucial business decisions.
 Lack of depth in managerial decision making.
 Financial control mechanisms are weak.

Causes of Problem Loan

 Wrong selection of borrowers
 Inaccurate appraisal/Inflated appraisal/Over costing of the project. Reasons- Political
pressure, pressure from high-ups, under hand dealing/bribe
 Inadequate information & improper investigation
 Too high debt-equity ratio
 Financing in non-viable projects
 Saturated sectors
 Low rate of return
 Over invoicing
 Faulty documentation
 Defective security
 Down turn in the economy
 Global recession
 Prolong illness of the borrower
 Lack of business management
 Non-Performing loan
 Bad Investment
 Lack of Supervision and Monitoring
 Unholy alliance

Steps That Are Taken by Banks about Problem Loans

Banks Own Steps
 Preventive Steps
o Additional Collateral
o Discussion and Advice
o Advice to Reduce Overhead Expenditure
o Arrangement of New Loan
 o Not Grant Loan without proper Analysis
o Advice for Inventory Control
o Proper Classification of Loan
o Inspection of Loan Project
o Review the Income of Loan Project
o Accountability of the Loan Officer
o Collection and Preservation of Adequate Loan Document
o Proper following of Banking Rules and Regulations
 Curative Steps
o Additional Loan Facilities
o Changing in Repayment Schedule of Loan
o Stopping the Due Installment
o Exemption of Interest
o Advice to Merge
o Advising to Withdraw Fund
o Correction of Loan Diversion
o Adjusting Financial Structure
Taking Legal Actions through the Court
 General Recovery Suit
 Recovery Suit by Liquidation
Steps Taken by Banks for Problem Loan
 Discussion and advice with borrower
 Called additional collateral
 Review Loan Documents
 Review the Administration of the Loan
 Review Borrower and Guarantors
 Consider a Pre-Negotiation Agreement
 Borrower refinancing with another lender
 Sale of the loan to another lender
 Restructuring of the loan
 Monitoring until condition improves
 Foreclosure and liquidation
 Borrower bankruptcy
 Additional Loan Facilities
 Correction of loan diversion
 Exemption or deferment of due installments and interests payment
 Rationalization of client’s overhead expenses
 Advice to merge:
  Advice to temporarily defer modernization &expansion plan
 Advice to change the credit policy of the firm
Considerable Factors of Loan Review
 Repayment Capacity
 Collateral
 Capital
 Character
 Conditions
 Age
 Experience
 Loan Amount and Repayment Period
 Proper Documentations
 Proper Rules and Regulations

What is provisioning? Discuss the basis of determining the classification status of classified
loans and advances and provisioning roles provided by Bangladesh Bank. Do you have any
suggestion of the present system of provisioning against regular loans and advances?
Explain with reason. Discuss the negative impacts of classified loans and advances in the
national economy. Discuss the details of classified loan recovery process on both legal and
non-legal aspects. "Lack of follow-up and monitoring is one of the key reasons of turning a
loan into Non-Performing Loan (NPL)."-Put your argument supporting the statement. Is
it due to the increase of classified loans of the bank that they now facing liquidity problems
and borrow from inter-bank call money market at a very high rate? Justify the view. If you
are agreed or not agreed comment. Bangladesh Bank has brought some changes of
provisioning on SME loans. But some banks are reported to have been measuring the
revised concept through unfair conversion of some other loans to SME loans. Give your
opinion on the matter. How to relief to this unfair situation? ******
Provisioning
This is the accounting process of setting aside funds from the profit against possible loan loss
according to status of classifications. The worse the classification status, the more the provision
requirement will be. This provision is made gradually, year after year, which help a bank lessen
the burden of charging the loan loss as an expense (Write-off) in a single year.
Basis of Determining the Classification Status of Classified Loans and Advances
A continuous loan, Demand loan or a Term Loan which will remain overdue for a period of
90(Ninety) days or more, will be put in to the “Special Mentioned Account (SMA)”
Interest accrued on “Special Mentioned Account (SMA)” will be credited to Interest suspense
account, instead of crediting the same to income account.
i). Any continuous loan if not repaid/renewed within the fixed expiry date for repayment will be
treated as past due/overdue from the following day of the expiry date.
ii). Any Demand loan if not repaid/rescheduled within the fixed expiry date for repayment will
be treated as past due/overdue from the following day of the expiry date.
iii). In case of any installments(s) or part of installment(s) of a fixed term loan (Not over 5 years)
is not repaid within the fixed expiry date, the amount of unpaid installments will be treated as
past due/overdue from the following day of the expiry date.
Any continuous loan will be classified as:
 ‘Sub-standard’ if it is past due/overdue for 6 (Six) months or more but less than 09 (Nine)
months.
 ‘Doubtful’ if it is past due/ overdue for 09 (Nine) months or more but less than 12
(Twelve) months.
 ‘Bad/Loss’ if it is past due/overdue for 12 (Twelve) months or more.
Any Demand Loan will be classified as:
 ‘Sub-standard’ if it is past due/overdue for 6 (Six) months or more but less than 09 (Nine)
months from the date of claim by the bank or from the date of creation of forced loan.
 ‘Doubtful’ if it is past due/ overdue for 09 (Nine) months or more but less than 12
(Twelve) months from the date of claim by the bank or from the date of creation of
forced loan.
 ‘Bad/Loss’ if it is past due/overdue for 12 (Twelve) months or more from the date of
claim by the bank or from the date of creation of forced loan.
In case of any installments or part of installments of a Fixed Term Loan is not repaid within due
date, the amount of unpaid installments will be termed as “defaulted installment”.
In case of Fixed Term Loans which are repayable within maximum five years of time:
 If the amount of ‘defaulted installment’ is equal to or more than the amount of
installments due within 06 (six) months, the entire loan will be classified as “Sub-
standard”.
 If the amount of ‘defaulted installment’ is equal to or more than the amount of
installments due within 12 (Twelve) months, the entire loan will be classified as
“Doubtful”.
 If the amount of ‘defaulted installment’ is equal to or more than the amount of
installments due within 18 (eighteen) months, the entire loan will be classified as
“Bad/Loss”.
In case of Fixed Term Loans, which are repayable in more than five years of time:
 If the amount of ‘defaulted installment’ is equal to or more than the amount of
installments due within 12 (Twelve) months, the entire loan will be classified as “Sub-
standard”.
  If the amount of ‘defaulted installment’ is equal to or more than the amount of
installments due within 18 (Eighteen) months, the entire loan will be classified as
“Doubtful”.
 If the amount of ‘defaulted installment’ is equal to or more than the amount of
installments due within 24 (Twenty-four) months, the entire loan will be classified as
“Bad/Loss”.
The Short Term Agricultural and Micro Credit will be considered irregular if not repaid
within the due date as stipulated in the loan agreement. If the said irregular status continues, the
credit will be classified as “Sub-standard” after a period of 12 (Twelve) months, as “Doubtful”
after a period of 36 (thirty-six) months and as “Bad/Loss” after a period of 60 (Sixty) months
from the stipulated due date as per loan agreement.

Provisioning Rules provided by Bangladesh Bank

Base for Provisioning: The base for provisioning will be computed as under:
Aggregate outstanding amount of classified loan less: The amount in interest suspense. Less: The
value of eligible securities.
Provisioning Base= Amount of classified loan−Interest suspense−The value of eligible securities
Provisioning against unclassified Loans:
Banks will be required to maintain General Provision in the following way:
 @ 1% against all unclassified loan (Other than the loans under Small Enterprise and
consumer financing & Special Mentioned Account).
 @ 2% on the unclassified amount for Small Enterprise financing.
 @ 5% on the unclassified amount for Consumer financing where it has to be maintained
@ 2% on the unclassified amount for: a). Housing Finance & b). Loans for professionals
to set up business under consumer financing scheme.
 @ 5% on the outstanding amount of loans kept in the “Special Mentioned Account” after
netting off the amount of interest suspense.
Provisioning against classified Loans:
Banks will maintain provision at the following rates in respect of classified Continuous,
Demand & Fixed Term Loans:
 Sub-Standard: 20%
 Doubtful: 50%
 Bad/Loss: 100%
Provision in respect of short term agricultural and micro credits is to be maintained at the
following rates:
  All credits except Bad/Loss (i.e. “Doubtful”, “Sub-standard” irregular and regular credit
accounts): 5%
 Bad/Loss: 100%
Provision against off Balance Sheet exposure of the Bank (BRPD Circular # 08/07 Dt.
07.08.07):
 @ 0.50% provision effective from December 31, 2007
 @ 1.00% provision effective from December 31, 2008
Do you have any suggestion of the present system of provisioning against regular loans and
advances? Explain

Negative impacts of classified loans and advances in the national economy.

