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A WORKING REPORT ON CREDIT OPERATION & MANAGEMENT OF PRIME BANK LTD

by

Fatima Prodhan ID # 0710011

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

INDEPENDENT UNIVERSITY, BANGLADESH April 2011

A WORKING REPORT ON CREDIT OPERATION & MANAGEMENT OF PRIME BANK LTD

by

Fatima Prodhan ID # 0710011

has been approved April, 2011

Ms. Sylvana Maheen Ahmed Lecturer School of Business Independent University, Bangladesh

LETTER OF TRANSMITTAL21 April, 2011

To Ms. Sylvana Maheen Ahmed Lecturer, Independent University, Bangladesh

Subject: Submission of Internship Report.

Dear Madam,

With due respect I am very please to enclose herewith the internship report on Credit Operation and Management of Prime Bank LTD. I have tried my best to prepare a good report with providing all of my effort and to cover all aspects regarding the matter. I think that the report contains the information that you need to get an idea about Credit Operation and Management of Prime Bank Ltd.

I, therefore, hope that you would be kind enough to accept my internship report and oblige there by.

Sincerely Yours,

Fatima Prodhan ID # 0710011

ACKNOWLEDGEMENT

First of all I would like to pay all my sincere gratitude to the creator of this universe Almighty Allah for giving me the required patience, energy and little bit knowledge to prepare this report.

I am also very much grateful to my supervisor Ms. Sylvana Maheen Ahmed for her tips containing prime guideline regarding the preparing the report successfully.

I am very much grateful to the authority of Prime Bank Limited for assigning me as an internee in this reputed bank and having the opportunity to learn theoretical as well as practical knowledge related to overall banking system and complete such an ambitious study for my internship program as well as for preparation of this report.

I am grateful to all concerned persons who provided valuable guidance, suggestions and advices in collecting information, analyzing and preparing the report. I am particularly indebted to them whose efforts and cordial cooperation made the report possible.

Finally I would like to thank bank staffs for providing information and additional elements.

Executive SummaryPRIME BANK is a bank with a difference incorporated as a public limited company on 17th April 1995 under the company acts 1994. Prime Bank limited is a full service commercial bank with local and international institutes. Prime bank has been striving to provide best-in-the-class services to its diverse range of customers spread across the country under an on-line banking platform. I have worked one of the major departments of this bank. The main objectives of this study are to give a brife idea about credit operation and management of Prime Bank and explain my duties and responsibilities in Prime Bank over this three months. For collection of data for this report I have used both primary and secondary sources. I had collected data from personal observation and informal discussion with the employees of Prime Bank Narayanganj Branch, relevant books, newspapers etc. PBL annual report, 2008 2009, published documents, office circular. In this report chapter one is about introduction of PBL and the objectives of this report. Chapter two is talked about the policy of credit operation and management of PBL. Third chapter is about my responsibilities and duties in PBL and the last chapter is conclusion. During analysis of data I have noticed some positive and negative aspects of Prime Bank Ltd. like strong manpower, branch network, work environment problems, administrative problem and technological problem. After observing over these three months in Prime Bank Ltd. I can say that if PBL centralize their monitoring system it could be more active to maintain classified loan to a minimum level. PBL should open more new exchange houses abroad for enhancing remittance business. PBL should arrange job rotation in branch level to get overall banking knowledge for their employee.

Table of ContentLetter of Transmittal Acknowledgement Executive summary Pg No. Chapter 1: Introduction 1.1 Introduction ..... 1 ... 2

1.2 Objective of the Report

1.3 Data Collection ... .2 1.4 Limitations of the Report ........ 2

Chapter 2: Credit Operation & Management 2.1 Credit.... 3 2.2 Credit Operation....... 3 2.3 Credit Management...... 3 2.4 Background of Credit Operation & Management of Prime Bank.... 4 2.4.1 Credit Operation & Management of Prime Bank4 2.4.2 CREDIT RISK MANAGEMENT OF PRIME ......4 2.4.3 CREDIT POLICY OF PRIME BANK LIMITED......... 5 2.4.4 Types of CREDIT OF PRIME BANK....... 5 22.5 Steps in the Lending Process.... 6 2.6 Creditworthiness of the Borrower.... 7 2.6.1 Computation of CRG... 8 2.7 Structure of the Loan Agreement... 10 2.8 DOCUMENTATION OF LOAN AGREEMENT........11 2.9 Information About the loan Customers.....14 2.10 Mechanism of Credit Distribution of the Prime Bank...14 2.11 Disbursement.....15 2.12 Loan Classification-Provisioning...15 2.13 Recovery Policy of the Prime Bank...16 2.14 Conclusion.........16

