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THE PROBLEMS AND PROSPECTS OF RETAIL CREDIT IN CONTEXT OF PRIME BANK LIMITED IN BANGLADESH

By

Kashfia Nehereen ID: 0310001

Has been approved September, 2007

_________________________________ Mr. Samir Mainuddin Lecturer School of Business Independent University Bangladesh

THE PROBLEMS AND PROSPECTS OF RETAIL CREDIT IN CONTEXT OF PRIME BANK LIMITED IN BANGLADESH

By

Kashfia Nehereen ID: 0310001

An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration

INDEPENDENT UNIVERSITY BANGLADESH September, 2007

September 9, 2007. Mr. Samir Mainuddin Lecturer School of Business Independent University, Bangladesh.

Subject: Submission of internship report.

Dear Sir, With due respect, I, Kashfia Nehereen, ID: 0310001, would like to inform you that, it is a great pleasure for me to submit the report on The Problems and Prospects of Retail Credit in context of Prime Bank Limited in Bangladesh, as a requirement for BBA 499 program. While conducting the report, I have gathered lots of knowledge about retail credit and many unknown facts, problems and prospects of retail or consumer lending on second generation banks like Prime Bank, Eastern Bank, Dhaka Bank and National Credit and Commerce Bank. Therefore, I firmly believe that, this report will be able to meet your approval. I would genuinely appreciate to make further corrections where it seems necessary by you. Your kind advice will encourage me to conduct more research on retail credit in future

Sincerely Yours

. Kashfia Nehereen ID: 0310001

AcknowledgementAt the very beginning, I would like to express my sincere gratitude to Allah, who has given me the chance to complete my internship report in a very comfortable manner. My gratitude and thanks goes to my respected supervisor Mr.Samir Mainuddin, Lecturer, School of Business, who co-operated me all through the times for completing my internship report. I want to mention my special gratitude and thank to Dr.S.U. Ahmed, Assistant Professor, School of Business, without the special guideline of whom, it would be impossible on my part to complete my internship report successfully. I have conducted my report on The Problems and Prospects of Retail Credit in context of Prime Bank Limited in Bangladesh for which, I want to express special thanks to all the employees of SBC Tower branch of Prime Bank. I am also acknowledging the cooperation and support that I received from the Retail Credit Head Office of Prime Bank. I want to mention special thanks to Mr.Shahjahan Bhuiyan, Managing Director of Prime Bank Limited for allowing me to do my internship in this bank. I also want to mention two names whos all over inspiration and guidelines were there during my internship period for completing my report. Those are Mr. Sk Matiur Rahman,Vice President, Head of Treasury Mrs.Tahmina Akhter,Principal Officer, International Division of Prime Bank

There is no doubt that, because of their help, I, as an inexperienced person was able to accomplish the report. These persons gave me their valuable time whenever I needed their help. This report is so a blessing of the individuals who gave the valuable information of their banks other than Prime Bank. Lastly, I would like to express my special honor to Mr.Nadim Jahangir, Director in charge, School of Business for his co-operation.

TABLE OF CONTENTS

Contents Letter of Transmittal Acknowledgement Executive Summary 1.0 Introduction 1.1 Background of the Problem 1.2 Problem Statement 1.3 Objectives 1.4 Methodology 1.5 Limitations 1.6 Research Timeline 2.0 Review of the Literature on Retail Credit 3.0 A Brief Profile of Prime Bank Limited 3.1 Vision 3.2 Mission 3.3 Strategic Priority 3.4 Core Values 3.5 Products and Services 3.6 Depository Services 3.7 Loan Services 3.8 Types of Credit Facilities 3.9 Other Services

Page No.

1 1 1 2 3 3 4 5 6 6 7 7 7 7 8 8 9 10

4.0 Retail Credit Practices in Prime Bank Limited(PBL) 4.1 Credit Portfolio 4.2 Income Generation by Retail Credit 4.3 Target Clients 4.4 Typology of the Products offered by Prime Bank Limited(PBL) 4.4.1 Car Loan 4.4.2 Household Durables Loan 4.4.3 Any Purpose Loan 4.4.4 Doctors Loan 4.4.5 Marriage Loan 4.4.6 Education Loan 4.4.7 Loan against Salary 4.4.8 Travel Loan 4.4.9 Hospitalization Loan 4.4.10 CNG Conversion Loan 4.4.11Swapna Neer 4.5 Credit Assessment, Approval and Disbursement Procedure 4.5.1 Credit Assessment 4.5.1.1 Application 4.5.1.2 Contact Point Verification(CPV) 4.5.1.3 Guarantee 4.5.1.4 De duplication check

Page No.(Continued) 11 11 13 13 14 15 16 17 18 19 20 21 22 23 24 25 26 26 27 28 28 28

4.5.1.5 Assessment Method 4.5.2 Credit Approval Process 4.5.3 Credit Disbursement 4.6 Number of clients in Retail Credit 4.7 Promotional Activities 5.0 Retail Credit Practices in Eastern Bank Limited(EBL), Dhaka Bank Limited(DBL), and National Credit and Commerce Bank Limited(NCCBL) 5.1 Retail Credit Practices in Eastern Bank Limited(EBL) 5.1.1 Credit Portfolio of EBL 5.1.2 Income generation by Retail Credit 5.1.3 Target Clients 5.1.4 Typology of the Products offered by EBL 5.1.4.1 EBL Jibandhara or Any Purpose Lifestyle Loan 5.1.4.2 EBL Auto(Car) Loan 5.1.4.3 EBL executive Loan 5.1.4.4 EBL Utshab or Vacation Loan 5.1.5 Credit Assessment, Approval and Disbursement Process 5.1.6 Number of clients in Retail Credit 5.1.7 Promotional Activities 5.2 Retail Credit Practices in Dhaka Bank Limited(DBL) 5.2.1 Credit Portfolio 5.2.2 Income Generation by Retail Credit

