PRESENTATION ON

Credit

PREPARED BY:
MOIDUL ISLAM
MANAGEMENT TRAINEE OFFICER
UTTARA CORPORATE BRANCH
CREDIT

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 Involvement Funded
of Fund
Non-Funded

Short-Term Loan
Repayment Long-Term Loan
Tenor
LTR
CC-Hypothecation
Security CC-Pledge
Control
LIM
Type of
Credit Sole Financing
Lenders’
participation Syndicate Financing

Working capital financing

Purpose Project Financing

Continuous Loan (CL-2)

Demand loan (CL-3)
BB Term Loan (CL-4)
BRPD Circular
Short Term Agricultural & #
Micro Credit (CL-5)
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For 100% Export oriented companies

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Syndicated loan means joint financing by a group of
banks or financial institutions to a borrower against
common security.

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Credit Risk is the possibility that a borrower or counterparty will fail to meet obligations.
It is most simply defined as the potential that a bank borrower or counterparty will fail to
meet its obligations in accordance with agreed terms.

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Risk Assessment

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 Credit Risk Grading (Score Sheet)

Risk Rating Grade Score Feature

Superior 1 100 Fully Cash covered, Govt./ Int. Bank
Guarantee
Good 2 85+ Strong Repayment Capacity
Acceptable 3 75-84 Consistent Earnings, Cash Flow
Marginal-Watch 4 65-74 Greater attention required – Above
list Average Risk.
Special Mention 5 55-64 Sustained deterioration in financial
condition
Sub Standard 6 45-54 Weak Financial Condition
Doubtful 7 35-44 Repayment Unlikely
Bad and Loss 8 <35 No progress in repayment/ on the
verge of wind-up

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 CREDIT RISK
Financial 50% Business 20% Management 10% Security 10% Relationship 10%
Risk risk Risk risk Risk

Liquidity 15% Size of business Experience Security Account conduct

5% 5% Coverage 5%
5%
Leverage 15% Age of business Succession 3% Collateral Utilization of
3% coverage 3% limit 2%
Profitability 15% Business outlook Teamwork Support 2% Compliance of
3% 2% covenants
2%
Coverage 5% Industry growth Personal deposit
3%
1%
Market
competition 3%
Barriers to
business 3% #
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 Required Documents:
FOR INDIVIDUAL BORROWER
 Copy of National ID of the Borrower(s)
 Photograph of the Borrower
 Personal Guarantee
 Up to date satisfactory CIB Report of the client & borrower
 Photograph of the guarantor
 National ID of the guarantor
FOR PROPREITORSHIP FIRM
 Up to date Trade License
 Up to date TIN & VAT Certificate
 Personal Net-Worth Statement (PNS) of Proprietor
 Personal Guarantee of the Spouse of the Proprietor
FOR PARTNERSHIP FIRM
 Up to date Trade License
 Up to date TIN & VAT Certificate
 Partnership Deed (Registered)
 Personal Net-Worth Statement (PNS) of Partners
 Letter of Partnership.
 Partnership Account Agreement.
 Borrowing authority from partners /partner’s resolution

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 Required Documents:
LIMITED COMPANY/ NGO/TRUST
 Memorandum of Association & Articles of Association
 Trade License
 Board Resolution
 Up to date TIN & VAT Certificate
 Partnership Deed
 Latest Form-XII Certified by RJSC regarding list of directors
 Notarized IGPA to sell the hypothecated stock in trade, machineries or equipment.

In Case of Mortgaged Property :

 Original title deed
 Bia deed
 Parcha/Khatian (CS, SA, RS, BS)
 Non Encumbrance Certificate (NEC)
 Mutation Khatian
 Ground rent payment receipt
 Municipality tax payment receipt.

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 Charge Documents:

Other Charge documents:

i)Letter of Hypothecation with Supplementary Agreement.
ii) Letter of Pledge with Supplementary Agreement
iii) Letter of Guarantee iv) Letter of Trust Receipt
v) Letter of Installment vi) Letter of Continuity
vii) Letter of Authority viii) Letter of Undertaking

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 The manner by which-some articles or commodities or properties are
made available to a banker as security is known as charging of
securities. In a charge there is no transfer of interest or property.

TYPES OF CHARGE CREATION:

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Methods of Creating Charge on Securities

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 The documents must be properly and duly stamped before or at the
time of execution by the borrower.
 An unstamped or insufficiently stamped document is only a scrap of
paper in the eye of law.
 A document is to be stamped according to the requisite stamp duty of
the country.