 Efficiency problem for the banking sector
 Stopping Money Cycling
 Capital Erosion
 Increase in Loan Pricing
 Earning Reduction and Frustration
 Lower Liquidity Position
 Distort Allocation of Credit
 Worsen Market Confidence
 Slow Economic Growth
 Increase Cost of Doing Business
 Inflation
 Increase Cost of Production
 Lowers Standard of Living
 Lowers Economic Savings
Discuss the Details of Classified Loan Recovery Process on both Legal and Non-Legal
Aspects
Legal Aspects of Classified Loan Recovery Process
When the borrower turns his back to the bank and stops payment of bank loan, this good relation
slowly turns sour and bitter and the happily knotted banker-customer tie began to disintegrate. At
the final stage, when all efforts of banks in recovering loan proved fruitless, he resorts to the
court of law to realize its borrowed money.
The section 17 of the Money Loan Court Act, 2003 mandates disposal of the cases within a
maximum of 120 days, in reality, courts can’t dispose cases within this timeframe. In fact, courts
take a much longer time in hearing and disposing petitions of the defendants. The defendants file
writ petition in the High Court Division against any interim order of the lower court. The High
Court Division, in many cases, by issuing a stay order put off the proceedings of the lower court
until disposal of the writ petition.
But disposal of a writ petition is a lengthy process. If the order of the writ petition goes against
the defendant, s/he then appeals against the order of the writ petition. The case thus keeps
travelling from one bench to another, one court to another. The main intention of the defendants
is to keep the case pending at the stage of hearing in the lower court and they take undue
advantage of the legal bureaucracy. If they file an appeal against the decree of the lower court,
they shall have to deposit 50 per cent of the decreed value to the lower court. That’s why
defendants are usually not willing to file an appeal against the decree of a lower court. For that
reason they create many legal hurdles at the hearing stages in the case. In what follows, many
cases under the Money Loan Court Act, 2003 take even 8 to 10 years to settle.
Besides, many bank loan defaulters, using their political influence manage to delay the legal
procedure of the cases filed against them for an indefinite period of time. Though there is a
provision under section 4(1) of the Money Loan Court Act, 2003 to establish one or more money
loan courts in every district, it has not been implemented. As a result, the number of money loan
courts is insufficient in comparison with the number of cases. The cases filed under this act are
often tried in the Joint District Judge Court which is already burdened with regular cases.
In the instances of a CR Case (for cheque bouncing), since it is a criminal case, it is is lodged
with Chief Judicial Magistrate Court (for areas out of Metropolitan) and Chief Metropolitan
Magistrate Court (for areas within Metropolitan) and after several hearings up to cognizance, the
case is transferred to Sessions Court. As the cases mostly don’t get resolved within the stipulated
time-frame, it gets re-launched and normally, a CR case takes about two or more years to settle.
A legal adviser’s negligence and dishonesty can also contribute to slow disposal. A lawyer may
have several cases under trial in different courts. On many occasions, lawyers are found
neglecting bank’s cases and priorities other cases since bank clears lawyers’ professional bills at
a later date after several hearings or after the settlement of the case. This happens mostly when a
case is transferred to the Sessions Court from Magistrate Court. Lawyer leaves the responsibility
of conducting the case to the public prosecutor of the court concerned. During argument hearing,
he doesn’t appear before the court or doesn’t argue strongly and fails to manage arrest warrant or
shorten the time gap for the next hearing. There are also allegations that many legal advisers of
banks take bribes from the defendants and in return don’t argue strongly while hearing and thus
facilitate bail and delay the date of next hearing favoring the defendants.
There are instances when accused loan defaulters filed counter-case against the plaintiff banker
with the ill intention of deliberately demoralizing and harassing the banker. Besides, the existing
provision of punishment for many financial scams and irregularities in banking sector, the
punishments, in my view, is not proportionate to the depth of crime. If the punishment for
looting of thousand crores of taka is imprisonment of a few months, borrowers will be
encouraged to default. Therefore, punishment for financial crimes must be much more stern and
exemplary so that defaulters and associated culprits of banking sector think twice before
committing such crimes.
If we truly want to get benefits from the laws pertaining to recovery, legal bureaucracy must be
handled. To get rid of procedural delay and backlogs of the banks’ cases, it appears crucial to
form a separate bench in the High Court Division of the Supreme Court for speedy disposal of
the writ petitions filed by the defendants. This bench will only hear and dispose of the writ
petitions and appeals filed by or against the banks. A bar limiting the defaulters to file writ
petition and appeal up to a certain amount of loan can also be put to tackle the procedural delay.
Provision of deposit of at least half or one-third of the decreed/disputed amount before filing any
appeal can also add velocity to disposal of cases. In this way, writ petitions and appeals will be
disposed of in an accelerated way and the number of disposed cases will be increased. On the
other hand, section 4 of the Money Loan Court Act, 2003 should be made functional by
establishing one or more Money Loan Courts with sufficient number of dedicated judges in each
district for the trial of cases constituted by banks and financial institutions. Necessary
amendments to law may be done so that bank’s CR cases for bounce of cheques or any kind of
money recovery cases can be lodged and tried with this dedicated court.
Non-Legal Aspects of Classified Loan Recovery Process
Invoice as normal
The process for debt recovery should begin with you invoicing your clients as normal. You and
your clients should have already agreed on payment terms, so, ideally, at this point, you should
wait for confirmation that you’ve received payment.
Chase
It’s common for invoices to have a payment term of 30 days stipulated at the bottom. If it turns
out that you haven’t been paid by a client when you were expecting, then you should begin the
process of chasing up the invoice. Send additional emails or make phone calls to politely remind
the client that they need to pay for the work you’ve completed for them, otherwise the situation
will continue to escalate.
Credit hold
One way to prompt a client to pay is to stop doing any work for them until they have paid their
outstanding debt to you. This is sometimes referred to as a credit hold or administrative hold,
whereby work on an account stops due to a lack of funding.
In many cases, this is likely to solve the problem as a business might suffer without the services
you are providing to them. However, if this doesn’t result in you receiving your payment then
you do have other options.
Final notice
The final notice is the last piece of correspondence you’re likely to send the client before legal
proceedings begin. This highlights to them that they have until a certain deadline, which you can
decide, to settle any debts with you, before you begin pursuing legal action against them to claim
the money you’re owed.
If this final notice doesn’t see your client settle any outstanding payments with your business,
then you have different options to pursue when considering legal action.
Legal action
Your last resort is to pursue legal action against your client. When this happens, you have two
options open to you, depending on the amount your business is owed:
 Small claims court
 Debt collection
Lack of follow-up and monitoring is one of the key reasons of turning a loan into Non-
Performing Loan (NPL)
Monitoring and Following up:
 For ensuring funds are utilized as the proposed application for which they were
sanctioned, monitoring and following up is necessary to see that the terms and conditions
are complied with.
 Monitoring the project implementation for avoiding time delay and resulting cost
overruns.
 Detecting the symptoms of condition at an early stage for initiating measures at the
appropriate moment.
 Keeping an eye on the movement of financial position of the company.
 Making appraisal about the performance in terms of production, profits, sales etc. on a
tenor basis for ensuring that the debtor is keeping to the unique plan and is having enough
profits to deal the debts as well as for the sake of maintaining normal business motion.
 Assessing the impact of negative externalities on the performance of the company for a
regular basis.
Is it due to the increase of classified loans of the bank that they now facing liquidity
problems and borrow from inter-bank call money market at a very high rate? Justify the
view. If you are agreed or not agreed comment.
When a lender records a large percentage of its outstanding loans as non-performing loans, it can
hurt the financial performance of the lender. Banks mainly make money from the interest they
charge on loans, and when they are unable to collect the owed interest payments from NPLs, it
means that they will have less money available to create new loans and pay operating costs.
The money represents an income that is potentially lost, and it affects the profitability of the
lender. Not only does it affect the lender, but it also leaves potential borrowers with fewer
options to get loans from the lender.
Holding a high number of NPLs relative to the total assets of a company poses a huge risk to the
company. Potential investors are interested in investing in companies with healthy books of
accounts. When the percentage of non-performing loans increases, the lender’s stock price will
also go down. The NPLs a bank holds in its books, the less attractive it is for potential investors
because its future profitability will suffer if the lender will not earn an income from its credit
business.
Also, the lender will be required to set aside a portion of its profits as bad debts provisions in
case it is required to write off the debts. In the United States, banks with a high percentage of
non-performing loans are carefully monitored by the Federal Deposit Insurance Corporation
(FDIC) to protect depositors whose funds are at risk.

Bangladesh Bank has brought some changes of provisioning on SME loans. But some
banks are reported to have been measuring the revised concept through unfair conversion
of some other loans to SME loans. Give your opinion on the matter. How to relief to this
unfair situation?
Banks are reporting other loans as SME loan due to the facility in terms of Duration and
Classifications that are given to SME loan.
Steps to relief this Unfair Situation
 Proper Classification in terms of Sector
 Proper Follow up and monitoring
 Increase Knowledge of the Officer
 Proper rules and regulations
 Give punishment for this unfair trading
 Develop central database

Discuss the procedure of loan rescheduling and loan restructuring. "Loan rescheduling is a
technique of managing NPL," do you agree? Justify your answer. Bangladesh Bank has
recently issued a master circular regarding loan rescheduling and loan restructuring.
Discuss the key features of this circular.
Rescheduling
If a loan is rescheduled, it means that the original arrangement for repayments is altered,
typically because the borrower is finding it difficult to pay back the lender.
In other words, rescheduling, often referred to as debt rescheduling, is a way in which the
repayment of debts may be reorganized. The borrower might be an individual, company,
organization, or even a country.
Rescheduling, which is sometimes called loan modification, may be in the form of:
 A combination of lower interest payments but a longer period during which they are
collected.
 Arranging for a later repayment date.
 Lowering the interest payments but raising how much eventually has to be paid.
  Negotiating a new loan (usually called debt restructuring).
Features of new loan rescheduling rules issued by Bangladeshi Bank
 Circular No: BRPD Circular No 16, Date: 18 July, 2022.
 Time Duration: The Loan proposal has to be completed within 03 months from the date
of the application.

 Loan amount and time period

Types of Loan Loan Amount Highest Period (with grace period)
Less than 100 crore 6 years
Term Loan 100 – 500 crore 7 years
Higher than 500 crore 8 years
Less than 50 crore 5 years
Continuous Loan 50 – 300 crore 6 years
Higher than 300 crore 7 years
In case of rescheduling of 3rd and 4th time the time period would be 1 year less for each loan.

 Down Payment
The Down payment has to be paid before submitting the Rescheduling Proposal to the Branch.
% of Overdue % of Total Overdue
Types of Loan Loan Amount
Amount Amount
Less than 100 crore 7.00% 4.50%
Term Loan 100 – 500 crore 6.00% 3.50%
Higher than 500 crore 5.00% 2.50%
Less than 50 crore - 4.00%
50 – 300 crore 3.00 %
Continuous Loan Not less than 2 crore
Higher than 300 crore 2.50%
Not Less than 9 crore
In case of rescheduling of 3rd and 4th time the down payment would be 1% higher than the stated
rate.
 New Loan Amount after Rescheduling of the Loan
After rescheduling to avail new loan facility, the borrower has to pay 3% of the outstanding
balance of the rescheduled loan amount. (2% in case of exporter)
 Restructuring for Regular Loan
o Tenure may be extended by 50% of the residual tenure of the loan amount or 02
years at most.
o Down payment is not required for restructuring Regular loan amount.
o Rescheduled loan cannot be restructured.
  Approval
o Rescheduling Proposal has to be approved by the Board of Directors
o No need to prior approval from the Bangladesh Bank

Who is a prospective borrower? Why and how credit report is prepared on prospective
borrower. Explain. What does this report indicate? Elaborate your answer. Mention the
minimum eligibility criteria by such borrower before submitting loan proposal formally.
You are a credit in charge of a commercial bank. How would you interview a prospective
borrower? What factors would you consider to select a good borrower? Do you think even
after proper selection, will there be guarantee of recovery of disbursed loan on time?
Discuss with reasons. In selecting a borrower, if it is perfectly made. 'Loan cannot turn into
Bad Loan - Explain your comment on this statement. Please list down the names of the
documents to be obtained from the borrower before disbursement of the loan. Discuss the
procedures of establishing right upon securities when borrower fails to repay the loan
amount.
Prospective Borrower
Prospective borrower means any person who seeks to borrow money to finance the acquisition,
construction, repair, or maintenance of real property.
Why and how credit report is prepared on prospective borrower. Explain.
Reasons
 Credit Report Can Affect Ability to Borrow
 Credit Reports Are the Basis for Credit Scores
 Lenders Use Credit Scores to Help Make Lending Decisions
 Landlords, Insurers and Others May Check Credit Reports
 Credit Report Can Help Spot Credit Fraud
How
The Five-Cs-of-credit method of evaluating a borrower incorporates both qualitative and
quantitative measures. Lenders may look at a borrower’s credit reports, credit scores, income
statements, and other documents relevant to the borrower’s financial situation. They also
consider information about the loan itself. Each lender has its own method for analyzing a
borrower’s creditworthiness. Most lenders use the five Cs—character, capacity, capital,
collateral, and conditions—when analyzing individual or business credit applications.

Mention the minimum eligibility criteria by such borrower before submitting loan proposal
formally
 Good Credit Score and History
 Income Stability
  Higher Debt-to-income Ratio
 Adequate Collateral
 Lower Origination Fee
 Proof of Identity
 Employer and Income Verification
 Proof of Address
 Money Management Skills
 Integrity
 Prudence
 Purposeful Spending
 Borrow only when there is need
Do you think even after proper selection, will there be guarantee of recovery of disbursed
loan on time?
It is guaranteed that there will be recovery of disbursed loan on time. But in case of natural
calamities or unpresented occurrence the recovery of the loan amount may be delayed.
Reason
 Borrowers Death
 Financial Breakdown
 Operational Failure of Business
 Interest Rate Risk
 Rules and Regulation
 Court Order
 Natural Calamities
 Recession
 Global Economic Breakdown
 War
 International Sanction

Documents to be obtained from the borrower before disbursement of the loan.

 Certificate of Incorporation
 Memorandum of Association
 Articles of Association
 Member license copy
 Inauguration Date of the Business
 Certified Copy of Form XII, Schedule -10, Form-xv
 Copy of Board Resolution
 CIB Report
 Internal Credit Rating Report (ICRRS)
  Credit Rating Report
 Project Profile
 Project Appraisal Report
 Project Completion Report
 Outstanding Credit Facility of the Borrower
 Group Exposure if any
 Income Tax Certificate
 All Types of License

What is meant by single borrower exposer of a bank? Does it create any hurdle for banks
to disburse loan by having adequate liquidity?
Single Borrower Exposure
“Exposure” – means credit exposure (funded and non-funded) and refers to all claims,
commitments and contingent liabilities arising from on and off-balance sheet transactions, which
include, but not limited to, outstanding loans/financing facilities, advances and receivables.
These amounts comprise outstanding balance (i.e. principal amount and accrued interest/profit)
which has not yet been repaid as on reporting date. In case of loans that are backed by cash
and/or readily encashable securities maintained with the same bank (e.g. FDR of the same bank)
under lien, exposure can be calculated after deducting the secured/covered amount from the
outstanding balance of the associated loans.

Does it create any hurdle for banks to disburse loan by having adequate liquidity?
Yes.

