Intern Report of NCC Bank
Intern Report of NCC Bank
Intern Report of NCC Bank
Internship report on
Investment and Credit Management in Banks:
A Look from NCC Bank Ltd.
SUBMITTED TO
Sr. Executive Vice President
NCC Bank Ltd, HRD, H.O, Dhaka
SUBMITTED BY
Khondaker Ashik Mahi
ID: 2011-1-10-231
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Letter of Transmittal
December 17, 2015
To
Sr. Executive Vice President
NCC Bank Ltd,
HRD, H.O, Dhaka
Subject: Submission of the Internship report
Dear Sir,
I am submitting my internship report titled "Credit Management and Investment of NCC Bank
Limited" as partial requirement of internship program under BBA curriculum.
I would like to thank you for assigning this report as it provided me with the opportunity to
venture into the real life scenario and to broaden the horizon of my understanding on how
syndication is arranged and all the work that goes into it. I sincerely hope that my work will
come up to the level of your expectation.
I welcome your query and grateful to answer them.
Sincerely yours,
Khondaker Ashik Mahi
ID: 2011-1-10-231
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Acknowledgement
The successful accomplishment of this Internship Report is the outcome of the contribution and
involvement of a number of people, especially those who took the time to share their thoughtful
guidance and suggestions to improve the report. It's difficult for me to thank all of those people
who have contributed something to this report. There are some special people who cannot go
without mention.
First of all, I would like to thank my honorable academic supervisor Farzana Akter, Lecturer,
Department of Business Administration, East West University. I am thankful to her for her
continuous support and supervision, suggestions and providing me with valuable information
that was very much needed for the completion of this presentation.
I would like to thank my manager Md. Zakir Hossain, AVP and Branch Manager, Dhakhinkhan
Branch, Dhaka for giving me the opportunity to execute my internship program under his
supervision in NCC Bank Limited. I am really thankful to him for his valuable time to give me
the information and knowledge about all over the bank. During this three month I saw him as a
Lecturer also.
I would also like to express my immense gratitude & heartfelt thanks to all of the employees of
my team who not only helped me a lot to prepare this report but also helped me with their
guidance and by sharing their invaluable knowledge throughout my entire tenure in NCC Bank
Limited.
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TABLE OF CONTENTS
CHAPTER ONE:........................................................................................................................11-16
EXECUTIVE SUMMERY...............................................................................................................12
1.0 Introduction............................................................................................................................. 12
1.1 Objective of the Report:............................................................................................................13
1.2 Methodology of the Report:......................................................................................................13
1.2.1 Data Required...............................................................................................................13
1.2.2 Data Sources:................................................................................................................14
1.2.3 Data Analysis Tools and Techniques:.....................................................................14
1.2.4 Variable Used................................................................................................................14
1.2.5 Limitation of the Report:...........................................................................................15
CHAPTER TWO:.......................................................................................................................16-31
AN OVERVIEW OF NCC BANK LIMITED (NCCBL)....................................................................16
2.1 AN OVERVIEW OF NCC BANK LIMITED (NCCBL)................................................17
2.2 Background of NCC Bank Limited..............................................................................17
2.3 Mission Statement..........................................................................................................17
2.4 Objectives..........................................................................................................................18
2.5 Values................................................................................................................................. 18
2.6 Management Information System..............................................................................18
2.7 Correspondent Relationship........................................................................................19
2.8 Departments of NCCBL.................................................................................................19
2.9 Human Resources Management of NCCBL..............................................................19
2.10 Financial Statement.....................................................................................................20
2.10.1 Balance Sheet:...................................................................................................20
2.10.2 Income Statement............................................................................................21
2.10.3 Ratio Analysis:..................................................................................................22
2.10.4 Investment analysis:...............................................................................................25
2.10.5 Deposit and advance:......................................................................................26
2.11 Board of Directors:.......................................................................................................27
2.12 Organizational Structure of Dhakhinkhan Branch:............................................28
2.13 ORGANOGRAM OF NCC BANK LTD........................................................................28
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CHAPTER THREE:...................................................................................................................31-55
CREDIT MANAGEMENT..............................................................................................................31
3.1 Credit........................................................................................................................................ 32
Credit Policy of NCCBL..............................................................................................32
Credit Principles.........................................................................................................33
Global Credit Portfolio limit of NCCBL.................................................................33
3.2 LOAN AND ADVANCE SECTION...........................................................................................34
3.2.1 Continuous Loan.........................................................................................................34
3.2.1.1 CASH Credit (CC):..........................................................................................34
3.2.1.2 OVER Draft (OD):..........................................................................................35
3.2.2 Demand Loan...............................................................................................................35
Loan against Imported Merchandise (LIM)........................................................35
Loan against Trust Receipt (LTR)..........................................................................36
Payment against Documents (PAD).......................................................................36
Loan against Packing Credit....................................................................................36
Loan against Investment..........................................................................................36
3.2.3 Term Loan.....................................................................................................................37
Loan (General)............................................................................................................37
Housing Loan...............................................................................................................37
Project Loan.................................................................................................................37
Transport Loan...........................................................................................................38
Small Business Loan Scheme..................................................................................38
Personal Loan Scheme..............................................................................................39
3.2.4 Other Special Scheme................................................................................................39
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Consumer Scheme......................................................................................................39
Lease Financing..........................................................................................................39
Micro credit financing...............................................................................................40
3.3 Documentation of the Loan:....................................................................................................41
3.4 Credit Risk Management Policy:..............................................................................................41
3.4.1 Credit Evaluation Principles...........................................................................42
3.4.2 Pre-disbursement Compliance......................................................................43
3.4.3 Scope:...................................................................................................................43
3.4.4 Superseding Power:.........................................................................................44
3.4.5 Amendment of the policy:...............................................................................44
3.4.6 Access to the policy:..........................................................................................44
3.4.7 Product and Services:.......................................................................................44
3.4.8 Loan-Deposit Ratio:.........................................................................................44
3.4.9 Risk Acceptance criteria:................................................................................45
3.4.10 Deviation:..........................................................................................................45
3.4.11 Return:................................................................................................................45
3.4.12 Single customer exposure limit:..................................................................45
3.4.13 Large Loan:.......................................................................................................46
3.4.14 Diversification and sector allocation:........................................................46
3.4.15 Maximum Tenor:.............................................................................................46
3.4.16 Security:.............................................................................................................46
3.4.17 General covenants:..........................................................................................47
3.5 Advance................................................................................................................................... 48
3.5.1 Types of advance...................................................................................................................48
Securities........................................................................................................................48
Modes of Charging Security:......................................................................................49
Lien................................................................................................................................... 49
Pledge............................................................................................................................... 49
Hypothecation................................................................................................................49
Mortgage:........................................................................................................................ 49
Trust Receipt..................................................................................................................50
Advances against Work-Order...................................................................................50
Advances against Approved Shares:........................................................................50
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CHAPTER SEVEN:...................................................................................................................76-81
SWOT ANALYSIS.......................................................................................................................... 76
SWOT (Strength, Weakness, Opportunity & Threats):.................................................................77
7.1 STRENGTH:...................................................................................................................77
Innovation:........................................................................................................77
Top Management:............................................................................................77
Company Reputation:.....................................................................................77
Sponsors:...........................................................................................................77
Modern facilities and Online Banking:......................................................78
String of Branches:.........................................................................................78
Good customer service:.................................................................................78
Interactive corporate Culture:.....................................................................78
Alliance in ATM:..............................................................................................78
7.2 WEAKNESS:.................................................................................................................78
Advertising and promotion:........................................................................78
Limited Network:...........................................................................................79
7.3 OPPORTUNITY:...........................................................................................................79
Diversification:...............................................................................................79
Credit cards and Tele banking:...................................................................79
7.4 THREATS:.....................................................................................................................79
Contemporary Banks.....................................................................................79
Multinational Bank:......................................................................................80
Upcoming Banks:............................................................................................80
Default Culture:...............................................................................................80
CHAPTER EIGHT:...................................................................................................................81-87
FINDINGS AND ANALYSIS..........................................................................................................81
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8.0 Findings:................................................................................................................................. 82
8.1 CC Hypo (Cash Credit Hypothecation)......................................................................83
8.2 CC Pledge (Cash Credit Pledge) Under SME............................................................83
8.3. Overdraft (SOD)............................................................................................................84
8.4 Loans against House Building:...................................................................................85
8.5 Real Estate Financing for CRB:...................................................................................85
8.6 Lease Financing:............................................................................................................86
8.7 SME Loan.........................................................................................................................86
CHAPTER NINE.......................................................................................................................87-91
RECOMMANDATIONS AND CONCLUSIONS.............................................................................87
9.1 RECOMMANDATION........................................................................................................88
9.2 CONCLUSIONS..................................................................................................................90
CHAPTER TEN 92
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CHAPTER ONE:
INTRODUCTION
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EXECUTIVE SUMMERY
In order to provide a student with job exposure and an opportunity of the transition of theoretical
knowledge into real life experience, an internship is very important. A better balance between
theory & practice can be gained through this program.
