Welcome To

My Presentation
Prepared & Presented
By:
Name: Fatematuz zahura
ID: 13-1-12-0013
Batch: 18th
Major in Finance

Supervised By:
Shah Md. Al-Emran Sarker
Assistant Professor
Faculty of Business
ASA University Bangladesh
Presentation Topic

Credit Risk Management of

Prime Bank Limited
 Introduction
Risk is inherent in all aspects of a commercial operation. For Banks and financial institutions,

credit risk is an essential factor that needs to be managed. Credit risk is the possibility that a
borrower or counter party will fail to meet its obligations in accordance with agreed terms.

Prime Bank Limited is one of the leading banks in this sector which arranges corporate and

retail credit. This Bank is very much concerned with the credit risk and its management and has
a credit risk management department. Hence credit risk and its management has become a vital
part of the bank. This report will give an overall idea about the credit risk and its management
as practiced by the Prime Bank Limited.
 Objectives of the Study
Broad Objectives:

The overall objective of this study is to acquire knowledge about the credit & credit risk
management system of Prime Bank Limited.

Specific Objectives:

Evaluation of credit risk management tools for effective measurement of customer satisfaction.

To give a brief overview of Prime banks Ltd. and the function and service offered by the bank.

To have better orientation on Credit Risk Management activities of Prime Bank Limited,

especially on various Credits and loan services offered by the bank.

 Methodology of the Study

Methodology is generally a guideline system for solving a problem with specific

component such as phases, task, methods, techniques and tools. It is the systematic
study of methods that are applied within a discipline. It also refers how to organize
data from various sources to complete a successful study.
 Sources of Data Collection
Collection of Secondary Data:
Annual Reports,

Brochures,

Manuals and Publication of The Prime Bank Ltd.,

annual report of Bangladesh Bank,

books, various business related articles and internet were the major sources of secondary

data.
 Limitations of the Study
Prime Bank Ltd. maintains strict confidentiality about provide their financial

information; therefore, it was quite difficult to obtain all the necessary data that was
required to complete the report.

Information about the company profile is not available in the annual report.

The allocated time of the study was limited for 3 month.

Website of the company is not enriched

 Bank's Information
February 12, 1995: Incorporation of the Bank and Certificate

of Commencement of Business.
February 20, 1995: License issued by Bangladesh Bank.

March 27, 2000: Listed in Dhaka Stoke Exchange Limited

(DSE).
April 17, 2005: Formal launching of the Bank &
Commencement of the business from the Motijheel Branch.
December 11, 2007: License issued from Bangladesh Bank

as Primary Dealer.
 Vision
Every Company has their own vision. By fixing vision, they

can set their future growth. Prime bank Ltd. has its own
vision to be leader in the banking industry
To be the best Private Commercial Bank in Bangladesh in

terms of efficiency, capital adequacy, asset quality, sound

management & profitability having strong liquidity
 Mission
To build Prime Bank Ltd. In to an efficient, market

driven, customer focused institution with good

corporate governance structure.
Continuous improvement in business policies,
procedure & efficiency through integration of
technology at all levels.
 Objectives
To have a strong customer focus & to build a relationship

based on integrity superior services & mutual benefit.

To work as a team to serve the best interest of the group.

To work for continuous business innovations &

improvements.
To value & respect people & make decisions based on merits.

To provide recognition & rewards on performance.

To have sustained growth, improved & wide spectrum of

products & service.

Guidelines of Bangladesh Bank on Management Credit
Risks
Credit Risk Management (CRM)
Department
 Major Functions of CRM
To update Banks Credit Policy/Lending Guideline, procedures and control

mechanisms related with all credit risks arising from corporate/commercial

banking and retail banking etc.
To approve/decline credit proposal received from Corporate Division
(presently from Branches) within delegated authority and to recommend to
the higher authority if it is beyond delegation.
To provide advice/assistance regarding all credit matters to Corporate
Division/Branches.
Periodical review of different types of credits, maintain effective follow-up and

supervision and take all possible measures in time to save from classification .
Duties and Responsibilities of CRM
Review approval procedures of Retail Credit from time to time

Review and update banks credit manual and credit operating

procedures on an annual basis.

Conduct industry analysis and detect risk involved with each industry.

Formulate strategy to minimize risk of lending to specific industry.

Guide and educate officers of all Departments of Credit

Division and Corporate Division/branches.

Revise and ratify borrowers risk grade developed by Corporate

Division/branches.
Credit Monitoring Process
 Loan Performance of PBL
Loan Performance of PBL 2011-2015

170000000000
165000000000
160000000000
155000000000
150000000000 165042327369
145000000000 159009716196
154871128263
152719235900
140000000000
141801648964
135000000000
130000000000
2011 2012 2013 2014 2015
 SME Loan
SME Loan

1400000000

1200000000

1000000000

800000000
1278065027 1278065027
600000000 988948830
804349365
759121216
400000000

200000000

0
2011 2012 2013 2014 2015
 House Loan
House Building Loan

3900000000
3800000000
3700000000
3600000000
3500000000
3806849550
3400000000
3634699533
3615477187 3603454341
3300000000
3200000000 3301459546
3100000000
3000000000
2011 2012 2013 2014 2015
 Retail Loan

Retail Loan

16000000000
14000000000
12000000000
10000000000
8000000000 14451065292
12552789720
12138261922
11303238002
6000000000 10938785871
4000000000
2000000000
0
2011 2012 2013 2014 2015
 General Loan

General Loan

40000000000
35000000000
30000000000
25000000000
20000000000 35650698225
33237874555 32097906688
30396292698
15000000000
22300158827
10000000000
5000000000
0
2011 2012 2013 2014 2015
 Findings
One of the problems with credit appraisal is inadequate and
inaccurate data.

Sponsors always tend to overstate their future cash flow, revenue and

income and understate the risk with capturing market and expenses.

Market dont remain same over the years especially over the time gap

between loan sanction and loan recovery.

Lengthy procedure and long time involved in the appraisal of project

Sometimes, there is pressure groups involvement in sanctioning loan.

Many viable projects do not get sanctioned loan due to absence of

bribe and pressure from political and other pressure group.

 Recommendations
Prime bank Limited has an efficient & excellent credit management team

and performing with great expertise and care.

Credit officer measures the risk associated with the credit facility. He should

not be liberal in this respect; he should strictly follow the credit evaluation
principle setup by the bank. It should improve in file management system
to faster the dealings with the client's proposal

For commercial lending, most of the time clients are unable to submit

audited financial statements. The reason is no legal bounding to prepare

audited financial statements for all commercial organization. So the credit
officer has to face difficulties about the reliability of financial statements
submitted. So there should be some flexibility for proprietorship concerns.
 Conclusion
Credit Appraisal system of Prime bank is pretty efficient. From the

beginning of the process of credit appraisal system the credit

committee is sufficiently committed and caring. After received loan
application from the client, in-depth study of various related
documents & gathering of information from different banks and
other sources are performed. The loan proposal that is prepared by
the credit officer and submitted to the higher authority for approval
is the most important part of credit appraisal system because
based on this proposal the granting of credit decision is made.
Credit collection process of PBL is also strict and satisfactory.