What is creditworthiness? Discuss the points those are essentially to be considered by a

banker while assessing the creditworthiness of a perspective borrower. State how you will
deal with existing borrower needing enhancement of the creditability.
Creditworthiness
Creditworthiness is a measure of how likely you will default on your debt obligations according
to a lender's assessment, or how worthy you are to receive new credit. Your creditworthiness is
what creditors consider before they approve any new credit.
 Creditworthiness is a measure of a borrower's risk to a lender.
 Creditworthiness is determined by several factors including your repayment history and
credit score.
 You can improve your creditworthiness by making payments on time and reducing debt.
7C's of Creditworthiness
 Character
 Capacity
 Cash
 Capital
 Collateral
 Condition
 Control

Character
Character as tool for analysis of creditworthiness is most vital factors consider by the lenders
because character of the promoter of company or Individual is the most powerful motivation of
borrower to repay the money. Responsibility, truthfulness serious purpose and serious intention
of replaying the money is the character. The banks try to prevent the wilful defaulters from
accessing the loan.
Credit history, Education, Knowledge and skills are also part of character which evaluated by the
lenders.
Better the character better the creditworthiness.
Capacity
The basic of finance or loan is to give to those people or company who can refund the same and
have capacity to replay the principal with interest. The capacity is determined by the Asset,
liability, Cash flow, Network, existing debt obligations, industry risk and credit and credit
utilization ratio. The cash flow statement of organization and the person is helpful in determining
its capacity. Next is alternative sources of repayment of the loan amount which is vital because
sometimes the serious person also fails to repay the loan because of genuine reason that time this
alternative sources helps. Suppose the company have also alternative business he may repay
from that source also. In case of individual having earning spouse is added advantage in
repayment of loan.
Higher the capacity higher the creditworthiness.
Capital
Normally loans are sanctioned for a project or a reason, so applicant must have invested sizable
amount in the enterprise or project. The loan applicant’s percentage of ownership is used to build
confidence in the project. A company’s owner must have invested his own money before The
Financial Institutions sanction loan. The single biggest reason for failure of any company is
under capitalization. In individual case the same also applicable. Ideally the banks sanction up-to
75% of the total project cost this is because they want to share the risk sharing technique. A well-
capitalized project is better places in obtaining the loan.
Higher the initial capita higher the creditworthiness.
Cash
Cash particularly the free cash generated in business or the monthly surplus cash in case of
individual case is key to repayment of advance. If someone is earning high but the expense to
earn that amount is also more than that then he becomes cash deficiency. Someone have
expenses more than income is cash negative so they are not creditworthy. We can use cash flow
statement for evaluation of the net cash available for repayment.
More is the surplus cash higher is there creditworthiness.
Collateral
This the asset which are pledged against the loan. Mean in case the company or the person fails
to repay the amount then those assets are auctioned and amount is recovered. Land, factory,
shares, bonds, buildings, Bank deposit, Bank guarantee, LIC Policies etc are treated as the
collateral for sanction of loan. Lenders actually sanction the loan against the collateral. For
sanction of working capital the machine and factory is taken as collateral.
Higher the collateral higher the creditworthiness.
Condition
The condition is the overall economic and political environment and its impact on the business
and its revenue. The purpose of the loan and its value addition to the growth of business in
current environment is the measure factor for sanction of debit. The company investing the loan
amount in accusation or expansion or purchase of asset then there is more chances for sanction of
advance in comparison to the amount used in date today expenses. During the condition
evaluation the strength and number of competitors, size of market, correlation with existing rules
and regulations, change in consumption taste and relevant social, economic and political
influence on business.
More favorable the condition better is the creditworthiness.
Control
Last but not the least factor of creditworthiness is control. This factor checks the consistency of
the business with the rules and regulations. This also check control on business in achieving its
corporate goals. More the control higher the creditworthiness.
State how you will deal with existing borrower needing enhancement of the creditability.
 Communicate with borrower
 Sight Visit
 Collateral checks
 Feasibility report
What do you know about check list for a borrower? Does your bank have any approved
checklist for prior awareness and compliance of the loan applicant? Mention some major
points those are to be included in the checklist as basic requirement.
Loan Checklist
Loan Checklist means an electronic or hard copy, as applicable, checklist delivered by or on
behalf of the Borrower to the Custodian, for each Collateral Loan, of all Related Documents to
be included within the respective loan file, which shall specify whether such document is an
original or a copy.
 Certificate of Incorporation
 Memorandum of Association
 Articles of Association
 Member license copy
 Inauguration Date of the Business
 Certified Copy of Form XII, Schedule -10, Form-xv
 Copy of Board Resolution
 CIB Report
 Internal Credit Rating Report (ICRRS)
 Credit Rating Report
 Project Profile
 Project Appraisal Report
 Project Completion Report
 Outstanding Credit Facility of the Borrower
 Group Exposure if any
 Income Tax Certificate
 All Types of License
Does your bank have any approved checklist for prior awareness and compliance of the
loan applicant?
Yes.

What does redemption of mortgage document mean? What precautions should be taken
before redeeming mortgage documents?
Redemption of Mortgage Document
The right of redemption allows individuals who have defaulted on their mortgages the ability to
reclaim their property by paying the amount due (plus interest and penalties) before the
foreclosure process begins, or, in some states, even after a foreclosure sale (for the foreclosure
price, plus interest and penalties
Precautions Should Be Taken Before Redeeming Mortgage Documents
The property mortgaged is only a security for the payment of the money lent. The mortgagor is
entitled to get back his property on payment of the principal and interest after the expiry of the
due date for the repayment of the mortgagee's money. This right of the mortgagor is called the
Right of Redemption. Section 60 of the Transfer of Property Act reserves this right. The right
cannot be fettered by any condition which prevents redemption. The right cannot be controlled
by any contract to the contrary.
Where a mortgagor is entitled to redemption, on the fulfilment of requisite conditions which
enable a retransfer, he may require the mortgagee to either, re-transfer the property to him or
instead of re-transferring the property, to assign the mortgage debt and transfer the mortgaged
property to such a third person as the mortgagor may direct. In such a case, the mortgagee shall
be bound to assign and transfer accordingly.
The Right of Redemption is an essential ingredient of a mortgage process. The mortgagor's right
of redemption is not merely a contractual right. It is a legal right given to him by the statute itself
under Section 60 of the Transfer of Property Act, 1882.
As per the provisions, at any time after the principal money has become due, and upon payment
at a proper time and place of the mortgage-money, the mortgagor has the following rights:
 Right to require the mortgagee to deliver to the mortgagor the mortgage-deed and all
documents relating to the mortgaged property which are in the possession of the
mortgagee,
 Anywhere the mortgagee is in possession of the mortgaged property, to deliver
possession of it to the mortgagor, and
 The cost of the mortgagor either to re-transfer the mortgaged property to him or to such
third person as he may direct,
 Into execute and to have registered an acknowledgement in writing that any right in
derogation of his interest transferred to the mortgagee has been extinguished.
 The right conferred by this section is called a right to redeem. A suit to enforce this is
referred to as a suit for redemption. The mortgagor can exercise the right before it is
extinguished by the act of the parties or by the operation of law.
 The right can also be extinguished by a decree of the court. The mortgagor is not entitled
to redeem before the mortgage money is due i.e. before the time fixed for the payment of
mortgage money. The rights as conferred above may be enforced by the mortgagor or by
any encumbrancer.
 The rights are subject to the condition that the right conferred as above have not been
extinguished by the act of the parties or by decree of a court. The mortgage deed may
provide that the time fixed for payment of the principal money should be allowed to pass
or in case no such time has been fixed, the mortgagee shall be entitled to reasonable
notice before payment or tender of such money.
 It is to be noted that the above statutory provisions shall not apply to redemption of
portion of mortgaged property. The provisions shall not entitle a person interested in a
 share only of the mortgaged property to redeem his own share only, on payment of a
proportionate part of the amount remaining due on the mortgage

What are the common irregularities, fraud and forgeries found in lending operations in
banking relating to collateral of land, building, factories and machineries? Explain the
different steps and precautions to be taken to protect the banks from those irregularities,
fraud and forgeries. ****
Common Irregularities, Fraud And Forgeries Found In Lending Operations In Banking
Relating To Collateral Of Land, Building, Factories And Machineries
 Duplicate mortgage
 Fake property documents
 Discrepancy in property documents
 Redemption of registered mortgage
 Fake Machinery List
 Misinterpretation of Importable Machineries
 Over invoicing of Machineries
Different Steps and Precautions to Be Taken To Protect the Banks from Those
Irregularities, Fraud and Forgeries
 Proper Assessment
 Proper Monitoring and Supervision
 Rules and Regulation
 BB Initiatives
 Comply with International Standards

What do you mean by continuous loan? Define working capital. Mention the different
forms of-working capital loan for financing made by commercial banks. Distinguish
between trading loan and working capital. Distinguish between pledge and hypothecation.
Between hypothecation and pledge loan, which one would you prefer for your bank? Please
justify with arguments in favour of your view. "There is no difference between goods in
pledge godown and cash in vault/safe." Explain. Discuss the importance of working capital
to an industrial enterprise. Discuss the different steps during the sanction of a trading or
working capital loan proposal. Do you think that many industrial units turned to sick due
to inadequate working capital finance? Elaborate your answer in real perspective. Please
furnish a sample of working capital assessment for a textile industry of 100 (hundred)
loams. Do you think that for an industrial undertaking initial working capital should be
sanctioned beforehand for disbursement went for in time on completion and trial operation
of the unit, so that no delay occurs for commercial operation? Elaborate your answer.
******
Continuous Loan
The loan Accounts in which transactions may be made within certain limit and have an expiry
date for full adjustment will be treated as Continuous Loans. Examples are: CC, OD etc.
Working Capital
A working capital loan is a loan that is taken to finance a company's everyday operations. These
loans are not used to buy long-term assets or investments and are, instead, used to provide the
working capital that covers a company's short-term operational needs.
Those needs can include costs such as payroll, rent, and debt payments. In this way, working
capital loans are simply corporate debt borrowings that are used by a company to finance its
daily operations.
 A working capital loan is a loan taken to finance a company's everyday operations.
 Working capital loans are not used to buy long-term assets or investments; they are used
to provide working capital to covers a company's short-term operational needs.
 Companies with high seasonality or cyclical sales may rely on working capital loans to
help with periods of reduced business activity.
 Working capital loans are often tied to a business owner's personal credit, so missed
payments or defaults may hurt their credit score.
Types of Working Capital Loan
Cash Credit/Bank Overdraft
These are the most usable forms of working capital financing that are mainly used by both small
and large businesses. These cash facilities are provided by the commercial banks by which the
borrower is approved a specific amount of cash that he can use for making business payments.
Additionally, in this setting, the borrower has to make certain that he does not cross the approved
limit. The good thing is that the rate of interest is charged to the level the cash is used and not at
the approved amount which encourages him to keep depositing the amount when possible to save
on interest rate. Truly, this is valuable working capital financing.
Trade Credit
This is a type of working capital financing that is extended by the present or potential supplier of
a business. Trade credit is offered to businesses based on their creditworthiness, which is
revealed by its profit records, liquidity situation and payment records. As other funding
programs, trade credit also comes with some specific requirements and costs. The supplier will
also thoroughly evaluate your business credit history before offering you money.
Purchase/Discount of Bills
For a small business, it is another good type of working capital financing provided by the
commercial banks. Every business generates bills in their normal routine while selling products
or services to debtors. In the end, that bill works as a document to get payment from the debtor.
And if the seller needs cash, he will go directly to the bank with that bill and the bank will apply
discount on the whole amount of the bill primarily based on the existing interest and pay the
outstanding amount to the seller. The bank will collect the money on the maturity date of that
bill.
Working Capital Loans
Working capital loans are used by small businesses to finance their day by day operations or
raise their cash flow. Working capital loans are as good as term loans for a short duration.
During financial difficulties, a small business can get help from this loan to pay for salaries,
mortgages, rent and other expenses. You can also get this loan for financing your business
permanent working capital requirements.