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 UC
Type of Loans SS DF BL
STD SMA
Continuous Loan 0 to < 2 2 to < 3 3 to < 6 6 to < 9 9 and above

Demand Loan 0 to < 2 2 to < 3 3 to < 6 6 to < 9 9 and above

Fixed Term Loan up
0 to < 2 2 to < 6 6 to < 9 9 to < 12 12 and above
to TK.10 lac.
Fixed Term Loan
0 to < 2 2 to < 3 3 to < 6 6 to < 9 9 and above
more than TK. 10 lac
STAC & MC 0 to 12 12 to < 36 36 to < 60 >60

Consumer Financing Small Loans All other

Short
Term & M. to BHs, credits
Agri. Other Enterpr MBs,
Particulars Credit than House ising SDs
LP Financi
and HF & Finance
Microcre LP ng
dit
STD 5% 5% 2% 0.25% 2% 1%
UC
SMA 5% 5% 2% 0.25% 2% 1%
SS 5% 20%
Classified DF 5% 50%
BL 100% #
 Base for provision=
[ outstanding balance-( Value of Eligible Securities + Balance of Interest
Suspense)]
OR
Outstanding Loan Amount*15%
Whichever is higher
Required Provision= Base for provision* Rate of Provision
Value of Eligible Securities
Percent of value taken

Deposit under lien 100%

Government bond/ Savings certificate 100%
Guarantee given by Government/Bangladesh Bank 100%
Gold ornaments pledged with bank 100%
Easily marketable securities kept under control of bank 50%
Land and building mortgaged with the bank Maximum 50%
Shares traded in stock exchange 50% of average market value or face value,
whichever is less #
Required Down Payment for Rescheduling of Term Loans & STAC/MC:
1st time At least 15% of overdue installments or 10% of total outstanding, whichever is less
2nd time At least 30% of overdue installments or 20% of total outstanding, whichever is less
3rd time At least 50% of overdue installments or 30% of total outstanding, whichever is less

Required Down Payment for 1st time Rescheduling of Demand and Continuous Loan:
Amount of overdue loan Rate of down payment
Up to Tk.1.00 crore 15%
Above Tk.1.00 crore and up to Tk.5.00 crore 10% but not less than Tk.15.00 lac

Above Tk.5.00 crore 5% but not less than Tk.50.00 lac

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 Time limit for Loan Rescheduling
Classification Status
(Maximum Months from the Date of
Loan Type Frequency Rescheduling )
SS DF BL
1st Rescheduling 18 12 12

Continuous 2nd Rescheduling 12 09 09

3rd Rescheduling 06 06 06

1st Rescheduling 12 09 09
Demand Loan 2nd Rescheduling 09 06 06

3rd Rescheduling 06 06 06

1st Rescheduling 36 24 24
Term Loan
2nd Rescheduling 24 18 18
3rd Rescheduling 12 12 12
1st Rescheduling 2 Years
Short-term Agriculture
2nd Rescheduling 1 Year
&Micro-Credit
3rd Rescheduling 06 Months
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 Chain Impact
Selection of wrong borrower
Lacking of monitoring and follow-up
Low margin/ Low return
Low level of profit/ Loss

 A portion of Banks portfolio turns into inoperative asset

 Non performing loan can not yield income, because interest accrued on such loan can
not be credited to “ Income Account”.
 The source of banks income becomes limited which created a negative impact on
profit

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Legal Procedures of Loan Recovery:
• Placing post dated cheque(s) in the account of the client.
• Serving legal notice upon the client if the cheque is dishonored/ bounced.
• Filing complaint case if the client fails to act per the requirement of the legal
action.
• Serving another legal notice upon the client for recovery of classified loan
liabilities.
• Arranging publication of auction notice in the newspaper for sale of
mortgaged properties.
• Filing Artha Rin Suit in case of failure to sell the mortgaged properties.
• Filing Artha Execution Suit to recover the decreetal amount.
• Summon notice.
• Show cause notice.
• Auction notice.
• Obtain Possession of enjoyment certificate/ Ownership Certificate.

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 SPECIAL GRATITUDE TO
Shahud Ahmed,
SEVP & Head of IBD, Head Office.

Md. Abu Zafar Shamsuddin,

SVP & Manager, Uttara Corporate Branch.

Md. Abdul Basir Hashu,

SAVP & Manager Credit and foreign Trade, Uttara Corporate Branch.

Suraiya Talukder,
SAVP & Manager Operations, Uttara Corporate Branch.

Abu Hassanat Md. Rofiqul Mowla,

Senior Principal Officer, Uttara Corporate Branch.

Mohammad Sharif Hossain,

Principal Officer, Uttara Corporate Branch.

Sayed Zakir Hossen,

Senior Officer, Uttara Corporate Branch.

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