Banking system of Bangladesh has gone through three phase of development --- Nationalization,
Privatization and Financial Sector Reform. National Credit and Commerce Bank is the largest
Private Commercial Bank from 1993 with new hope and promise to serve the countrymen.
This report mainly divided into three parts. First Part deals with my practical experience as an
internee in NCC Bank Ltd, Dhakhinkhan Branch and my own observations on Management and
Organizational Pattern of the NCC Bank Ltd. And final part deals with credit management of the
NCC Bank Ltd.
The report is a combination of three months internship program with NCC Bank. I
acknowledged different banking functions and day-to-day banking operations on my way to
complete internship. In this paper I have explained my best in respect of my real life experience
gathered from different departments.
1.0 Introduction
Bachelor of Business Administration (BBA) course requires 3 months attachment with an
organization followed by a report assigned by the supervisor in the organization and endorsed by
the faculty advisor. I took the opportunity to do my internship in National Credit and Commerce
Bank Ltd (NCCBL). My topic of internship is authorized from the head office of NCC Bank Ltd.
My faculty supervisor Farzana Akter, lecturer of EWU, also approved the topic and authorized
me to prepare this report as part of the fulfillment of internship requirement.
I have worked in various Department of NCC Bank Ltd, Dhakhinkhan Branch. In this report, I
will try to make an overall analysis on all activities of NCC Bank Ltd specially focuses on Credit
Management & Investment.
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To have better orientation on credit management activities specially credit policy and
practices, credit appraisal, credit processing steps, credit management, financing in
various sector and recovery, loan classification method and practices of National Credit
and Commerce Bank Ltd (NCCBL).
To know the competitive strength and weakness of the bank and the marketing and
expansion strategy of bank that can help to face the potential threats and opportunities.
To know the technological advantage and lacking of this bank in the modern banking
system and to make a bridge between the theories & practical procedures of banking dayto-day operations.
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To analyze and present the numerical data and values associated with Investment Risk
Management of NCCBL, I have used following tools and techniques,
Column Chart,
Bar Chart,
Line Chart,
Pie Chart, and
The formula has generated and used in Microsoft Excel.
Balance Sheet
Income Statement
Net income
Total assets
Total liabilities
Total investments
Total deposits
Net profits
Total advances
Net operating income
Net operating expense
Total equity
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This report will only consider credit management & Investment of NCC Bank Ltd. It will not
cover
Asset and liability/ balance sheet risk Management
Internal control And compliance risk mgt
Money laundering Risk mgt.
Banks policy of not disclosing some data and information for obvious reason, which
could be very much useful.
The main constraint of the study was insufficiency of information, which was
required for the study. There are various information the bank employee cant provide
due to security and other corporate obligations.
All the branches of the bank were not physically visited and all the concerned
personnel of the bank have not been interviewed.
Lack of in-depth knowledge and analytical ability for writing such report.
Learning all the banking functions about the investment risk management within just
60 days was really tough.
Data and information used in this study are mostly from secondary sources.
Large scale research was not possible due to the constraints and restrictions posed by
the bank.
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CHAPTER TWO:
AN OVERVIEW OF NCC BANK
LIMITED (NCCBL)
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NCC Bank Limited is the leading private sector bank in Bangladesh offering full Range of
Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market
Services. NCC Bank Limited is the preferred choice in banking for friendly and personalized
services, cutting edge technology, tailored solutions for business needs, global reach in trade and
commerce and high yield on investments, assuring Excellence in Banking Services.
2.2 BACKGROUND OF NCC BANK LIMITED
National Credit and Commerce Bank Ltd. bears a unique history of its own. The Organization
started its journey in the financial sector of the country as an investment company back in 1985.
The aim of the company was to mobilize resources from within and invest them in such way so
as to develop country's Industrial and Trade Sector and playing a catalyst role in the formation of
capital market as well. Its membership with the browse helped the company to a great extent in
this regard. The company operated up to 1992 with 16 branches and thereafter with the
permission of the Central Bank converted in to a fully fledged private commercial Bank in 1993
with paid up capital of Tk. 39.00 corer to serve the nation from a broader platform.
Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere
personalized service to its customers in a technology based environment.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange
business. Its various deposit & credit products have also attracted the clients-both corporate and
individuals who feel comfort in doing business with the Bank.
Within this short time the bank has been successful in positioning itself as progressive and
dynamic financial institution in the country. This is now widely acclaimed by the business
community, from small entrepreneur to big merchant and conglomerates, including top rated
corporate and foreign investors, for modern and innovative ideas and financial solution.
Total Number of branch of NCCBL: 104 (Including SME/Agri Branch: 8)
2.3 MISSION STATEMENT
To become a bank of choice in serving the nation as a progressive and socially responsible
financial institution by bringing credit and commerce together for profit and sustainable growth.
NCC Bank shall be at the forefront of national economic development by: i) Anticipating business solution required by all NCC Banks customers everywhere and innovatively
supplying them beyond the expectation.
ii) Setting industry benchmark of world class standard in delivering customer value through the
comprehensive product range, customer service and all the activities.
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iii) Building an exciting team based working environment that will attract, develop and retain
employees of exceptional ability who help celebrate the success of banks business, of banks customers
and of national development.
iv) Maintaining the highest ethical standards and a community responsibility worthy of a leading
corporate citizen
v) Continuously improving productivity and profitability and thereby enhancing share holder
value.
Slogan
Where Credit & Commerce Integrates
Motto
The Bank will be a confluence of the following three interests:
Of the Bank:
Profit Maximization and Sustained Growth.
Of the Customer:
Maximum Benefit and Satisfaction.
Of the Society:
Maximization of Welfare
2.4 OBJECTIVES
Be one of the best banks of Bangladesh. Achieve excellence in customer service next to none and
superior to all competitors. Cater to all differentiated segments of Retail and Wholesale
Customers. Be a high quality distributor of product and services. Use state-of the art technology
in all spheres of banking.