Bank Guarantee
This is a non-fund based working capital financing. Bank guarantee is acquired by the client or
seller to decrease the risk of loss to the other party due to non- performance of agreed
undertaking which may be paying back the money or offering some services and so on. A bank
guarantee is repealed by the holder only in case of non-performance by other party. Bank will
charge some commission and may also ask for some security.
Invoice Factoring
Invoice factoring is an arrangement in which a business sells all or some of the accounts
payables to a third party at a value lower than the original value of those accounts. The third
party in this setting is called the factor that offers factoring services to business. The factor
provides financing by purchasing the bills and additionally collects the amount from the debtors.
Letter of Credit
This form is also known as non-fund based working capital financing. There is a little difference
between letter of credit and bank guarantee. So, a buyer would purchase a letter of credit and
send it to the seller. As soon as the seller sends the products according to the agreement, the bank
would pay the amount to the seller and collects that cash from the buyer.
Account Receivables
You can always use your confirmed sales orders or account receivables to apply for a working
capital loan. It is ideal, especially if your company lacks funds to fulfil a sales order. However,
such loans are only secured if your company has a reputable history and proven track record of
paying debts on time.
Equity funding from Investors or Personal Resources
This is the most resourceful capital loan. It is commonly procured from investments by family,
friends, or home equity loans. They are the most practical loans for start-ups or have companies
that do not have an established credit history.
Working Capital vs Term Loan – Differences
Parameter Working Capital Loan
Repayment Tenure Working Capital Loans Feature A
Shorter Repayment Tenure Or Maturity
Period. It Does Not Exceed 12 Months.
Loan Amount When It Comes To A Working Capital
Loan, The Amount Sanctioned By
Lending Institutions Is Usually
Smaller.
Rate Of Interest Since Working Capital Loans Are A
Type Of Unsecured Loans, They
Feature Higher Interest Rates.
Loan Type Working Capital Loans Are Short Term
Loans.
Purpose Working Capital Loans Are Acquired
For Covering Working Capital
Requirements Of Any Business Entity.
Eligibility Criteria Working Capital Loans Feature A Less
Rigid Eligibility Criteria.
Paperwork Opting For Working Capital Loans
Does Not Involve Tons Of Paperwork
Or Lengthy Procedures.
Collateral Working Capital Loans Do Not
Require Collateral.
Types Some Popular Types Of Working
Capital Loans Include Account
Receivables Loans, Business Credit
Line, Factoring, Advances, Etc.
Credit Score Working Capital Loans Do Not
Enhance The Borrower’s Credit Score.
Distinguish between pledge and hypothecation
Parameter Pledge
Term Loan
Business Term Loans Can Be
Repaid Across The Tenure Of
1 Year To 5 Years.
Business Term Loans Offer
Comparatively Higher Loan
Amounts.
As Compared To Other Types
Of Loans, Term Loans Feature
Lower Rates Of Interest.
Business Term Loans Are
Long Term Loans.
Individuals Avail Of Term
Loans For Financing
Expansion, Purchasing New
Assets, Or Covering Other
Business-Related Expenses.
Individuals Who Wish To
Acquire Term Loans Need To
Satisfy Stringent Eligibility
Criteria To Access Funds.
Term Loan Approvals Involve
Tons Of Paperwork And
Procedure Compliance.
Term Loans Require
Individuals To Pledge Security
As Collateral.
Different Types Of Term
Loans Include Short Term
Loans, Long Term Loans, And
Intermediate Term Loans.
Term Loans Improve The
Borrower’s Credit Score.
Hypothecation
 Meaning Bailment of goods as security Hypothecation is the pledging of
against the debt for the performance goods, against the debt without
of the obligation or the payment delivering them to the lender.
thereon, is known as the pledge.
Defined in Section172 of Indian Contract Act, Section 2 of Securitisation and
1872 Reconstruction of Financial Assets
and Enforcement of Security Interest
Act, 2002
Legal Deed of Pledge Hypothecation Agreement
Document
Possession of Remains with the creditor Remains with the debtor
property
Parties Pledgor and Pledgee Hypothecator and Hypothecatee
Rights of To sale out the goods in his To take to possession of the asset first,
lender possession to adjust the debt. then it out to recover the debt.
Remedy for Lender can sell the asset to recover Since lender does not have physical
default by debt amount. possession, he can file a suit to take
borrower possession and dispose it off to
recover debt amount.
Type of Movable (Gold, Jewellery, Stock, Movable (Vehicles, Stock and
Security NSC etc. debtors.)

Between hypothecation and pledge loan, which one would you prefer for your bank?

"There is no difference between goods in pledge godown and cash in vault/safe." Explain.

Discuss the importance of working capital to an industrial enterprise.

 Assists in the smooth operation of a business
 Maintains the goodwill of the company
 Aids in bartering
 Liquidity Management
 Out of Cash
 Helps in Decision Making
 Addition in the Value of Business
 Helps in the Situation of Cash Crunches
 Perfect Investments Plans
 Helps in Earning Short Term Profits
  Strengthening the Work Culture of the Entity
 Improves Creditworthiness of Entity
 Act as Guarantor to Other Enterprises
 Good Reputation of Entity
 Higher Return on Capital Employed
 Improvement in Solvency and Credit Profile
 Efficient Utilization of Fixed Assets
 Expansion of Business
 Increased Profitability
 Uninterrupted Trading and Production
 Appreciation in Business Value
 Edge Over Competitors
 Better Financing Terms
 Ready for Boons and Banes
Do you think that many industrial units turned to sick due to inadequate working capital
finance? Elaborate your answer in real perspective.
 Stagnation of growth
 Difficulty in Meeting Targets
 Operating Inefficiency
 Deterioration of Profitability
 Missing Attractive Opportunities
 Loss of Reputation
 Lower Rate of Return
 Improper Usage of Fixed Assets
 Business Opportunities Are Not Utilized
 Affects The Liquidity Position
 Low Level Of Production
 Credit Worthiness Of The Company Is Decreased
Do you think that for an industrial undertaking initial working capital should be
sanctioned beforehand for disbursement went for in time on completion and trial operation
of the unit, so that no delay occurs for commercial operation? Elaborate your answer.
 Yes.
Reason
 To start the production earlier
 To use the resources efficiently
 To better management
 To reduce duration gap
 To make better use of the Assets
  To manage liquidity properly

Distinguish between interest remissions and write off. Between these two which one is
beneficial for a bank. Discuss with example. ******** Discuss loan write-off rules set by
Bangladesh Bank. List down the preconditions to be fulfilled by a borrower for availing
write off facility. Does it have any effects on bank balance sheet? Explain. What will follow
after the loan write off? ****
Loan Write-Off vs Loan Waive-Off
Parameters Write-Off Waive-Off
Impact on Write-off has no direct impact on the Loan waiver provides relief to the
borrower borrower, as the debt still exists but is borrower, as they no longer have to
not considered collectable by the repay the portion of the loan that
lender or creditor. was waived off.
Impact on Write-off results in a loss for the A loan waiver results in a loss for
lender lender, as the debt that was declared the lender, as they have to forgive
uncollectible is removed from their the portion of the loan that was
books and no longer considered an waived off.
asset.
Eligibility Not applicable Eligibility for a loan waiver is
predefined and is allowed depending
on various factors, such as the
borrower's financial status, loan
history, and the reason for the
request.
Legal The borrower may have to face several No legal trouble arises
Consequences legal consequences.

Between these two which one is beneficial for a bank? Discuss with example
Between these two interest’s remission is beneficial for bank.
Reasons
 Continuous flow of earning
 Reduce default risk
 Improve Financial Performance of the borrower
 Something is better than nothing

Discuss loan write-off rules set by Bangladesh Bank

 Banks may, at any time, write off loans classified as bad/loss. Those loans which have
been classified as bad/loss for the last five years and for which 100% provisions have
 been kept should be written off without delay. The process of writing off all other
loans classified as bad/loss should be started immediately. Under the process the oldest
bad/loss classified loans should be considered first for written off.
 Banks may write off loans by debit to their current year's income account where 100%
provision kept is not found adequate for writing off such loans.
 All out efforts should be continued for realizing written off loans. Cases must be filed in
the court of law before writing off any loan for which no legal action has been initiated
earlier.
 A separate "Debt Collection Unit" should be set up in the bank for recovery of written
off loans.
 In order to accelerate the settlement of law suits filed against the written off loans or to
realize the receivable written off loans any agency outside the bank can be engaged.
 A separate ledger must be maintained for written off loans and in the Annual
Report/Balance Sheet of banks there must be a separate "notes to the accounts"
containing amount of cumulative and current year's loan written off.
 Inspite of writing off the loans the concerned borrower shall be identified as defaulter as
usual. Like other loans and advances, the writing off loans and advances shall be reported
to the Credit Information Bureau (CIB) of Bangladesh Bank.
 Prior approval of Bangladesh Bank shall have to obtained in case of writing off loans
sanctioned to the director or ex-director of the bank or loans sanctioned during the tenure
of his directorship in the bank to the enterprise in which the concerned director has
interest (as per explanation contained in section 27(2) of the Bank Company Act, 1991).
Preconditions for Loan Write Off
Banks may, at any time, write off loans classified as bad/loss. Those loans which have been
classified as bad/loss for the last five years and for which 100% provisions have been kept
should be written off without delay. After issuance of this circular the process of writing off all
other loans classified as bad/loss should be started immediately. Under the process the oldest
bad/loss classified loans should be considered first for written off.
Does it have any effects on bank balance sheet?
Yes. Loan Write Off will reduce the Assets of the Balance Sheet. Because the lending or
investment will be reduced.
What will follow after the loan write off?
What do you mean by ALM and ALCO? Discuss the importance of asset liability
management. Please show the formation of ALCO of your bank and write the role and
responsibilities of ALCO. Do you think that in absence of good/effective ALM of a bank
may lead it to difficult crises jeopardizing image and foundation of the bank? Please
elaborate your answer. Please prepare a typical balance sheet of a bank. ******
Asset Liability Management
Asset/liability management is the process of managing the use of assets and cash flows to reduce
the firm’s risk of loss from not paying a liability on time. Well-managed assets and liabilities
increase business profits. The asset liability management process is typically applied to bank
loan portfolios and pension plans. It also involves the economic value of equity.
 Asset and liability management (ALM) is a practice used by financial institutions to
mitigate financial risks resulting from a mismatch of assets and liabilities.
 By strategically matching of assets and liabilities, financial institutions can achieve
greater efficiency and profitability while also reducing risk.
 Some of the most common risks addressed by ALM are interest rate risk and liquidity
risk.
Asset-Liability Committee
An asset-liability committee (ALCO), also known as surplus management, is a supervisory group
that coordinates the management of assets and liabilities with a goal of earning adequate returns.
By managing a company's assets and liabilities, executives are able to influence net earnings,
which may translate into increased stock prices.
 Asset-liability committees (ALCOs) are responsible for overseeing the management of a
company or bank's assets and liabilities.
 An ALCO at the board or management level provides important management information
systems (MIS) and oversight for effectively evaluating on- and off-balance-sheet risk for
an institution.
 An ALCO's strategies, policies, and procedures should relate to the board’s goals,
objectives, and risk tolerances for operating standards.
 One of the ALCO’s goals is ensuring adequate liquidity while managing the bank’s
spread between the interest income and interest expense.
Importance of Asset Liability Management.
Asset and liability management allows financial institutions to recognize and mitigate risks on
their balance sheet. They are also able to reduce the overall risk that can come from a mismatch
in their assets and liabilities. By doing this, they can become more efficient, increase
profitability, and reduce risk.
  It helps in risk measurement and management for companies.
 Effective asset-liability management ensures liquidity risk management.
 Effective ALM protects and enhances the profit and net worth of a company.
 It increases the net interest income of the banking institution.
 ALM is used to quantify the various kinds of risks in the company.
 It helps in finalizing the short-term and long-term planning for a company.
 It helps in strategizing the introduction of new products in the market.
In addition, ALM deals with aspects related to credit risk as this function is also to manage the
impact of the entire credit portfolio (including cash, investments, and loans) on the balance sheet.
The credit risk, specifically in the loan portfolio, is handled by a separate risk management
function and represents one of the main data contributors to the ALM team.
Formation of ALCO