Chapter 3: Working Experience 3.1 Introduction...17 3.2 General Banking Division.17 3.3 Cash Section..18 3.4 Credit Division...18 3.5 Findings..19 3.6 Recommendations.20 3.7 Conclusion.20

References Appendix

A Working Report on Credit Operation & Management of Prime Bank Ltd

1

Chapter 1 1.0 Introduction 1.1 IntroductionPrime Bank Limited was incorporated as a scheduled Bank under the Companies Act 1994, initiated its operation on April 17,1995 with target to play the vital role on the socio-economic development of the country (Prime Bank, n.d.). It availed its registration as a Banking company under the Banking Company Act, 1993 from the Bangladesh Bank dated February 12, 1995. PBL focuses on a wide range of financial products and services, which include commercial banking through both Conventional and Islamic mode, Merchant and Investment Banking, SME & Retail banking, Credit Card and off-shore banking. It plays leading role in Syndicated Financing. It has expertise in corporate credit and trade finance and made extensive market penetration with continuous growth in corporate, Commercial and Trade Finance sectors. It has a fully owned exchange house at Singapore focusing on remittance inflow to Bangladesh (Prime Bank, n.d.). The vision of Prime Bank Limited is to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity. The chairman of Prime Bank is Mr. Azam J. Chowdhury. The Prime Bank Group has a large and well distributed branch network of 94 fully fledged branches and 39 Booths in Bangladesh with a strong tradition of service excellence. Prime Bank Narayanganj Branch has stablished at 15th March 1998 and the manager of the branch is MD. Farhad Ahmad Khan(Senior Assistant Vice President & Head of Branch). Prime Bank offers a number of products and services. The Deposit Schemes are Contributory Savings Scheme, Monthly Benefit Deposit Scheme, Education Savings Scheme, Fixed Deposit Scheme, Short Term Deposit, Lakhopati Deposit Scheme, Double Benefit Deposit Scheme, House Building Deposit Scheme, Prime Millionaire Scheme. Loan Schemes are General Loan Scheme, Consumer Credit Scheme, Personal Loans, Lease Finance, Hire Purchase, Small and Medium Enterprise (SME). Other Services of PBL are On-line Banking, Information Technology in Banking Operation, SWIFT Service and Western Union Money Transfer (Prime Bank, n.d.).

Prime Bank Limited

A Working Report on Credit Operation & Management of Prime Bank Ltd

2

1.2 Objectives of the StudyThe main objectives of this study are: To give a brief idea about credit operation and management of Prime Bank. To explain my duties and responsibilities in Prime Bank.

1.3 Data CollectionData were collected from both primary and secondary sources. Primary data were collected from personal observation and informal discussion with the employees of Prime Bank Narayanganj Branch. Secondary data were collected from relevant books, newspapers etc. PBL annual report, 2008 2009, published documents, office circular.

1.4 LimitationsSome limitations were faced while conducting this study. The limitations were --

The employees in Prime Bank Limited are so much busy in their responsible fields; they could hardly provide little time to discuss with them. Another limitation of this report is Banks policy of not disclosing some data and information for obvious reason, which could be very much useful. Actually to cover whole credit operation and management of PBL it needs more time. As I had only three month I tried to cover the basic things only.

Prime Bank Limited

A Working Report on Credit Operation & Management of Prime Bank Ltd

3

Chapter 2 2.0 Credit Operation & Management 2.1 CreditThe 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. The fundamental nature of credit is that an element of trust exists between buyer and seller-whether of goods or money. In other words credit is the ability to command the goods or services of another in return for a promise to pay such goods or services in some specified time in the future (Investorwords, n.d.).

2.2 Credit OperationBank is a financial intermediary whose prime function is to move scarce resources in the form of credit from savers to those who borrow for consumption and investment. The main use of bank