2.5 VALUES
Customer focus
Integrity
Team Work
Respect for individual
Quality
Responsible citizenship
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2010
2011
2012
2013
2014
6,231,607,253
6,442,038,081
7,732,385,281
7,875,262,621
8,612,160,908
731,592,743
774,915,500
1,139,317,553
1,256,477,852
1,173,484,082
FC)
Balances
5,500,014,510
5,667,122,581
6,593,067,728
6,618,784,769
7,438,676,826
with BB
Balances
567,325,877
462,493,232
1,316,317,832
656,757,606
2,407,581,410
with other
Investmen
10,980,808,236
20,840,288,280
30,851,738,163
19,908,322,002
26,568,661,762
ts
Loans and
63,230,141,628
72,733,540,709
79,948,220,174
88,167,205,831
90,920,772,028
advances
Fixed
1,191,493,190
1,506,770,757
1,743,585,434
1,736,637,982
2,573,252,105
assets
Other
1,352,801,369
1,525,568,280
4,249,255,937
5,698,510,026
4,077,095,326
83,554,177,553
103,510,699,339
124,042,696,069
135,159,523,539
1,847,028,696
5,565,102,190
9,444,527,760
2,763,533,530
4,975,525,649
67,961,244,777
81,127,168,218
96,918,222,155
98,229,442,528
105,703,614,110
4,388,794,697
5,234,633,372
7,342,935,755
9,779,884,197
10,130,694,248
74,197,068,170
91,926,903,780
113,705,685,670
110,772,860,255
120,809,834,007
9,357,109,383
11,583,795,559
12,135,817,151
13,269,835,814
14,349,689,532
Sheet
PROPERT
Y AND
ASSETS
Cash:
In hand
(including
assets
TOTAL
ASSETS
Borrowing
125,841,502,821
s from
Other
Deposits
and other
A/C
Other
liabilities
TOTAL
LIABILIT
IES
TOTAL S.
EQUITY
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TOTAL L
83,554,177,553
103,510,699,339
125,841,502,821
124,042,696,069
135,159,523,539
& S.
EQUITY
Figure: 2.6.1
2.10.2 INCOME STATEMENT
Particular
2010
2011
2012
2013
2014
2,486,468,804
1,661,817,872
2,241,539,584
2,039,393,557
2,680,556,207
5,674,450,977
5,915,529,141
6,179,587,783
6,073,188,991
6,532,499,519
1,574,245,636
1,700,764,012
2,152,767,271
2,374,375,016
2,785,697,656
4,100,205,341
4,214,765,129
4,026,820,512
3,698,813,975
3,746,801,863
835,652,069
547,949,936
1,274,074,479
1,351,935,762
1,221,323,403
3,264,553,272
3,666,815,193
2,752,746,033
2,346,878,213
2,525,478,460
3,248,230,506
3,630,147,041
2,742,746,033
2,326,878,213
2,500,478,460
876,551,737
1,431,190,726
1,308,985,033
1,189,031,038
999,149,242
2,371,678,769
2,198,956,315
1,433,761,000
1,137,847,175
1,501,329,218
Profit and
Loss
Account
Net interest
income
Total
operating
income
Total
operating
expense
Profit before
provisions
Total
provisions
Profit after
provision
Profit before
tax
Provision
for tax
Profit after
tax
Figure: 2.6.2
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ROE
0.3000
0.2500
0.2000
ROE
0.1500
0.1000
0.0500
0.0000
2010
2011
2012
2013
2014
ROA
0.0300
0.0250
ROA
0.0200
0.0150
0.0100
0.0050
0.0000
2010
2011
2012
2013
2014
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2010
2011
2012
2013
2014
0.3000
0.2000
0.1000
0.0000
2010
2011
2012
2013
2014
0.0400
0.0200
0.0000
2010
2011
2012
2013
2014
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Equity Multiplier
10.5000
10.0000
Equity Multiplier
9.5000
9.0000
8.5000
8.0000
2010
2011
2012
2013
2014
0.0400
0.0200
0.0000
2010
2011
2012
2013
2014
0.3000
0.2000
0.1000
0.0000
2010
2011
2012
2013
2014
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Particular
2010
2011
2012
2013
2014
Investment
10,980,808,236
20,859,689,665
30,851,738,163
19,908,322,002
26,568,661,762
Return on
14.95%
13.99%
09.05%
11.04%
11.05%
Investment
%
Figure: 6.1
Investment
35,000,000,000
30,000,000,000
25,000,000,000
Inv estment
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
0
2010
2011
2012
2013
2014
Return on Investment %:
ROI %
16.00%
14.00%
12.00%
10.00%
ROI %
8.00%
6.00%
4.00%
2.00%
0.00%
2010
2011
2012
2013
2014
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Particular
Deposit
Advance
2010
2011
2012
2013
2014
67,961,244,777
63,230,141,628
81,152,374,463
73,107,385,390
96,918,222,155
79,948,220,174
98,229,442,528
88,167,205,831
105,703,614,110
90,920,772,028
Figure: 6.2
120,000,000,000
100,000,000,000
80,000,000,000
60,000,000,000
Deposit
Adv ance
40,000,000,000
20,000,000,000
0
2010
2011
2012
2013
2014
Chairman
Vice-Chairman
Director
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Director
Director
Director
Director
Director
Director
Director
Director
Director
Independent Director
Independent Director
Figure: 2.7
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2.14.3 CARDS
Debit card
Credit card
2.14.4 REMITTANCE PRODUCTS
Special Interest rate on Savings and Term Deposits
Wage Earners Welfare Deposit Pension Scheme
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CHAPTER THREE:
CREDIT MANAGEMENT
3.1 CREDIT
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In line with the policy guideline issued by the Central bank from time to time, the bank
formulates its own credit policy keeping it flexible to accommodate changes that are taking
place. At present, several credit schemes are on the offer, which received quit well response from
the customers and may help the bank to expand its customer base. The bank also engaging in
syndication with other banks for allowing large loans converging Bangladesh banks rules and
regulation.
The word credit comes from the Latin word Credo meaning I believe. It is a lenders trust in
a persons/ firms/ or companys ability or potential ability and intention to repay. In other words,
credit is the ability to command goods or services of another in return for promise to pay such
goods or services at some specified time in the future. For a bank, it is the main source of profit
and on the other hand, the wrong use of credit would bring disaster not only for the bank but also
for the economy as a whole.
The objective of the credit management is to maximize the performing asset and the
minimization of the non-performing asset as well as ensuring the optimal point of loan and
advance and their efficient management. Credit management is a dynamic field where a certain
standard of long-range planning is needed to allocate the fund in diverse field and to minimize
the risk and maximizing the return on the invested fund. Continuous supervision, monitoring and
follow-up are highly required for ensuring the timely repayment and minimizing the default.
Actually the credit portfolio is not only constituted the banks asset structure but also a vital
factor of the banks success. The overall success in credit management depends on the banks
credit policy, portfolio of credit, monitoring, supervision and follow-up of the loan and advance.
Therefore, while analyzing the credit management of NCCBL, it is required to analyze its credit
policy, credit procedure and quality of credit portfolio.
CREDIT POLICY OF NCCBL
One of the most important ways, a bank can make sure that its loan meet organizational and
regulatory standards and they are profitable is to establish a loan policy. Such a policy gives loan
management a specific guideline in making individual loans decisions and in shaping the banks
overall loan portfolio. In NCC Bank Limited there is perhaps a credit policy but there is no credit
written policy.
CREDIT PRINCIPLES
In the feature, credit principles include the general guidelines of providing credit by branch
manager or credit officer. In NCC Bank Limited they follow the following guideline while giving
loan and advance to the client. Credit advancement shall focus on the development and
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payment or an obligation to make payment on demand or at some future time on account of the
immediate transfer of goods (securities). Loans are the largest asset item, which generally
account for half to almost three-quarters of the total value of all banks assets. A banks loan
account typically is broken down into several groups of similar type loans. The Loan and
Advances made by the NCCBL can broadly be classified by following categories1. Continuous Loan
2. Demand Loan
3. Term Loan
4. Other Special Scheme
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Overdraft (OD) is an arrangement between a banker and its customer by which the latter is
allowed to withdraw over his credit balance in the current account up to an agreed limit. This is
only a temporary accommodation usually granted against securities. The borrower is permitted to
draw and repay any number of times, provided the total amount overdrawn does not exceed the
agreed limit. The interest is charged only for the amount drawn and not for the whole amount
sanctioned.
A cash credit is differs from an overdraft in one respect. A cash credit is used for long term by
businessmen in doing regular business whereas overdraft is made occasionally and for short
duration.