Roles and Responsibilities of ALCO

According to the Risk Management Guidelines issued in February 2012 by Bangladesh Bank, the
major responsibilities of ALCO are as follows:
 Ensure that bank’s measurement and reporting systems accurately convey the degrees of
liquidity and market risk.
 Monitor the structure and composition of bank’s assets and liabilities and identify balance
sheet management issues that are leading to underperformance
 Decide on the major aspects of balance sheet structure, such as maturity and currency
mix of assets and liabilities, mix of wholesale versus retail funding, deposit mix etc
  Decide on how to respond to significant, actual and expected increases and decreases in
required funding
 Review maturity profile and mix of assets and liabilities
 Articulate interest rate view of the bank and decide on balance sheet strategy
 Approve and periodically review the transfer pricing policy of the bank
 Evaluate market risk involved in launching of new products
 Review deposit-pricing strategy, and
 Review liquidity contingency plan for the bank
Balance sheet risk management is not limited to collection of data only. ALCO is required to
understand the implications of the numbers generated from analyses and formulate appropriate
responses and strategies for the bank.
Do you think that in absence of good/effective ALM of a bank may lead it to difficult crises
jeopardizing image and foundation of the bank? Please elaborate your answer. Please
prepare a typical balance sheet of a bank.
Yes.
Reasons
 Interest Rate Risk
 Liquidity Risk
 Material Risk
 Reputation Risk
 Higher Cost of Funding
Please prepare a typical balance sheet of a bank.
Assets Liabilities
Cash Liabilities
 Cash in hand (Including foreign
currency) Borrowings from other banks, financial
 Balance with Bangladesh Bank and its institutions & agents
agent bank(s) (Including foreign
currency) Borrowings from central bank &
government agencies
Balance with other banks and financial
institutions Money at call on short notice
 Inside Bangladesh
 Outside Bangladesh Deposits and other accounts
 Current accounts & other accounts
Money at call on short notice  Bills payable
 Savings deposits
Investments  Term deposits
 Government  Other deposits
  Others
Other liabilities
Loans and advances
 Loans, cash credit, overdrafts etc. Total Liabilities
 Small and medium enterprises
 Bills purchased & discounted Total shareholders' equity
 Capital and shareholders' equity
Fixed assets including premises, furniture  Paid up capital
and fixtures  Share premium
 Statutory reserve
Other assets  Dividend equalization fund
 Revaluation reserve on govt. securities
Non-banking assets  Fair value gain/(loss) on equity
investment Foreign currency
Total property and assets translation reserve
 Surplus in profit and loss
account/Retained earnings

Total liabilities and shareholders' equity

Off balance sheet items

Contingent liabilities
 Acceptances and endorsements
 Irrevocable letters of credit
 Letter of guarantees
 Bills for collection
Other Commitments
 Swap deals with banks and customers
 Spot and forward deals with banks and customers

What is loan pricing? Discuss the elements those are required to be taken into
consideration in pricing of loan. Does your bank consider those while launching a new loan
scheme? "Proper pricing is most essential before launching a new product"— Discuss the
statement with your views. Discuss about different methods of loan pricing. Which method
would you suggest for your bank? In a competitive market which of the variable and fixed
pricing you would advise as a banker. Please explain. Do you think that ceiling fixed by
Bangladesh Bank in Interest Rate is comfortable? Explain. *****
Loan Pricing
Loan pricing is the process of determining the interest rate for granting a loan, typically as an
interest spread (margin) over the base rate, conducted by the book runners. The pricing of
syndicated loans requires arrangers to evaluate the credit risk inherent in the loans and to gauge
lender appetite for that risk.
Elements those are required to be taken into consideration in pricing of loan
Internal Factor
 Probability of Alternative Profit
 Amount of loanable fund
 Cost of bank fund
 Administrative and transaction cost
 Overhead expenses
 Expenses for credit investigation and credit analysis
 Security maintenance of expenses
 Supervision and collection expenses
 Amount of risk of loan and cost of risk
 Amount of bad debt
 Bank customer relation
 Earning possibility from the alternative use of fund
 Shareholders expectation of dividend
External Factors
 Demand for Loan
 Guidance of the government and bank regulatory agencies
 Number of competitors and their capacity to control the loan market
 Nature of loan price by competitors
 Risk of increase and decrease of interest rate
 Possibility of raising funds through other alternatives
Does your bank consider those while launching a new loan scheme?
Yes.
Discuss about different methods of loan pricing.
Pricing of Loan under Interest Based System
 Variable Rate
o Caps and Floor Base Interest System
o Interest Based on Quantity
o Multiple Based Interest Rate
o Interest Rate based on Time
 Fixed rate
o Interest Rate for General Borrower
o Interest Rate for Special Borrower
Pricing of Loan under Non-Interest Based System
  Compensating Balance
 Fees, Charges

Define Green Banking according to Bangladesh Bank's guidelines. Discuss the importance
and need of green banking in the context of present and future global warming situation of
Bangladesh. Briefly give a resume of green banking activity of your bank/institution.
Discuss a banker's responsibility in ensuring environmental friendly financing.
Green Banking: Green banking is a genre of banking practices which considers all the social
and environmental/ecological factors with an aim to protect the environment and conserve
natural resources. It is also called as ethical banking or sustainable banking.
Importance of Green Banking
 Ethical (Green) banking, in general, eliminates as much paper as possible and instead
relies on online/electronic transactions to complete transactions, resulting in green bank
cards and green mortgages.
 Less paperwork implies fewer trees will be taken down.
 Increasing business people’s knowledge of environmentalism so that they can engage in
environmentally beneficial business practices.
 Environmental norms for lending are adopted and implemented by green (ethical) banks,
which benefit future generations.
 When you are given a mortgage, the interest rate is lower than it would be with a
traditional bank since ethical banks place a higher value on environmentally favorable
variables such as ecological gains.
 Green banks place a higher value on environmentally friendly variables such as
ecological gains, resulting in lower lending interest rates.
 All new clients who open “green accounts” will receive cashback.

Define credit planning. Discuss the importance of credit planning in the lending operation
of a bank. Discuss the components, those are to be incorporated in credit planning. Discuss
the factors to be taken into consideration by a bank while making its credit plan. Give a
brief of credit plan of your bank for the year, 2022. *****
Credit Planning
A credit planning is to set out procedures for defining and measuring the credit-risk exposure
within the Group and to assess the risk of losses associated with credit extended to customers,
financial investments and counter party risks with respect to derivative instruments.
The main aspects of a credit planning are-
1) the terms and conditions on credit 2) customer qualification criteria 3) procedure for making
collections 4) steps to be taken in case of customer delinquency.
Important Factors / Components are to be taken in consideration by a bank during credit
planning or lending operational policy of a bank.
Importance of Credit Planning
 A complete understanding of a bank’s own capital reserve.
 Understanding a bank’s overall credit risk based on individual, customer and portfolio
levels.
 Implementing an integrated and quantitative credit risk solution to make an appropriate
credit risk environment.
 The business model in place should be such that is ever-evolving, able to achieve real-
time scoring to limit monitoring, have data visualization capabilities and business
intelligence tools to make it available any time.
 Establishing a sound credit-granting process or criteria that will clearly indicate the
bank’s target market. This should include appropriate credit administration, measurement
and monitoring process.
 It helps in predicting and/ or measuring the risk factor of any transaction.
 It helps in planning ahead with strategies to tackle a negative outcome.
 It helps in setting up credit models which can act as a valuable tool to determine the level
of risk while lending.
Components of Credit Planning
Terms of Sale
The conditions under which a firm sells its goods & services-
1. The period for which credit is granted: The factors that influence the credit period are
 Predictability
 Consumer Demand
 Cost, profitability and standardization
 Credit risk
 Size of the account
 Completion
2. The type of credit instrument
3. Credit Function
 Running a credit department
 Chose to contract all or part of credit to a factor
 Manage internal credit operations are insured against default
Credit analysis
Refers to the process of deciding, it usually involves two steps:
1. Relevant information
 financial statements
 credit agency
 banks credit
 market good will
2. Credit Worthiness
 Character
 Capacity
 Capital
 Collateral
 Condition
3. Credit scoring: The process of quantifying the probability of default when granting consumer
credit
Collection Policy
Collection policy is the final factor in credit policy. Collection policy involves
monitory receivables to spot trouble and obtaining payment on past due accounts

An effective Credit planning should include the following considerations

 Objectives of the credit function
 Opening procedures and obtaining information for new accounts
 Assessing & evaluating the proposals
 Terms and conditions
 Authority levels and responsibilities
 Invoicing procedures
 Monitoring borrowing and paying behavior of customer
 Procedure relating to complaints and disputes
 Targets, benchmarks, and deadlines for the credit function
 Defining & collecting of dues, overdue and bad debts

What do you mean by relationship manager? Discuss his/her duties and responsibilities in
bank. Discuss, as a credit officer or Relationship Manager of a Bank branch how will you
check plan to supervise and follow-up of loans and advances for early and timely recovery
of the outstanding advance.
Relationship Manager
A bank relationship manager helps a bank's clients and customers with their investments and
financial planning. They often provide financial advice and assistance to clients in order to help
them achieve their financial goals. It's important for relationship managers in this role to have a
powerful understanding of the banking and investment industry to ensure they're following bank
policies while keeping track of major risks that clients or customers want to avoid.
Responsibilities of a Relationship Manager
 Managing clients' investment portfolios to ensure financial success
 Discussing major financial goals of clients to better understand their objectives
 Updating clients and customers on their portfolio activity and success
 Maintaining strong relationships with clients to build trust
 Proactively seeking new clients for the bank
 Developing presentations for new clients to help them understand how the bank can help
them
 Conducting risk assessments on investment options and reporting them to the client
 Ensuring they follow strict banking policies and protocols
how will you check plan to supervise and follow-up of loans and advances for early and
timely recovery of the outstanding advance
 To ensure that operations of accounts are regular, Bad indications warrant greater
supervision.
 To keep watch over the inflow and outflow of Fund.
 Maintenance of production and sales record.
 To verify proper end-use of funds for the purpose for which loan was given.
 Progress made in construction and operations.
 Inventory position and Turnover rate observation
 Ensure that security/collateral have been obtained as per terms of sanction.
 Ensure that the valuation of security has been assessed correctly.
 Position regarding insurance of goods.
 Ensure that the documents have been obtained as per terms of sanctions.
 Regular inspection of the security and verification of document.
 Reasons for default or delayed payment of loan installments.
 Appropriate actions are taken in time to regularize the irregularities and recover as per
schedule.
 Keep regular contract with the borrower.
 To keep a watch on safety of funds.
 Ascertain financial positions of the borrowing concern from time to time through the
study of audited Balance sheet/Financial statement.
 Obtain Periodical balance confirmation.
 Obtain stock statement as per terms of sanction against hypothecation and pledge of
goods.
  Maintenance of limit registers.
 Non-compliance of any terms and conditions of the loan.
 Other account of the borrower.
 Miscellaneous.

Define the SME credit in light of Bangladesh Bank's guidelines and mention the booster
sectors. Are you in agreement that SME is playing vital role in the economic development
of the country? Explain your answer. Do you think that all banks should give top priority
in financing this sector for creating employment, reduction of poverty and overall
development of the country? Justify your answer. *******
SME Financing
SME finance is the funding of small and medium-sized enterprises, and represents a major
function of the general business finance market – in which capital for different types of firms are
supplied, acquired, and costed or priced. Capital is supplied through the business finance market
in the form of bank loans and overdrafts; leasing and hire-purchase arrangements;
equity/corporate bond issues; venture capital or private equity; asset-based finance such as
factoring and invoice discounting, and government funding in the form of grants or loans.
Significance of financing SME sector of on economy
 In each branch of Bank, a separate SME help desk and women entrepreneurs are
employed to provide special benefits.
 SME/Agriculture Branch has been established for expansion of SME business.
 Special loans for women entrepreneurs in small and medium industries have been
introduced. A women account system has been started where women are getting the loan
facility on easy terms.
 Bank is committed to promote sustainable and competitive facilities through innovative
development, technological advancement and expansion, enhancing the efficiency of
entrepreneurs and marketing the products across the country under the Cluster
Development Policy. Under this programme, loans for electric and electronic, cooling,
weaving industries, jamdani sarees, bamboo and bin, ready-made garments, potteries etc.
were given to the cluster.
 Banks are giving loans through the complete uprising system as the first financial
institution in Bangladesh to provide fast funding to Asian SME sector. In this process,
loans to more than 4,000 small entrepreneurs have been added which adds a new
dimension to banking services.
 Employment opportunities for two thousand and more than five hundred educated youth
have been created in the rural areas through Agent banking activities. Apart from this, it
has been possible to provide banking services to the marginalized people through Agent
Banking Channel, which has been instrumental in achieving the growth of the rural
economy.
  With the aim of expanding the small and medium industries, the Bank has taken
measures to showcase the products of the customers in the fair of Asia, which is an
important role in the product marketing of customers.
 To promote the business management of cottage, micro and small entrepreneurs, the bank
is generating income from the Asia-based entrepreneurship development wing.
 The role of small and medium industries in the overall economic development of
developing countries like Bangladesh is undeniable. Because of the shortage of labour
and production time is short, it is able to contribute rapidly to increase national income
and create jobs. The elimination of extreme poverty and the role of women in this field
can play a pivotal role in equality and empowerment of women. SME sector is playing an
important role in the economic development of many prosperous countries of Asia. Our
neighboring countries are also focusing heavily on SMEs. The SME is the employment
generating machine that can be a tool to achieve economic growth, reduce income
discrimination, and reduce poverty. In our country, SME funding is expanding in various
industrial factories and business commerce. Presently, the contribution of 25 per cent is
made by the SME sector to the GDP of the country. Since the employment of a large
number of people is being created for managing the organisation, it is certainly possible
to eliminate unemployment by giving loans in this sector.