Page No.(Continued) 29 29 30 32 32 33

33 33 35 35 36 36 37 38 39 40 41 41 42 42 44

Page No.(Continued) 5.2.3 Target Clients 5.2.4 Typology of the Products offered by DBL 5.2.4.1 Personal or Any Purpose Loan 5.2.4.2 Car Loan 5.2.4.3 Home Loan 5.2.4.4 Vacation Loan 5.2.5 Credit Assessment, Approval and Disbursement Process 5.2.6 Number of clients in Retail Credit 5.2.7 Promotional Activities 5.3 Retail Credit Practices in National Credit and Commerce Bank Limited(NCCBL) 5.3.1 Credit Portfolio 5.3.2Income Generation by Retail Credit 5.3.3 Target Clients 5.3.4 Typology of the Products offered by NCCBL 5.3.4.1Personal or Any Purpose Loan 5.3.4.2 House Renovation Loan 5.3.5 Number of clients in Retail Credit 5.3.6 Credit Assessment, Approval and Disbursement Process 5.3.7 Promotional Activities 44 44 45 46 47 48 49 49 50 51 51 52 53 53 54 55 56 56 56

6.0 Comparative Analysis of Retail Credit Status of PBL with EBL, DBL and NCCBL 6.1 Disbursed Amount of Retail Credit 6.2 Interest Income Generated by Retail Credit 6.3Number of Clients in Retail Credit 6.4 Types of Retail Credit Products Offered 6.5 Different Features of Similar Products Offered 6.6 Promotional Activities 7.0 Problems of Prime Bank in Retail Credit Operation 8.0 Prospects for Prime Bank in Retail Credit 9.0 Recommendation 10.0 Conclusion

Page No.(Continued) 57 57 57 58 58 58 60 61 63 64 65

LIST OF TABLESTables 1.List of Depository Services provided by PBL 2.List of Loan Services provided by PBL 3.Features of PBL Car Loan 4. Features of PBL Household Durables Loan 5. Features of PBL Any Purpose Loan 6. Features of PBL Doctors Loan 7. Features of PBL Marriage Loan 8. Features of PBL Education Loan 9. Features of PBL Loan Against Salary 10. Features of PBL Travel Loan 11. Features of PBL Hospitalization Loan 12. Features of PBL CNG Conversion Loan 13. Features of PBL Swapna Neer Loan 14. Features of EBL Jibandhara or Any Purpose Lifestyle Loan 15. Features of EBL Auto(Car) Loan 16. Features of EBL Executive Loan 17. Features of EBL Utshab or Vacation Loan 18. Features of DBL Personal or Any Purpose Loan 19. Features of DBL Car Loan 20. Features of DBL Home Loan Page No. 9 9 15 16 17 18 19 20 21 22 23 24 25 36 37 38 39 45 46 47

Page No.(Continued) 21. Features of DBL Vacation Loan 22. Features of NCCBL Personal or Any Purpose Loan 23. Features of NCCBL House Renovation Loan 24.Comparison of retail credit disbursed among four banks 25.Comparison of retail credit interest income among four banks 26. Comparison of number of clients in retail credit among four banks 27. Comparison of retail credit products offered among four banks 28. Comparative Features of Any Purpose Loan among four banks 29. Comparison of promotional activities among four banks 58 58 59 60 48 54 55 57 57

LIST OF FIGURESFigures 1.Credit Portfolio of PBL 2.Retail Credit Growth of PBL 3.Interest Income Growth of PBL Retail Credit 4.Process flow Chart of Retail Loan Processing of PBL 5. Clients Growth in PBL Retail Credit 6.Credit Portfolio of EBL 7.Retail Credit Growth of EBL 8.Interest Income Growth of EBL Retail Credit 9.Clients Growth in EBL Retail Credit 10.Credit Portfolio of DBL 11.Retail Credit Growth of DBL 12.Interest Income Growth of DBL Retail Credit 13.Clients Growth in DBL Retail Credit 14.Credit Portfolio of NCCBL 15.Retail Credit Growth of NCCBL 16.Interest Income Growth of NCCBL Retail Credit 17.Clients Growth in NCCBL Retail Credit Page Number 12 12 13 31 32 34 34 35 41 43 43 44 50 51 52 52 56

EXECUTIVE SUMMARY In the new competitive business era, Private banking sector is getting more competitive in Bangladesh. Besides this, as the number of salaried individuals are increasing day by day, they are also becoming more aware about the utilization of their money while fulfilling their personal needs. To consider these needs of people, Prime Bank Limited has recently emphasized more on Retail credit or Consumer Credit Therefore, to find out the possibility of establishing the leading position of Prime Bank in terms of retail credit, this report has been conducted to find out the problems and prospects of Prime Bank retail credit. In this report, the total credit portfolio of Prime Bank has been shown that indicated a positive growing trend in