There are two kinds of overdraft.
a) Secured Over Draft
b) Unsecured Over Draft
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allowed while on LIM account. When the delivery in part is desired by the importer, the LIM is
converted into cash credit account retaining proper margin and executing charge documents.
LOAN AGAINST TRUST RECEIPT (LTR)
Under this arrangement, credit is allowed to the importer to retire documents and release the
consignment from the customs authority against trust receipt keeping the goods under importers
control.
PAYMENT AGAINST DOCUMENTS (PAD)
The bank that opens the letter of credit is bound to honor its commitment to pay for import bills
when these are presented for payment, if drawn strictly in terms letter of credit. The foreign
correspondent bank, who negotiates the documents, debits the account of the opening bank and,
in fact, the amount thus stands advanced on behalf of the importer. The opening bank will lodge
the shipping documents to their book and will respond to the debit advice originated by the
foreign correspondent to the debit of Payment against Documents (PAD) account or Bills of
Exchange (B/E) accounts and present the bill to the importer for payment.
LOAN AGAINST PACKING CREDIT
Packing credit is a short term advance granted by bank to an exporter for assisting him to buy,
process, packs and ships the goods. The credit is gradually extended for payment of freight,
handling charges, insurance and export duties. A packing credit advance does not normally
extend beyond 180 days and has to be liquidated by negotiation/ purchase of the bills of
exchange.
LOAN AGAINST INVESTMENT
In order to contribute to the development of the Capital Market of the country NCC Bank
Limited extends credit facilities against pledge of Shares, Debentures, Prize Bonds, Bangladesh
Bank Treasury Bills etc. to the individuals as well as to the Member of DSE & CSE.
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b)
c)
d)
e)
f)
Housing Loan
Project Loan
Transport Loan
Small Business Loan Scheme
Personal Loan Scheme
LOAN (GENERAL)
In case of loan general, the bank advances a lump sum for a certain period at an agreed rate of
interest. The entire amount is paid on an occasion either in cash or by credit in his/her current
account which he/she can draw at any time. The interest is charged for the full amount
sanctioned whether he/she withdraws the money from his/her account or not. The loan may be
repaid in monthly installments or at the expiry of a certain period.
HOUSING LOAN
A large amount of money needed to construct a house or purchase an apartment. It is not
possible to of all people to construct a house by only own income sources. Especially this
problem largely faces by middle level and fixed income people. To solve this problem, NCCBLs
offer Housing loan with easy repayment condition and less interest rate.
PROJECT LOAN
NCC bank Ltd has their project loan scheme. Though they do not invest in project loan
extensively but now they are planning on project loan. Because project loan is huge investment
and it completely depends on success of the project for that reason bank always keeps eye some
major factor before invest on project loan. Before invest on project loan Bank always who is the
people involves in the project Security standard of the borrower. Then bank looks for the
feasibility report of the project. Borrower has to completely show the feasibility report to the
head office. In the feasibility report borrower has to show them what the mission of the project,
who are the target customer, comparative analysis of the project with other same project, how the
project meets the demand of the target customer, for which purpose the loan is asking for, detail
information of the project operation, detail price list of the equipment, approximate repayment
planning by the borrower. Branches do not have any authority to sanction any amount of loan for
Project loan. Branch can only asses the project feasibility, evaluate the client check the necessary
papers and collect it from the client. After getting the entire necessary papers branch makes a
proposal for the loan and send it to the head office. Head office then re-evaluate the proposal
with necessary papers. Then head office again inspects the project. After getting all the
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evaluation head office then send the sanction letter to the branch. Loan amount then disburse
from the branch. Branch has to do the regular monitoring until the whole loan amount is repaid.
TRANSPORT LOAN
NCC Bank Ltd was an investment company before the conversion in a bank. So they have good
idea about lease financing. Transport loan is fallen under the lease financing, though it is called
transport loan but it is actually fallen under leasing term and condition. NCC Bank Ltd does not
have any car loan scheme for individual clients, they had this scheme but the scheme is
completely stopped for the time being.
Process of transport loan is more or less similar to project loan. Borrower has to apply for the
loan in prescribed bank application form. In the application form borrower must mention which
vehicle he wants to buy and whats the quantity. Borrower also has to provide detail price list of
the vehicle, insurance paper for each vehicle, possible repayment planning of the loan; list of
collateral, list of hypothecation of securities and other necessary papers depends on clients and
number of vehicles. After getting all necessary papers and field inspection branch makes a
proposal for the loan and sends it to the head office. Head offices then again check the necessary
papers and do the field inspection. After inspection if Head Office thinks that for sanction of the
loan they need more papers and securities, borrower has to provide those papers. Branches
usually do not have any authority to sanction any amount of loan amount branch only disburse
the amount and do the regular monitoring whether the vehicle is purchased, is they quotation
match with the real one, vehicle is in the route and more importantly borrower is repaying the
installment regularly.
SMALL BUSINESS LOAN SCHEME
Small businessman take place a large portion in our country. More of them are honest, energetic
and hardy. In the absence of sufficient capital more of them cannot manage their business properly.
They have not sufficient asset to make a security against loan, as a result they are failure to take a
loan from bank or other financial assistance institution. If a loan give to them with easy terms and
condition then this energetic small businessman not only manage and increase their business
properly but also they take important role in development of our country. To meet up this purpose,
NCCBL start Small Business Loan Scheme.
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Education purpose
Advance against Salary
Education Loan
Travel Loan
Especially meet up this financing by own income source is very difficult for middle class people.
To solving these problems NCCBL introduce Personal Loan Scheme for Salaried Person.
CONSUMER SCHEME
The Scheme aims at improving the standard of living of the fixed income group. Under the
scheme the clients may secure loan facilities at easy installments to procure household amenities.
LEASE FINANCING
An entrepreneur, under this scheme, may avail of the lease facilities to procure industrial
machinery (without having to purchase it by down payment) with easy repayment schedule. The
clients also get special rebate in their income-tax payment under the scheme.
Lease financing is one of the most convenient long term sources of acquiring capital machinery
and equipment. It is a very popular scheme whereby a client is given the opportunity to have an
exclusive right to use an asset, usually for an agreed period of time, against payment of rent. Of
late, the lease finance has become very popular in almost all the countries of the world. An
obvious advantage of the lease is to use an asset without having to buy it. The lessee is obligated
to make lease payments until the expiration of the lease agreement, which corresponds to the
useful life of the assets. In a capital scarce economy like ours, Lease Financing is suitable for
firms to acquire Capital Machinery, Equipments, Medical Instruments, and Automobiles etc. And
thereby employ own resources more advantageously in some other investments. Lease financing
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also helps a firm to reap significant economic benefit through tax saving and by reducing the risk
of the equipments becoming obsolete due to the technological advancement.
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Documentation is obtaining such agreement where all the terms and condition and securities are
written and signed by the borrower. It specifies rights and liabilities of both the banker and the
borrower. In documentation each type of advances requires a different set of documents. It also
differs with the nature of securities. The documents should be stamped according to the stamp
Act. There are no hard and fast rules of documentation and it varies from bank to bank.
Generally, the documents are taken in the case of a secured advance by NCCBL:
Demand promissory note: Here the borrower promises to pay the loan as and when
demand by bank to repay the loan.
Letter of arrangement.
Letter of continuity.
Letter of hypothecation of goods and capital machinerys. Stock report: This Report is
used for OD and CC. In this report, information about the quality and Quantity of goods
hypothecated is furnished.
Memorandum of deposit of title deed of property duly signed by the owners of the
property with resolution of Board of Directors of the company owning the landed.
Personal guarantee of the owners of the property.
Guarantee of all the directors of the company.
Resolution of the board of directors to borrow fund to execute documents and completes
other formalities
Form no. XVII/XIX for filling charges with the register of joint stock companies under
relevant section.
Letter of Revival
Letter of lien for advance against FDR.