Define a project. Explain the processes usually required of project appraisal. Explain
different aspects (technical, financial, environmental and commercial) of a project
appraisal to help the management to take proper decision. What do you mean by sensitivity
analysis of a project? Highlight the necessity of sensitivity analysis of sensitivity studies of a
project. Do you foresee any risk for the financer against disbursement of long term project
loan? Please comment and explain. Do you think that national economy will not flourish if
all banks do not equally participate in financing the long-term investment projects?
Elaborate your answer. Explain the risk factors that make an industry sick. How you will
proceed to consider rehabilitation needed of a sick project? Mention the different types of
credit facility that a banker/financier extends to clients.
Project Appraisal
Project appraisal is the structured process of assessing the viability of a project or proposal. It
involves calculating the feasibility of the project before committing resources to it. It is a tool
that company’s use for choosing the best project that would help them to attain their goal. Project
appraisal often involves making comparison between various options and this done by making
use of any decision technique or economic appraisal technique.
Project appraisal is a tool which is also used by companies to review the projects completed by
it. This is done to know the effect of each project on the company. This means that the project
appraisal is done to know, how much the company has invested on the project and in return how
much it is gaining from it.
Steps of Project Appraisal
  Project identification
 Project screening
 Project scoping
 Market and demand analysis
 Technical analysis
 Financial analysis
 Economic analysis
 Risk analysis
 Environmental and social impact analysis
 Project appraisal report

Technical Appraisal
Selection of Process/Technology
For manufacturing a product more than one process/technology may be available. Cement can be
manufactured either by wet process or dry process
The choice of technology depends upon the quality and quantity of the product. If the quantity is
very large mass level production can be done. If the quality of the product is very high
sophisticated technology is required.
Technology can be purchased outright if the cost is affordable or can be obtained either through
licensing arrangement
Appropriate technology
Appropriate technology refers to that technology that is suitable for the local economic social
and cultural conditions. Appropriate technology means what kind of use of raw material, what
kind of manpower and how the technology protects ecological balance etc
Scale of operations
It signifies the size of the plant. The plant size depends on the market for the output of the
project. Economic size of the plant for given project can be analyzed by operating and capital
cost. Other factors like special problems of fabrication of equipment, transportation and erections
of equipment, problems with the availability of production of inputs.
Raw material
A product can be manufactured using alternative raw materials and with alternative process.
Since the machinery/equipment to be used depend upon raw materials. For example precipitated
calcium carbonate can be produced either by using lime stone or shell lime. Shell lime will be
available near sea shore but lime store will be available in areas with lime stone deposit.
Technical know how
When technical knowhow for the project is provided by expert’s consultants it must be
ascertained whether the consultant has requisite knowledge and experience and whether he has
already executed similar projects. Necessary agreement should be executed between the project
promoter and know how supplier
Collaboration Agreements
 If the project promoters have entered into agreements with foreign collaborators, terms
and conditions of the agreement
 Competency and reputation of the collaborator
 Imported technology
 Necessary approval of the government
 Availability of the design for fabrication
 Clause dealing with dispute
 Does not infringe any copy right issue
 Better to have buy back arrangement with the collaborator
Product mix
In order to enable the project to produce goods of varying size nature and quality as per the
requirements of the customers, the product facilities should be planned with an element of
flexibility. A cost benefit analysis. For example a plastic container manufacturing industry can
be planned to have more number of dies of different sizes. There should be flexibility
Selection and Procurement of Machinery
 The machinery and equipment required for the project depends upon the proposed
technology proposed to be adopted and the size of the plant proposed. Capacity of each
machinery is to be decided by making rough estimate. Apart from the main process of
machinery, equipment required for the supply of utilities, quality control, effluent
disposal, material handling.
 Procurement of the machinery from the reliable supplier
 Adequate number of tools and spares parts
 Stand by arrangements
 In case of second hand machinery, working conditions, estimated future life
Plant Layout
The efficiency of manufacturing operation depends upon the layout of the plant and machinery.
Plant layout is the arrangement of the various production facilities with in the production area.
Plant layout should be so arranged that it ensures steady flow of production and minimize the
overall cost.
 Future expansion can be done without much alteration
 Facilitate effective supervision
 Equipment causing pollution should be arranged to be located away from other plants
  Adequate clearance between adjacent machinery and between the walls
 Technical appraisal
 Proper lighting
 Smooth flow of men and materials from one stage to another
 Maximum safety
Location of the Projects
Location with the country or outside the country
Regional Factors
 raw material
 proximity to market
 availability of labour
 availability of supporting industries
 availability of infrastructure facilities
o Power: power intensive industries should be located where regular power is
available
o Water: water requirements for the project should be correctly arrived and
checked. The level of ground water
o Transport facilities
o Project scheduling:-scheduling is nothing but the arrangement of activities of the
project in the order of time in which they are to be performed
 land acquisition
 site development
 preparing building plans, estimate designs, getting necessary approvals and assigning
work to contractors
 construction of building, machinery foundation and other related civil works
 placing order of the machinery
 receipt of the machinery at site
 erection of machinery
 commissioning of plant

Techniques Are Generally Followed for Project Appraisal

 Economic Analysis
How far the project contributes to the development of the sector, industrial development, social
development, maximizing the growth of employment, etc. are kept in view while evaluating the
economic feasibility of the project.
 Financial Analysis
o Total Cost
 o O & M Expenditure
o Opportunity costs
o Other costs
o Returns on Investment over project life
o NPV
o CBR
o IRR
o Sensitivity Analysis

 Market Analysis
Before the production actually starts, the entrepreneur needs to anticipate the possible market for
the product. He/she has to anticipate who will be the possible customers for his product and
where and when his product will be sold.
 Technical Feasibility
o Physical scale
o Technology used & Type of Equipments & Suitability conditions
o How realistic is the implementation schedule
o Labour intensive method or others
o Cost estimates of Engineering Data
o Escalation are taken care of or not
o Procurement arrangement
o Cost of operation & Maintenance
o Necessary raw material & Inputs
o Potential impact of project on human & physical Environment
 Management Competency
Management ability or competence plays an important role in making an enterprise a success or
otherwise. Strictly speaking, in the absence of managerial competence, the projects which are
otherwise feasible may fail.
On the contrary, even a poor project may become a successful one with good managerial ability.
Hence, while doing project appraisal, the managerial competence or talent of the promoter
should be taken into consideration.
Sensitivity Analysis
Sensitivity analysis determines how different values of an independent variable affect a
particular dependent variable under a given set of assumptions. In other words, sensitivity
analyses study how various sources of uncertainty in a mathematical model contribute to the
model's overall uncertainty. This technique is used within specific boundaries that depend on one
or more input variables.
Sensitivity analysis is used in the business world and in the field of economics. It is commonly
used by financial analysts and economists and is also known as a what-if analysis.

Sensitivity Analysis
Sensitivity analysis in project management (also known as a risk and sensitivity analysis in
project management) is a method for modeling risk in any given assignment. Project sensitivity
looks at the big picture to see what, out of all the elements involved, could potentially prevent
you from achieving your goal or goals.
It also ranks these threats by order of importance from most to least impactful. Then, it’s up to
you and your team to prevent these issues from either coming up or derailing progress.
Importance of Sensitivity Analysis
 Make better decisions
 Make reliable predictions
 Know where you need an improvement
 Make your statement credible
 Accurate
 Simple to understand
 Provides ways to identify key variables that have the greatest impact on the outcome
value and its uncertainty
 Safety from Future losses and damages

Risk of Long Term Project Loan

 Pre-Construction Risk
 Feed Stock Risk
 Construction Risk
 Operations Risk
 Financing Risk
 Volume Risk
 Complexity in terms of parties and transaction costs
 Lengthy Documentation
 Technical Risks
 External Risk
 Organizational Risk
 Project Management Risks
 Low Performance
 Lack of Clarity
 Scope Creep
  High Cost
 Time Crunch
 Social and Environmental Risk
 Regulatory Risk
 Political Risk
 Tax Risk
 Liquidity Risk and Second Hand Trading
 Management Risk and Investment Risk
 Strong Competition
Do you think that national economy will not flourish if all banks do not equally participate
in financing the long-term investment projects?
 Yes, I think so.
Risk factors that make an industry sick
External Factors:
 General Recessionary Trend
 High Prices of Inputs
 Non-Availability of Raw Materials
 Changes in Government Policies
 Infrastructure Bottlenecks
 Market Constraints
 Price control
 Recession
 Natural Calamities
 Industrial Strike
 War between Countries
 Excessive Competition in the Market
Internal Factors:
 Project Appraisal Deficiencies
 Industrial Unrest and Lack of Employee Motivation
 Wrong Choice of Technology
 Marketing Problems
 Wrong Location
 Lack of Finance
 Improper Capital Structure
 Management Deficiencies
 Voluntary Sickness
 Lack of Economic Viability
  Lack of Labour Management
 Lack of Administrative Management

Reasons for Project Failure

 Budget Overrun
 Schedule Delays
 Products/Services does not meet expectation
 Flaky Company Culture
 Inexperienced Project Manager
 Unclear Objectives
 Lack of Funding
 Insufficient Supply of Resources
 Unrealistic Expectations
 Poor Communication
 Lack of Team Cohesion
 Leadership Problem
 Transparency Issues
 Ignoring Warning Signs
 Not Learning from Mistakes
 Not having a backup plan
 Lack of Visibility
 No Market Research
 Lack of Risk Management
 Lack of Updates
 Scope Creep
 Inadequate Documentation and Tracking

How you will proceed to consider rehabilitation needed of a sick project

All sick industry is not rehabilitated because all sick industry has not all possibilities to
rehabilitate. It’s mainly depends on the nature of the sickness. The sick industry that is probable
to rehabilitate by providing and assisting some predefined criterion. The predefined criterion are
based particularly on
a) Management Perspective
b) Technological Perspective
c) Financial Perspective
a) Management Perspective:
Management of the project should measure the aggregate demand of the product or the project
and maintain the market share. Consumption trend and production are to measure for
rehabilitating a sick industry. If the band thought that a little change in the managing committee
would reestablish the project, then they make a change in the managing committee.
b) Technological Perspective:
Whether the raw material and technology is available or not, that must be measured in the form
of price and quality. If they thought that some technological change would reestablish the project
they make some technological change.
c) Financial Perspective:
In the financial measurement the project should compute the cost of capital and maintain capital
budgeting. The present value of net cash inflow should be higher than the present value of cash
outflow. In such a case, the bank provides some financial treatment that the amount of interest is
to be waived or rephrased or providing consulting service, i.e.
 Success about the proper way
 Inspiration by providing motivation.
After considering an industry as sick, then the industry is taken into rehabilitation by aiding
above additional support of those the sick industry that can recovers the additional investment
the it seems to be as rehabilitated industry otherwise not. In some extraordinary case they were
bound to take some terrible decision because of some political pressure.
The main activates of rehabilitation department are as follows-
 The department primarily selects a sick project. PID investigates the project and find out
cause of sickness and formed a committee to investigate the project. Then it is taken to be
considered for rehabilitation. After considering it as a rehabilitation consultant.
 Take necessary action to rehabilitate sick project after appropriate investigation.
 Take steps about rehabilitation document examination, recommendation preparation
implementation and activation of plane.
 Confirmation about project profitability
 Take necessary steps about production marketing of product and loan repayment.
 Duties give up to the third party or previous management after successful managing of
the project.
 Managing and directing recommendation preparation about take over project.
 Analyze and compare the production marketing and recovery of the rehabilitation project
and take appropriate action according.
 When there is scope to rehabilitate a project, document Tranter to law department to take
further.