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Safety:
Safety means the assurance of repayment of distributed loans. Bank is in business to make
money but safety should never be sacrificed for profitability, to ensure the safety of loan. The
borrower should be chosen carefully. He should be a person of good character & capacity as well
as bank must have to maintain eligible number of security from borrower.
Profitability:
Banking is a business aiming at earning a good profit. The difference between the interest
received on advances and the interest paid on deposit constitutes a major portion of the bank
income, besides, foreign exchange business is also highly remunerative. The bank will not enter
into a transaction unless a fair return from it is assured.
Intent:
Banks sanction loans for productive purpose. No advances will be made by bank for
unproductive purposes though the borrower may be free from all risks.
Security:
The security offered for an advance is an insurance to fall bank upon in cases of need. Security
serves as a safety value for an unexpected emergency. Since risk factors are involved, security
coverage has to be taken before a lending.
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National interest:
Banking industry has significant role to play in the economic development of a country. The
bank would lend if the purpose of the advances can contribute more to the overall economic
development of the country.
3.4.2 PRE-DISBURSEMENT COMPLIANCE
When the credit proposal are approved the credit officer must have to be ensured that the
disbursement of the credit facilities must comply with the directions written in the credit policy
and circular made by time to time along with checking all the following terms and conditions.
The officer of Loan Administration must collect the acceptance of the customers of the terms
and conditions on the duplicate copy of the sanctioned advice.
They will thoroughly examine and ensure that the subject credit facility does not contradict to
any law, rules and regulation of the country, Bangladesh Bank and Deed of the Mortgage and
power of the Attorney to be drafted and executed under the Supervision of the Banks Legal
Advisor.
Lawyers certificate to the effect that all the legal formalities (Equitable/ Registered Mortgaged)
has been properly created on the land and building in favor of the bank & bank has acquired the
effective title of the property.
Registered power of attorney has been collected from the borrower (contractor) assigning the
work order favoring the NCCBL and the power of attorney has been registered with the work
order given agency and they have agreed that they will issue all the cheques favoring NCCBL.
The legal documents of the vehicle have been obtained. Collection of the satisfaction certificate
in respect of all the documents both legal and banking from the lawyer. Entry has been made in
the Safe-in and Safe-out register and the documents are preserved. After being satisfied all the
above terms and conditions the credit in-charge will disburse the loan amount to the client.
3.4.3 SCOPE:
This policy document will be applicable for issues related to Credit risk with respect to both
direct and indirect Credit products of traditional banking sector.
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If any provision of this policy document contradicts with the instructions contained in Credit
operational Manual or any existing circular, the Credit risk management policy will supersedes
and be held.
3.4.5 AMENDMENT OF THE POLICY:
The directors of the bank will review the Credit risk management policy at least annually and
make in view of the dynamic nature of banking business, the banks Credit Risk Management
Policy and procedures are evolutionary in nature and should be subject to ongoing review,
modification and revision. This Credit risk Management policy will be amended, revised as and
when warranted to accommodate the changes in the market condition, cyclic aspect of the
economy, government policy, industry demand, central bank regulation and experience of the
bank in managing Credit risk. For this purpose, the boards adopt necessary amendment.
3.4.6 ACCESS TO THE POLICY:
This policy document is categorized as a confidential one will be officially distributed to the
executives/officers working in the corporate Banking and Credit risk Management
Division(computing of Credit Risk Review Department, Credit Administration Department and
recovery department) of both Branch and Head office. It will also distributed to all Deputy
Managing Directors, Senior Executive Vice President, Executive Vice President.
3.4.7 PRODUCT AND SERVICES:
The Bank shall sell suitable Credit products and services in the market. For this purpose, Bank
will design new product from time to time, reengineer the existing ones to keep the same
competitive in the market. While designing new products and/or reengineering the existing ones
Bank will always take into consideration the customers demand. Product innovation and/or
reengineering shall be continuous process.
3.4.8 LOAN-DEPOSIT RATIO:
Loans and advances shall normally be financed from customers deposit and sometimes from
capital fund of the Bank. However, it will be ensured that loan-deposit Ratio should not exceed
90% at any particular point of time and regulatory compliance of CRR/SLR would be
maintained. Generally loans and advances shall not be extended out of temporary fund of
borrowing from money market.
3.4.9 RISK ACCEPTANCE CRITERIA:
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The Management will revise and prepare periodically Risk Acceptance criteria (RAC) duly
approved by the executive committee/Board and disseminate to the concerned executives at
operational level. In preparation of RAC the following area would be covered with flexibility for
deviation by the competent authority:
a) Maximum amount in cash type of facility line
b) Maximum limit to a single obligor and group
c) Acceptable Leverage, Current ratio, Interest coverage, Operating margin for an industry
d) Geographical location
e) Security and support
National Credit and Commerce Bank Ltd. will extend Credit only to qualified borrowers where
the amount and intended purpose are clear and legitimate. Credit facilities shall be allowed in
manner that the expansion in Credit does not compromise the asset quality of the bank.
3.4.10 DEVIATION:
Any deviation from the Credit Policy of the Bank must be justified in the proposal and well
documented, especially, all Credit assessment form shall invariably include the deviation from
the policy, if any, and proposal that does not comply with the Credit risk Management Policy
should be approved by Head office. However, no regulatory regulations shall be compromised.
3.4.11 RETURN:
Credit operation of the Bank should contribute return at optimum level within the defined risk
limitation. In other words, Credit facilities should be extended in such a manner that each deal
becomes a profitable one so that Bank can achieve its targets and has a superior on capital.
Besides, Credit extension shall focus on the development and enhancement of customers
relationship and shall be measured on the basis of the total yield for each relationship with a
customer.
3.4.12 SINGLE CUSTOMER EXPOSURE LIMIT:
An important element of risk management is to establish exposure limits for single obligors and
group connected obligors. To spread the risk to ensure that funds of the Banks are not used form
limited number of clients. Bangladesh Bank has laid down guidelines. As per prevailing
regulation, Bank will take maximum exposure (outstanding at any point of time) on a single
customer (individual, Enterprise, Company, corporate organization, Group) for the amount not
exceeding 35% of Banks total capital. However, for single customer of the export sector
maximum exposure limit shall be 50% of the total capital subject to the condition that total
funded facility shall not exceed 15% of the total capital of the bank at any point of time. National
Credit and Commerce Bank Ltd. will follow the ceiling set by Bangladesh Bank. However, size
of any Credit limit in each case shall be fixed after proper assessment of genuine Credit
requirement of the customer within the maximum allowable limit
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8. Stock
9. Machinery and equipment
10. Charge on the fixed and floating asset
11. Part-passu charge on fixed and floating assets
12. Corporate guarantee of another company backed by Board Resolution.
13. Personal Guarantee
14. Bill of receivables
15. Ownership of Vehicles/assets
16. Life Insurance policy
17. Post Dated Cheque
18. Trust receipt
19. Others as demand acceptable by the approving authority.
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3.5 ADVANCE
The different types of securities that may be offered to a banker are as follows:
(a) Immovable property
(b) Movable property
Pratiraksha Sanchaya Patra, Bangladesh Sanchaya Patra, ICB unit certificate, Wage
earner development bond.
Fixed Deposit Receipt
Shares quoted in the Dhaka Stock Exchange and Chittagong Stock Exchange.
Pledge of goods
Hypothecation of goods, produce and machinery
Fixed assets of manufacturing unit.
Shipping documents.
SECURITIES
Loans Lien or various kinds of Sanchaya patras, Govt. Securities, FDR, Collateral of immovable
property, shares quoted in stock exchange Overdraft, Pledge or hypothecation of machinery, land
and building on which machinery are installed, stock in trade, goods products and merchandise.
Bills purchased, Bills it.
MODES OF CHARGING SECURITY:
A wide range of securities is offered to banks as coverage for loan. In order to make the
securities available to banker, in case of default of customer, a charge should be created on the
security. Creating charge means making it available as a cover for advance. The following modes
of charging securities are applied in the NCC Bank Limited.
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LIEN
A lien is right of banker to hold the debtors property until the debt is discharged. Bank generally
retains the assets in his own custody but sometimes these goods are in the hands of third party
with lien marked. When it is in the hand of third party, the third party cannot discharge it without
the permission of bank. Lien gives banker the right to retain the property not the right to sell.
Permission from the appropriate court is necessary. Lien can be made on moveable goods only
such as raw materials, finished goods, shares debentures etc.
PLEDGE
Pledge is also like lien but here bank enjoys more right. Bank can sell the property without the
intervention of any court, in case of default on loan, But for such selling proper notice must be
given to the debtor. To create pledge, physical transfer of goods to the bank is must.
HYPOTHECATION
In this charge creation method physically the goods remained in the hand of debtor. But
documents of title to goods are handed over to the banker. This method is also called equitable
charge. Since the goods are in the hand of the borrower, bank inspects the goods regularly to
judge it s quality and quantity for the maximum safety of loan.
MORTGAGE:
Mortgage is transfer of interest in specific immovable property. Mortgage is created on the
immovable property like land, building, plant etc. Most common type of mortgage is legal
mortgage in which ownership is transferred to the bank by registration of the mortgage deed.
Another method called equitable mortgage is also used in bank for creation of charge. Here mere
deposit of title to goods is sufficient for creation of charge. Registration is not required. In both
the cases, the mortgage property is retained in the hank of borrower.
TRUST RECEIPT
Generally goods imported or bought by bank's financial assistance are held by bank as security.
Bank may release this lien / pledge these goods against trust receipt. This means that the
borrower holds goods in trust of the bank; trust receipt arrangement is needed when the borrower
is going to sell these goods or process it further but borrower has no sufficient fund to pay off the
bank loan. Here proceeds from any part of these goods are deposited to this bank.
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The discharged receipt, the letter of lien duly verified by the issuing branch & the letter
confirming registration of the lien on the deposit receipts shall be kept along with other
documents under safe custody of the bank.
UNCLASSIFIED:
The loan account is performing satisfactorily in the terms of its installments and no overdue is
occurred. This type of loan and advances are fall into this class.
SUBSTANDARD:
This classification contains where irregularities have been occurred but such Irregularities are
temporarily in nature. To fall in this class the loan and advance has to fulfill the following factor.
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The main criterion for a substandard advance is that despite these technicalities or Irregularities
no loss is expected to be arising for the bank. These accounts will require close supervision by
management to ensure that the situation does not deteriorate further.
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DOUBTFUL:
This classification contains where doubt exists on the full recovery of the loan and advance along
with a loss is anticipated but cannot be quantifiable at this stage. Moreover if the state of the loan
accounts falls under the following criterion can be declared as doubtful loan and advance.
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CHAPTER FOUR:
RISK ASSESSMENT
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4. 2. 2
As per instruction of Bangladesh Bank, Risk Grading Scorecard has been developed for all
exposures of NCCBL (irrespective of amount) other than those covered under consumer and
small Enterprise Financing Prudential Guidelines and also under the Short Term Agricultural and
Micro-Credit. The Score Card will be updated if required. The score of the risk grading scorecard
will be weighted one. These are 5 broad head rating components and separate parameters have
been set to measure borrowers position against each component. Score Cards are tools to
determine a borrowers aggregate score based on assessment of quantitative and qualitative
factors. Score Cards shall records the Assigned rating through a combination of the Aggregate
Score as well as exercise of judgment. Judgment plays an important role in the scoring of
qualitative factors as well as recommendations made to change the risk rating in case of
disagreement. It should be noted that industry volatility is a key driver in the Risk Grading as it
has been proved that the probability of default is higher in industries with higher volatility.
However, since there is no acceptable industry average of key financials and industry volatility
factor is absent, the matter has not been included in the present Risk Grading Score Card. A
snapshot of Principal Risk Component and Corresponding Parameters and weight assigned to
each Component is as follows:
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SL no.
1)
Components
Financial Risk
2)
Business Risk
3)
Management
Risk
4)
Security Risk
5)
Relationship
Risk
Parameters
a) Leverage
b) Liquidity
c) Profitability
d) Coverage
a) Turnover of Business
b) Age of Business
c) Business Outlook
d) Technology/Resource
e) Industry Growth
f) Inventory/Receivables
g) Market Competition
h) Entry/Exit Barriers
a) Business Experience
b) Expertise of the Management
c) Second line/Succession
d) Team Work
a)
b)
c)
d)
a)
b)
c)
Weight (%)
50
18
12
The Relationship officer of the Branch will prepare Risk Grading Scorecard in case of new
proposal, renewal and/or enhancement of existing facility, any deterioration in the borrowers
business position, any breach of contract by the borrower or as and when he/she feel it necessary.
In addition, aggregate weighted score of the customer is to be affixed in the relevant field of the
Credit Assessment Sheet.
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Risk Grade
Superior-Low Risk
Numeric Grade
1
Acceptable-Fair Risk
Marginal-Watch list
Definition
Facilities are fully Secured by cash deposits,
government bonds or a counter guarantee
from a top tier international bank. All security
documentations are in place.
The repayment capacity of the borrower is
strong. The borrower has excellent liquidity
and low leverage. The company demonstrates
consistently strong earnings and cash flow.
Borrower has well established market and
very good management skill. All security
documentation should be in place. Aggregate
Score of 85 or greater based on the Risk
Grade Scorecard.
These borrowers are not as strong as Grade-2
borrowers, but should still demonstrate
consistent earnings, cash flow and have good
track record. Borrowers have adequate
liquidity, cash flow and earnings, Credit is
normally be secured by acceptable collateral
(stocks/debtors/equipment/property),
Acceptable management. Acceptable parent/
sister company guarantee. An aggregate score
of 75-84 based on Risk Grade Scorecard.
Grade-4 assets warrant greater attention due
to conditions affecting the borrower, the
industry or the economic environment. These
borrowers have an above average risk due to
strained liquidity, higher than normal
leverage, thin cash flow and/or inconsistent
earnings. Borrower incurs a loss, loan
payments routinely fall past due, account
conduct is poor, or other untoward factors are
present. Weaker business credit and early
warning signals of emerging business credit
detected. An Aggregate Score of 65-74 based
on the Risk grade Scorecard.
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Special Mention
Substandard
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Doubtful and
performing)
Bad(non- 7
Loss(non-performing)
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CHAPTER FIVE:
CREDIT APPRAISAL
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Market prospect and potential for the product has to be fully assured at
competitive prices.
Technical viability
Considerations here are
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Financial viability
Considerations here are
The project should be found viable in financial analysis done by the Bank such as
Ratio Analysis, IRR Analysis, and Break-even Analysis etc.
Economic viability
Considerations here are
The project should benefit the national economy be creating employment and
increasing income.
Social acceptance
Considerations here are
The project should be socially acceptable, should benefit the society without
creating any social, ethical, environmental, and ecological disturbance or
pollution.
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Visiting the business site of the customer by the bank authority; verifying the particulars,
which are furnished with the application and ascertain of the customer honesty, integrity
and business dealings directly and through other sources also. Examination of the
turnover/transactions of the account of the customer seeking loan.
Collecting report on borrower and its sister concerns from the Credit Information Bureau
of Bangladesh Bank; obtaining credit report from local bank and financial and credit
institutions.
Preparation of appraisal report for all credit proposals. Following the lending criteria in
appraising advance proposal.
Issue of the sanction letter in duplicate incorporating all the terms and conditions to the
customer with an endorsement of a copy of letter to head office after obtaining Clean
Credit Report and being satisfied regarding land, building and other assets/properties to
be mortgage or hypothecated and prima-facie genuineness and correctness by scrutinizing
the documents, title deeds and other relevant papers and if the sanctioning of loan is
within the discretionary power of the branch. If the limit is beyond the managers power
they will forward the proposal to head office giving specific comments and
recommendation for approval.