Types of credit facility that a banker/financier extends to clients

Based on security bank credit can be classified into two types.
 Secured Advance: The advance which is secured by primary or collateral security is
called Secured Advances. In the event of a loan default, the lender can take possession of
the asset and use it to cover the loan. e.g. Business loan, housing loan, etc
 Unsecured Advances: Unsecured advances don’t have assets either primary or
collateral. These are also called clean advances. Unsecured loans rely solely on the
borrower’s credit history and his income to qualify for the loan. e.g.- Credit Card, Clean
personal loan, Education loan (small), etc.
All types of credit facilities may be classified into two groups based on fund outflow:
 Fund Based Credit
 Non-Fund Based Credit
Funded Credit
 Loan
o Short Term Loan
o Medium Term Loan
o Long Term Loan
 Cash Credit
o CC Hypo
o CC Pledge
o Continuous Loan
 Overdraft
 Credit Card
 Bridge Loan
 Composite Loan
 Retail Loan
 Bill Finance
o Bill Discounted
o Bill Purchased
 Export Finance
o Pre Shipment/ Packing Credit
o Post Shipment Finance
 Leasing Finance
Non Funded Credit
 Letter of Credit (LC)
o Sight LC
o Revocable LC
o Irrevocable LC
 o Confirmed LC
o Back to Back LC
 Bank Guarantee
o Financial Guarantee
o Performance Guarantee
o Deferred Payment Guarantee
 Buyer Credit
 Supplier Credit
 Derivative Products

Define Internal Credit Risk Rating System (ICRRS). Discuss the uses of ICRRS. Discuss
the quantitative indicators and qualitative indicators used in Internal Credit Risk Rating.
As per Bangladesh Bank Internal Credit Risk Rating (ICRR) system what are the features
of the different categories of Credit Risk Ratings? What are the sectors selected for ICRR?
What do you mean by CRG? State the purposes of applying CRG in credit disbursement as
compared to LRA. Discuss the components of CRG those should be taken into
consideration by a bank appraisal of a syndicate loan and what should be the minimum
expected rating for credit delivery. Explain in brief. Distinguish between Lending Risk
Analysis (LRA) and Credit Risk Grading (CRG). *****

Internal Credit Risk Rating System

Internal Credit Risk Rating System refers to the system to analyze a borrower's repayment ability
based on information about a customer's financial condition including its liquidity, cash flow,
profitability, debt profile, market indicators, industry and operational background, management
capabilities, and other indicators.
The summary indicator derived from the system will be called Internal Credit Risk Rating
(ICRR) - a key reference for credit risk assessment and decision making.
Use of Internal Credit Risk Rating System (ICRRS)
 To provide a granular, objective, transparent, consistent framework for the measurement
and assessment of borrowers’ credit risk.
 To facilitate the portfolio management activities.
 To assess the quality of individual borrower to help the banks to determine the quality of
the credit portfolio, line of business of the branch or the Bank as a whole.
 To be used for individual credit selection, credit pricing, and setting credit limit and terms
& conditions.
Discuss the quantitative indicators and qualitative indicators used in Internal Credit Risk
Rating.
Quantitative Indicators
Quantitative indicators in ICRR fall into six broad categories: leverage, liquidity, profitability,
coverage, operational efficiency, and earning quality.
 Leverage (10%)
o Debt to Tangible Net Worth (DTN)
o Debt to Total Assets (DTA)
 Liquidity (10%)
o Current Ratio (CR)
o Cash Ratio (Cash)
 Profitability (10%)
o Net Profit Margin (NPM)
o Return on Assets (ROA)
o Operating Profit to Operating Assets (OPOA)
 Coverage (15%)
o Interest Coverage (IC)
o Debt Service Coverage Ratio (DSCR)
o Operating Cash Flow to Financial Debt Ratio (OCDR)
o Cash Flow Coverage Ratio (CCR)
 Operational Efficiency (10%)
o Stock Turnover Days (STD)
o Trade Debtor Collection Days (TDCD)
o Asset Turnover (AT)
 Earning Quality (5%)
o Operating Cash Flow to Sales (OCFS)
o Cash Flow based Accrual Ratio (CFAR)
Qualitative indicators
 Performance Behavior (10%)
 Business and Industry Risk (7%)
 Management Risk (7%)
 Security Risk (11%)
 Relationship Risk (3%)
 Compliance Risk (2%)

Features of the different categories of Credit Risk Ratings

 Excellent
o Aggregate score of 75 or greater in ICRR.
 o Strong repayment capacity of the borrower evident by the high liquidity, low
leverage, strong earnings, and adequate cash flow.
o Borrower has well established strong market share.
o Very good management skill & expertise.
 Good
o Aggregate score of 65 or greater but less than 75.
o These borrowers are not as strong as "Excellent" borrowers, but still demonstrate
consistent earnings, adequate cash flow and have a good track record.
o Borrower is well established and has strong market share.
o Very good management skill & expertise.
 Marginal
o Aggregate score of 50 or greater but less than 65 and the quantitative score of at
least 40.
o This grade has potential weaknesses that deserve management’s close attention. If
left uncorrected, these weaknesses may result in a deterioration of the repayment
prospects of the borrower.
 Unacceptable
o Aggregate score of less than 50.
o Financial condition is weak and no capacity or inclination to repay.
o Severe management problems exist.
o Facilities should be downgraded to this grade if sustained deterioration in
financial condition is noted (consecutive losses, negative net worth, excessive
leverage).

Sectors selected for ICRR

 Industry
o Ready Made Garments (RMG)
o Textile (including spinning, knitting, weaving)
o Food and Allied Industries
o Pharmaceutical
o Chemical
o Fertilizer
o Cement
o Ceramic
o Ship Building
o Ship Breaking
o Jute Mills
o Steel Engineering
o Power and Gas
 o Other Industry
 Trade and Commerce
 Agro Base and Agro Processing
 Service
o Housing and Construction
o Hospitals and Clinics
o Telecommunication
o Other Service
Purposes of applying CRG in credit disbursement as compared to LRA
 Banks are allowed lending to a borrower if the borrower's ICRR is "Excellent" or
"Good". However, for the "Marginal" cases, the bank shall take cautionary measures in
renewing the facilities or lending new money to the customers. While assessing credit
proposals, banks must satisfy themselves on the future prospect of the business,
additional collateral coverage, etc. Banks shall take heightened measures for monitoring
these accounts including but not limited to regular client visits, monitoring of the
improvement plans, close monitoring of the repayment performances, timely review of
the facilities, oversight on the improvement areas, etc.
 No loan shall be sanctioned to borrowers whose ICRR is "Unacceptable" unless the loan
is 100% cash covered or fully guaranteed by the Government or Multilateral
Development Banks (MDBs) or the loan is for any state-owned organization or state-
owned project. If the credit facility of the borrower is 100% cash covered or covered by
government guarantee or bank guarantee, whatever rating the borrower gets, the rating
will be "Excellent".
 For the quantitative and qualitative risk analysis, if the ICRR falls under "Marginal" or
"Unacceptable" for any risk criteria (among 16 quantitative and 18 qualitative); whatever
the aggregate score is, the relationship manager shall evaluate what would be the impacts
of such risk on loan repayment and justify how those risks are mitigated; and in loan
proposal the approval authority should review that justifications thoroughly and make
necessary evaluations on it and should be documented in the loan file.
 In deriving ICRR, whatever score a borrower gets in the qualitative part, if the score in
the quantitative part is less than 40%, the borrower’s ICRR shall be "Unacceptable".
 Bank can make renewal and enhancement of existing loans for maximum 2 (two) times if
the borrower's ICRR is "Unacceptable".
 In conducting qualitative analysis, justifications for all criteria are required to be
documented.
 Bank must maintain portfolio level data base for the asset base with "Excellent", "Good",
“Marginal” and “Unacceptable” category and maintain risk appetite/tolerance level for
portfolio.
Discuss the components of CRG those should be taken into consideration by a bank
appraisal of a syndicate loan and what should be the minimum expected rating for credit
delivery.
 Minimum expected Credit Rating for Credit Delivery is Marginal subject to some
constraints.

Agricultural credit plays a very important role in Economic Development of the country
with high GDP growth. Explain this mentioning impact it keeps on the country's overall
GDP attainment. It is a fact that, increase of agricultural credit delivery, would ensure
higher agricultural productivity. Do you agree that wider participation of private
commercial banks in credit delivery to this sector would have contributed higher growth?
Give your views and suggestions of improvement if any. What do you mean by payment of
subsidy in Agricultural sector? Please list down the heads of subsidies provided by the
government in Agricultural sector. The government has allotted huge amount of subsidies
in Agricultural sector. Please explain how different sectors like producers (Farmers),
Agricultural productivity and Agricultural sector as a whole have been benefited due to
payment of this subsidy.
Importance of Agricultural Credit in Economic Development
 Improve and facilitate the production
 Reduced cost of money
 Easily available
 Special consideration
 Reduce Unemployment
 Increase GDP
 Increase National Income
 Increase Flow of Money
 Timely production
 Lower hassle
 Government Subsidy
 Betterment of the Rural Farmer
 Reduce the cost of living in case of grocery
Subsidy
An agricultural subsidy (also called an agricultural incentive) is a government incentive paid
to agribusinesses, agricultural organizations and farms to supplement their income, manage
the supply of agricultural commodities, and influence the cost and supply of such
commodities.
Different Heads of Subsidies
 Importance of Agricultural Subsidies
Lowering prices and controlling inflation
Preventing the long-term decline of industries
A greater supply of goods

Distinguish between Term Credit and Short Term Credit. Why do the private commercial
banks prefer short-term lending? Explain. ****
Difference between Term Credit and Long Term Credit

Factors Long-term loan Short-term loan

Tenures are usually beyond five years. Tenure is usually five years or under.
Loan tenure Maximum tenure can go up to 30 years.
Though certain long-term loans require Minimal documents are required to
Documentation additional documents, this is not the case avail short-term financing.
with personal loans with longer tenure.
Most housing loans are secured long term Short term loans often do not require
loans. The collateralized property cannot be collateral. However, in case
Mortgage
solely in the borrower’s name until full collateral is needed, the asset can be
period
loan repayment. Asset is collateralized for a free of collateralization in a short
longer period. period.
Certain long-term financing, like a home Short-term loans do not require the
loan or a car loan, may entail the borrower borrower to pledge a collateral
to pledge security. While availing a
Collateral
personal loan with a long tenure, borrowers
are not required to pledge any asset against
the loan amount.
Repayment of long term loans is spaced out Since short term loan tenures are
over many years and therefore these charge shorter, lenders charge higher
Interest rate
lower interest rates. interest rates to compensate for the
shorter repayment tenure.
Since short-term loans need to be
The monthly EMI payments are lower in
EMI repaid within a smaller duration, the
long term loans.
EMI amount is usually high.
Long-term loans may take more time to be A Short-term loan is disbursed
Disbursement disbursed as banks may thoroughly swiftly since these are for smaller
speed evaluate a borrower’s creditworthiness and loan amounts and involve minimal
repayment capability. documentation.
 Secured long-term financing can be used
for a particular purpose, like a home loan. The borrower can use the funds for
Usage of funds
However, an unsecured personal loan can any personal expense.
be used for any purpose or expense.
Most lenders typically charge a flat
Method of For a long term loan, lenders typically interest rate for short term loans.
Interest rate apply a reducing balance method when it This means that the interest rate is
charged comes to interest rate charges. charged on the entire loan amount
throughout the loan tenure.

Why do the private commercial banks prefer short-term lending?

 Less Interest
 Lower Interest
 Predictable
 Lower Stress
 Credit Score Boost
 More Equity
 No Collateral
 Fast Money
 Relaxed Eligibility
 Quick Payment Plans
 Less Paperwork
 Lower Cost
 Lower Non-Performing Loan
 Liquidity Management
 No requirement for keeping provision
 No or Less Default Risk

What do you mean by risk management? Discuss the importance of risk management.
Discuss the steps of risk management in details. Discuss the ways of avoidance of reduction
of risk.