Lending Risk is to be analyzed as per prescribed format, which is supplied by Bangladesh
Bank if the credit amount is ten million and above. LRA is to be forwarded along with the
proposal. On receipt of Head Office approval, branch will issue sanction advice duplicate
to the customer and obtain one copy should be preserved with security documents.
Documentation formalities needs to be completed before disbursement If the customer
accepted the terms and conditions.
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Rate of interest
Other conditions-
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CHAPTER SIX:
CREDIT MONITORING AND
RECOVERY PROCESS OF NCCBL
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Daily passed due statement should be generated from the system to another the
relationship to take proactive steps at an early stage. Branch should sent at least weekly
past due statement either by email or courier service to Credit administration department
who in turn place a consolidated statement before additional managing director/
managing director if the system failed to generate the centrally.
Accounts activity of the Credit facility should be monitored critically either relationship
manager frequently or monthly by the CAD officer to understand whether the risk
commensurate with the business. Any exceptions observed by CAD officer should be
reported to Credit administration department, Head Office.
Monthly statement should be prepared with observation for LTR/ LIM/ PAD facilities and
should be reported to Head of Credit Risk Management Division. Exceptions should be
reported to the addition Managing Director/managing director
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Large unit, where aggregate facilities is above taka 5 crore would be inspected by head of
Credit Risk Management Division or his nominated executive once in a year but at least
three months before the annual review date.
Inventory, aging of receivables and pledged goods, trend in sale and market position of
the goods and deposit of sale proceeds should be monitored closely.
Call reports shall be analyzed to ensure that the affairs of the business of the borrowers
are being run on expected line and there is no material change in the status of the
borrower.
It is to be mentioned here that Managing Director may constitute separate body to monitor the
problem accounts closely as identified and the affairs of large accounts.
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management lies in early problem recognition, leading the bank to take corrective measure to
protect asset quality through prompt remedial.
An Early Alert Account is one that has risks or potential weakness of a material nature
requiring monitoring, supervision, or close attention of the management. If such weaknesses are
left uncorrected, they may result in deterioration of the repayment prospects for the asset or in
the Banks Credit position at some future date with a likely prospects of being downgraded to
Grade 5 or worse (Impaired status), within the next twelve months.
Therefore, in order to protect and improve the quality of Banks portfolio, a more pro active
approach needs to be adopted. An early warning system in the form of Early Alert Account is
being instituted to cover the gap between Current and SMA categories. Early Alert Account is
not a classified account but reflects the weakness in Credit, which requires to be addressed. Also
it requires an assessment of the borrowers ability to rectify the problem within reasonable time
frame, and thus improve its position as Creditor.
First and foremost requirement for any or all relationship officers/Managers of the originating
unit are to identify a problem Credit in its early stages by recognizing the signs of deterioration.
Such signs include, but not limited to, the following:
Non-payment of interest or principal or both on due dates or past dues beyond a
reasonable period or recurring past dates.
In Case of Overdrafts, (or Cash Credits of similar facility), no movement in the
account beyond a reasonable period.
Deterioration in financial condition of the client, as gathered from clients late
financial statements.
A shortfall in collateral coverage, particularly if the collateral was a key factor in
decision making or the loan was predicted on the sole factor of collateral.
Death, illness or withdrawal/removal of key owners or management personnel
Adverse market report about the company or its principal owners.
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The symptoms of early alert shown in Annexure-19 are by no means exhaustive and hence, if
there are other concerns, such as a breach of loan covenants or adverse market rumors that
warrant additional caution, an Early Alert report should be raised.
An account may be reclassified as a regular account from Early Alert Account status when the
symptom, or symptoms, causing the Early Alert classification have been regularized or no longer
exist. The concurrence of the CRM approval authority is required for conversion from Early
Alert Account status to Regular Account status.
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Representative of recovery department would meet the customer, and if required, review
the stock Report and conduct stock inspection of accounts to arrive at an effective action
plan form recovery/upgrade.
Representative of Recovery Department will prepare a classified credit review report,
CCR Annexure-18 within 15 days of the transfer. The CCR should be approved by the
Head of Credit Risk Management Division, and copied to the Head of corporate Banking
and to the Branch/office where the loan proposal was originated. This initial CCR should
highlight any documentation issues, loan structuring weaknesses, proposed workout
strategy, and should seek approval for any loan loss provisions that are necessary.
The recovery department of Credit Risk Management Division will manage accounts
with sustained deterioration (a Risk Grade of sub-standard (6 or worse). Sometimes, as
per recommendation of the Credit administration Department and corporate Banking
Division the Management may decide to transfer some SMA Accounts form effective
supervision or EXIT accounts graded 4-5 tp the Recovery Department form efficient exit.
Whenever an account is handed over form corporate banking division/ Relationship
Management to Recovery Department, a Classified Account transfer form (Annexure-17)
will be prepared. Down grading should be done immediate Ely and should not be
postponed until the annual review process.
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CHAPTER SEVEN:
SWOT ANALYSIS
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7.1 STRENGTH:
INNOVATION:
The major strength of NCCBL is product innovation. They have introduced new product every
year. Their innovative product creates a positive image. In this year they have introduced the
Festival loan for the business man and the salaried person to meet their extra finance during the
Festival period i.e. Eid-ul-Fitr, Eid-ul-Azha, Durga Puza that highly appreciated among the
customers.
TOP MANAGEMENT:
The top management of the bank is a key strength for the NCCBL and the contributed heavily
towards the growth and development of the bank. The top management officials all have
reputed of banking experience, skill and proficiency.
COMPANY REPUTATION:
NCCBL has created a standing in the banking industry of the country chiefly among the new
corners. NCCBL has already established a firm grip in the banking sector having tremendous
growth in the profits and deposits within a phase of five years.
SPONSORS:
NCCBL has been founded by a group of prominent entrepreneur of the country. The sponsors
directors belongs large industrial conglomerates of the country. The giant name in directors list
is Nurul Islam, owner of Sanawara Corporation, Abdul Halim the owner of Prime Group.
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7.2 WEAKNESS:
ADVERTISING AND PROMOTION:
Advertising and promotion is the one of the weak point of NCC. NCC does not have any
effective truck for aggressive marketing activities. This lacking pushes the bank far behind the
form the other competitor.
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LIMITED NETWORK:
NCC has limited branches. Now 104 branches are operating over the country. Bank should
open their branches in prime locations. They have to target some effective area in which they
can enhance their profit.
7.3 OPPORTUNITY:
DIVERSIFICATION:
NCC can pursue a diversification strategy in expanding its current line of business. The
management can consider can option of starting merchant banking or diversify into leasing and
insurance. By expending business portfolio, NCC can shrink business risk. Also they can build
some ATM machine for giving extra benefit to customers.
CREDIT CARDS AND TELE BANKING:
These are the new retail banking services provided by the foreign banks. NCC can evaluate the
option of launching credit cards and Tele Banking system.
7.4 THREATS:
CONTEMPORARY BANKS
The contemporary banks of NCC like Prime Bank, Dhaka Bank and Southeast Bank, One
Bank, are its major rivals. They are carrying out aggressive campaign to attract lucrative
corporate clients as well as big time depositor. NCC should remain vigilant about the steps
taken by these banks, as this will in turn affect NCC strategies.
MULTINATIONAL BANK:
The rapid expansion of multinational bank poses a potential threat to the PCBs. Due to the
booming energy sector more foreign banks are expected to operate in Bangladesh. Moreover
the already existing foreign banks such as Standard Chartered and CITI NA are new pursing an
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aggressive branch expansion strategy. Since the foreign bank has tremendous financial strength,
it will pose a threat to local banks to a certain extent in terms of grabbing the lucrative clients.