Risk Management
Risk Management is defined as preventing and managing potential risks that can impact a bank’s
finances and overall operations. Risk Management Systems can help banks collect and track
important data related to potential risks. Also, they can analyze and evaluate these risks and
perform corrective action against these risks.
Importance of Risk Management
  prevent loss
 ensure survival
 protect their reputation
 safeguard stakeholders’ interests
 comply with regulations and laws
 protect the bank’s credit ratings.
 Financial Stability
 Reputation Management
 Customer Protection
 Competitive Advantage

Risk Management Techniques

 Avoidance.
 Retention.
 Spreading.
 Loss Prevention and Reduction.
 Transfer (through Insurance and Contracts)
 Reveals key dependencies and control effectiveness
 Improves performance
 Brings additional visibility
 Simplifies identification of systemic issues that affect the bank
 Mitigation
 Monitoring
 Create relationships
 Reporting
 Adequate organization, policies and procedures
 Active management of contingent liabilities
 Appropriate management information systems

Distinguish between money market and capital market. Do you think that increased all
money rate can influence capital market? In what way? Please specify. Do you suggest any
amount of investment in capital market by commercial bank Justify your answer? What do
you mean by SEC? Elaborate its functions. Do you think that SEC is performing its duty
property in monitoring and controlling capital market especially stock market of our
country? Please pass your comments. ****
Money Market vs Capital Market
 Basis For
Money Market Capital Market
Comparison
Meaning A segment of the financial market where A section of financial market where
lending and borrowing of short term long term securities are issued and
securities are done. traded.
Nature of Informal Formal
Market
Financial Treasury Bills, Commercial Papers, Shares, Debentures, Bonds, Retained
instruments Certificate of Deposit, Trade Credit etc. Earnings, Asset Securitization, Euro
Issues etc.
Institutions Central bank, Commercial bank, non- Commercial banks, Stock exchange,
financial institutions, bill brokers, non-banking institutions like insurance
acceptance houses, and so on. companies etc.
Risk Factor Low Comparatively High
Liquidity High Low
Purpose To fulfill short term credit needs of the To fulfill long term credit needs of the
business. business.
Time Horizon Within a year More than a year
Merit Increases liquidity of funds in the Mobilization of Savings in the
economy. economy.
Return on Less Comparatively High
Investment

Do you think that increased all money rate can influence capital market? In what way?
Please specify.
Yes.
Reasons
 Increased Interest Rate
 Increase Cost of Borrowing
 Reduce Demand for Loan
 Financial Instability
Do you suggest any amount of investment in capital market by commercial bank Justify
your answer?
 Treasury Bond
 Corporate Bond
Bangladesh Securities and Exchange Commission (BSEC)
The Bangladesh Securities and Exchange Commission (BSEC) was established on 8th June,
1993 as the regulator of the country’s capital market under the provision of Bangladesh
Securities and Exchange Commission Act 1993. The purpose of the Commission is to protect the
interest of investors in securities, develop the securities market and make rules for matters
connected therewith or ancillary thereto. The Commission consists of the Chairman and four
Commissioners who are appointed for full time by the Government. The Chairman acts as the
Chief Executive of the Commission. The Commission is a statutory body and attached to the
Ministry of Finance. BSEC is an ‘A’ category member of International Organization of
Securities Commissions (IOSCO) since 22 December 2013.
Main Functions of BSEC
 Regulating the business of the Stock Exchanges or any other securities market.
 Registering and regulating the business of stock-brokers, sub-brokers, share transfer
agents, merchant bankers and managers of issues, trustee of trust deeds, registrar of an
issue, underwriters, portfolio managers, investment advisers and other intermediaries in
the securities market
 Registering, monitoring and regulating of collective investment scheme including all
forms of mutual funds.
 Monitoring and regulating all authorized self-regulatory organizations in the securities
market.
 Prohibiting fraudulent and unfair trade practices relating to securities trading in any
securities market.
 Promoting investors’ education and providing training for intermediaries of the securities
market.
 Prohibiting insider trading in securities.
 Regulating the substantial acquisition of shares and take-over of companies.
 Undertaking investigation and inspection, inquiries and audit of any issuer or dealer of
securities, the Stock Exchanges and intermediaries and any self-regulatory organization
in the securities market.
 Conducting research and publishing information.

Banks usually extend credit against securities. List down the different types of securities
against which banks sanction loans to its clients. Among these securities, which one you will
prefer to accept for your bank? Briefly discuss their advantages and disadvantages. State
how the securities are maintained on record to protect interest of the financer. Explain why
Commercial Bank usually prefer to accept land and building as collateral securities against
loans. Mention the tangible benefits banks derive from it. Most of the banks accept land as
collateral security against loans. List down the name of the lands those cannot be accepted
as security and why cannot be taken as security, discuss the causes.
Types of Securities
 Land
 Building
 Machinery
  Corporate Guarantee
 Bank Guarantee
 Stock or Raw Materials
 Trust Receipt
 Insurance Policy
 Book Debt
 Share/Debenture
 Supply Bills
 Gold Ornaments
 Paper Security

What is credit control? Discuss various procedure of credit control. Discuss the advantages
and importance of credit control.
Credit Control
Credit control is defined as the lending strategy that banks and financial institutions employ to
lend money to customers. The strategy emphasizes on lending money to customers who have a
good credit score or credit record.
Customers with a good credit report generally have an excellent track record of repaying their
debt. This allows lenders to bring down the risk of defaults when issuing a new line of credit to
customers.
Banks, financial institutions, retailers, and manufacturers use this strategy to ensure profitable
lending and lend to only those customers who have a high probability of repaying their debt. The
risk committee of the company monitors credit control to minimize losses due to poor loans.
Credit control is also referred to as control management among the lenders.
Procedure of Credit Control
 Credit checks and assessment of creditworthiness
 Setting credit limits and payment terms
 Regular monitoring and review of accounts
 Use of credit reference agencies
 Debt collection procedures
 Negotiating payment plans
 Offering discounts for early payment

Objectives of Credit Control

 Price Stability
 Economic Stability
  Maximization of Employment
 Economic Growth
 Stabilization of Money Market
 Exchange Rate Stability
 Management of Liquidity
 Economic Growth
 Use Maximum Resources
 Currency Rate Stability
 Meet Financial Obligation
 Control Business Cycle

What do you mean by surveying a branch area? Why it is so important in preparing a

business plan of a branch? Please discuss. As a newly posted Branch Manager, based on
the survey data, you are advised to prepare a business plan for your branch. ***
Surveying a Branch Area
The survey provides information on changes in credit demand, banks' credit standards, including
loan conditions and prices, and the factors influencing banks' credit standards and prices.
Business plan for a bank branch
 Executive Summary
 Give a brief overview of the bank industry.
 Discuss the type of bank you are operating.
 Detail your direct competitors.
 Give an overview of your target customers.
 Provide a snapshot of your marketing strategy.
 Identify the key members of your team.
 Offer an overview of your financial plan.
o Income Statement
o Balance Sheets
o Cash Flow Statement

What is loan syndication? How does it work? Explain its merits and demerits. Do you think
that the interest of the participating members of syndication suffers in any way on the
point of recovery of loan investments on time? Explain. ***
Syndicated Loan
A syndicated loan, also known as a syndicated bank facility, is financing offered by a group of
lenders—referred to as a syndicate—who work together to provide funds for a single borrower.
The borrower can be a corporation, a large project, or a sovereign government. The loan can
involve a fixed amount of funds, a credit line, or a combination of the two.
Syndicated loans arise when a project requires too large a loan for a single lender or when a
project needs a specialized lender with expertise in a specific asset class. Syndicating the loan
allows lenders to spread risk and take part in financial opportunities that may be too large for
their individual capital base. Interest rates on this type of loan can be fixed or floating.
Features of Syndicated Loan
1. Large amount and long term. It can meet borrowers' demand for funds of long term and large
amount. It is generally used for new projects loans, large equipment leasing and enterprises'
M&A financing in transportation, petrochemical, telecommunication, power and other industries.
2. Less time and effort for financing. It is usually the responsibility of the arranger for doing the
preparation work of establishing the syndicate after the borrower and the arranger have agreed on
loan terms by negotiation. During implementation of the loans, the borrower does not need to
face all members of the syndicate, and relevant withdrawal, repayment of principal with interest
and other management work related to the loans shall be fulfilled by the agency bank.
3. Diversified approaches to syndicated loans. The same loan syndications can include many
forms of loans, such as fixed-term loans, revolving loans, standby L/C line on requirements of
the borrower. Meanwhile, the borrower can also choose RMB, USD, EUR, GBP and other
currency or currency portfolio, if needed.
4. It can help borrowers establish a good market image. Successful establishment of the
syndicate comes from the participants' full recognition of the borrower's financial and
operational performance, by which the borrower can build up their reputation.
5. Differences between syndicated loan and joint loan.
Advantages of Syndicated Loan
 Opportunity to create new banking contract
 Flexibility of loan terms/ Diversification of loan terms
 Effective management
 Positive market reputation
 Competitive rates
 Large amount
 Financing takes less time and effort.
 The administration of the loan is extremely efficient.
 It is beneficial for borrowers to establish a good market image.
 Borrowers have flexibility in structure and pricing.
 The borrower need not go to each bank and not apply separate applications to all banks.
 The purpose and period of the loan are fixed.
 The system is simple.
  Enhancement of Performance of Banks
 Ways of Getting International Loan
Disadvantages of Syndicated Loan
 Time-consuming process since negotiating with the bank can take various days. Thus,
loan syndication is a time-consuming process.
 Borrowers may also be adversely affected by syndicated loan agreements.
 If the problem arises, it may be difficult for borrowers to satisfy all banks simultaneously.
 Managing the relationship between multiple parties is a difficult task.
 If profitability fails, the smallest bank withdraws its capital.
 Involves Risk
Participants in Loan Syndication
 Lead Bank
The lead bank is the bank which contribute the highest amount in the loan.
 Managing Bank
The managing bank is selected by the borrower which require loan. The managing bank organize
loan. It helps in filing loan application, it discusses the terms and conditions with other banks and
organizes the syndicate. After getting the signature from the borrower and participating banks the
work of the managing bank is ended.
 Agent Bank
The agent bank is the bank employed by the participating bank for safeguarding the interest after
the lean agreement. is signed. They come after the managing bank.
 Participating Bank
The bank which are participating are divided into two types. The types are as follows :
o The wholesale large commercial banks which grants loan and takes the highest
share.
o The retail sector small bank which grants loan take any percentage of share as
given to them.
Documentation for Loan Syndication
 Mandate Letter
 Term Sheet
 Information Memorandum
 Syndicated Loan Agreement
 Fee Letter
Charges of Loan Syndication
  Managing Fee
 Participation Fee
 Commitment Fee
 Agency Fee

What will you do when a loan proposal does not submit within set criteria of approved
credit policy but the applicant appears to be potential and helpful for the bank's branch?
Would there be any exception available to Bank authority to consider a loan proposal not
falling within the approved norms of credit policy while the client is needed by the bank?
Put up justification and basis for such special consideration. What qualities does a field
officer (who appraises loan proposal) should possess, please elaborate your answer?
What will you do when a loan proposal does not submit within set criteria of approved credit
policy but the applicant appears to be potential and helpful for the bank's branch?
 Better to delay the process and asking to submit the loan proposal within set criteria of
approval credit policy.

What is fund flow? Discuss the importance of fund flow statement for a bank. Distinguish
between fund flow and cash flow statement. Please prepare a sample cash flow statement of
your bank.
Fund Flow
Fund flow is the cash that flows into and out of various financial assets for specific periods of
time. It's usually measured on a monthly or quarterly basis.
Fund flow doesn't measure the performance of any single asset but emphasizes how cash is
moving. For example, with mutual funds, fund flow measures the cash involved in share
purchases or inflows and the cash resulting from share redemptions or outflows. It doesn't say
anything about how well or badly a fund performed.
Importance of Fund Flow Statement
 Financial Position
 Company Analysis
 Management
 Changes in Assets and Liabilities
 Creditworthiness
 Indicates addition of share capital
 Shows addition or reduction in share premium
 Reveals profit or loss of operation
Discuss the factors those to be essentially considered before opening a rural branch of a
bank. How a business plan to be prepared for proposed branch? Mention about the
qualities and efficiency that a selected opening branch manager should possess for the
branch success.
Factors to be essentially considered before opening a rural branch of a bank
 Location
 Population
 Customer Base
 Industry of the Area
 Cost of doing Banking business
 Communication system
 Standard of living of the area
 Reputation of the location
 Easy to access
 Visibility
 Demand Gap

Qualities and efficiency that a selected opening branch manager should possess for the
branch success.
 excellent verbal communication skills
 business management skills
 customer service skills
 ability to sell products and services
 confidence
 creativity
 accountability
 positivity
 empathy
 honesty
 time management
 reliability
 encourage collaboration
 support career development
 foster culture of belonging
 organized personality
 innate problem solver
 quick learner
 leadership
 cooperative
 alert and awareness