UPCOMING BANKS:
The upcoming local private banks can also pose threats to the PCBs. The govt. has planned to
permit new banks. It is expected that in the next few years more local private banks may
emerge. If that happens the intensity of competition will rise further and banks will have to
develop strategies to compete against foreign banks. Like as Meghna Bank, Jamuna Bank, etc.
DEFAULT CULTURE:
Default culture is very much familiar to our country. For a bank is very harmful NCC has not
faced seriously yet. However the bank grows older it may be ill with this situation.
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CHAPTER EIGHT:
FINDINGS AND ANALYSIS
8.0 FINDINGS:
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After analyzing the whole report we come up with some finding. Some of the tasks in NCC Bank
do very much traditional. If we compare them with other local banks like City bank, Eastern
Bank, Brac Bank, Prime bank we came to know about this. With the modern computerized
system they make their works easier than the NCC Bank. NCC Bank follows the same old
process to save their data and they do their whole operation manually where other banks are
doing with their computer. Some findings are given below
While working at NCC Bank, Dhakhinkhan Branch, I have attainted to the newer kind of
experience. After the collecting and analyzing of data I have got some findings. Those findings
are completely from my personal point of view. Those are:
Branch Manager Conscious efforts to achieve the targets and knows how to motivate
employees and how to represent the Bank well in the local community.
The employees of the bank are young, energetic, co-operative and friendly. Their dealings
with the clients are co-operative and friendly which create positive perception about the
bank in the clients mind.
The bank uses some modern technology such as: Fax, Telex, and SWIFT. So, their
service is better than most of the bank.
The credit & investment analysts have a strong background in accounting financial
statement analysis, business law and economics along with good negotiating skills. This
lessens the possibility of bad debt.
The loans and deposits of this bank are rising at an impressive rate.
The Customer service of NCCBL is very much impressive than other financial institution.
Special schemes like consumer deposit scheme, monthly saving scheme etc. are very
popular.
The working environment of the office is very nice.
The bank provided online banking in all branches .The operations of the Bank are
computer oriented to ensure prompt and efficient services to the customers.
Cost of fund is high in this branch.
In NCCBL, customers can open DPS within the first ten days of a month.
The web-site of NCCBL is updated.
NCC Bank Limited should properly advertise and Communicate to public about the
services provided by it. So that, more customers will be attracted.
They save their all kinds of data in papers.
They find the interest suspense account through their computer but manually they check
those out.
Sometimes very simple work is done by the head office which takes time and make
difficult.
Sometimes verification is done by a new officer which dangerous both for the bank and
the branch office.
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All types of loans and their problems and prospects which provided by NCC Bank Ltd
at are given below:
8.1 CC HYPO (CASH CREDIT HYPOTHECATION)
National Credit And Commerce Bank Limited security falls under this type of lending. It is a
continuous credit. It is allowed Linder the categories.
#
Lengthy documentation procedure. For this reason many customers feel boring to get this
type of loan.
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Their repayment systems are monthly. As a result after every month loan amount
decreases and also risk decrease.
Prospects of SOD:
Against FDR, Savings and Deposits these type of loan are taken.
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Incorrect document
Political pressure
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To help many investor for buying car, vehicle and other equipment
Prospects of SME:
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CHAPTER NINE
RECOMMANDATIONS AND
CONCLUSIONS
9.1 RECOMMENDATIONS:
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An NCC bank earns its principal revenue from profit on investment. To avoid investment
risk as much as possible through minimizing adverse selection, before sanctioning any
investment (loan) the officers of the bank have to observe whether every aspect of
principles of lending is filled and other things such as credit requirement, accountability,
prepayment of loans, collections, insurance and other required fields are covered or not.
An energetic investment recovery unit should also be formed to manage directly accounts
with sustained deterioration of investment. To encourage investment recovery unit
incentive program may also be introduced.
SME Investment of NCCBL was increasing very rapidly during last five years. The bank
should keep it up in order to make their position stronger and to take them as a role model
as the contributor on SME sector in this country which will inspire others to come
forward.
The bank provided the maximum amount of investment focusing commercial and
industrial sectors in urban areas mainly on Dhaka Division and Chittagong Division
basis. To help the countrys development regionally equal and take the bank as amiable to
mass people countrywide, the bank should give more accentuate to make their fund
available as functional to rural based industries and organizations alongside diversified
industries which may act as the factors to minimize the investment risk of the bank.
In order to lessen the classified investment, interested customers for investment should be
analyzed more cautiously and flawlessly. It can be made by gathering and accumulating
customers information through the online CIB Report or historical activities of the
customers toward investment so that their classified investment will be less.
For the probable solutions of the identified problems ensure better progress to NCC Bank in
future, some necessary steps are recommended bellow on the basis of collected data, observation,
expert staffs opinion and my knowledge and judgment. Banks always contribute towards the
economic development of a country. Compared with other banks NCC Bank Ltd. is contributing
more by investing most of its funds in fruitful projects lending to increase in production of the
country.
For Cash Credit Hypothecation loan procedure time should be decrease so that
customers get loan easily and quickly. Document justification process can be easy if
employ a lawyer so that quickly justify document and able to provide loan.
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For Cash Credit Pledges repayment amount should be further invest and always careful
so that customer cant be able to default.
For SOD (Overdrafts) promote customers to do FDR, DPS so that customers take loan
against FDR and DPS. It is fully secured for banks and customers give less interest from
other loan.
For Loan Against House Building Credit officer should check all documents perfectly
so that when will be needed it can be sold.
For Consumer Credit Scheme bank try to increase loan amount so that employee can
buy as they need and feel happy and work hardly.
Real Estate Financing for CRB High rise building increase day by day and also
increase real estate financing for future purpose bank should increase loan and check all
document which are provided by the organization.
For Lease Financing Many fields banks provide lease financing but cant able to see all
time their lease asset. So banks should employ extra employee so that he /she can be able
to see lease items.
For SME Bankers should provide loan and go customer business and give advice so that
they increase their business and can give repayment perfectly.
9.2 CONCLUSIONS
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Todays business is very competitive and complex. To survive in the related sector the
organization need competitive people and has to take some effective policy. Every country must
have a plan for important role in economic activities. Bangladesh is no exception of that.
Commercial Banks financial development and economic developments are closely related.
Thats why the private commercial banks are playing significant role in this regard.
The National Credit and Commerce Bank Limited (NCCBL) is one of the best Banks in respect
of service, profitability and strength among the private commercial banks in our country and
also to play a catalyst role in the formation of capital market. National Credit and Commerce
bank Limited bears a unique history of its own.. Its various deposit and credit products have also
attracted the clients-both corporate and individuals who feel comfort in doing business with the
Bank.
The National Credit and Commerce Bank Limited (NCCBL) is now been called a modern bank
that undertakes all its operations at an international standard. Over the years, NCCBL has built
itself as one of the pillars of Bangladeshs financial sector and is playing a pivotal role in
extending the role of the private sector of the economy. Each and every bank has got its own
credit policy which generally promulgated on the basis of prevailing countries socio economic
conditions, political and other related aspects from time to time as per guideline of central bank.
NCC Bank limited have formulated own policy indicating the areas of lending complied by
Bangladesh Bank guideline. The main features of credit policy of NCC Bank Ltd focus on the
following areas:
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Bibliography
Foundation Training Course Book of NCCBL
Volume -1
Volume-2
Reading on International Trade, Finance and Foreign Exchange Written by Sk. Harun-Ur-Rashid
Published By Bangladesh Institute of Bank Management
Banking Theory, Law and Practice
Written by Gordon E. & Natarajan K.
Published By Himalayan Publishing House
Foreign Exchange Regulation Published By Bangladesh Bank.
Statements of Affairs, NCCBL (O.R. Dhakhinkhan Branch)
Banking Manuals of NCCBL
Annual Report of NCCBL -2010-2014
Import Policy Order 2014
Export Policy Order 2014
Bank Web Site:
http://www.nccbank.com.bd
http://www.bankinforbd.com
http://www.bb.org.bd