Consumer Credit

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1.1 Background of the problem:

Banking concept has been evolved since the rapid development of information technology. Nowadays almost all over the world, retail banking concept is well-orchestrated name which has indeed added a new feather to the gamete of banking lexicon. The introduction of retail banking in Bangladesh has led the banking industry to the doorstep of embryonic prospects and potentials. Consequently, several local and foreign banks came in this country to get abundant benefit for their financial betterment. In recent years, the banks are aggressively pursuing their marketing strategy to take hold of new segments with purpose to discover new opportunities because the tremendous market competition makes the companies feel constantly improve their marketing mix. Thus, offering innovative products and service in the market are remarkably increasing. Consumer loan, credit card, online banking, mobile banking, ATM card etc are some of the outcomes of this continuous innovation and improvement. The technological innovations make the consumer more knowledgeable and persuade them to put more thinking in their buying decision. With the involvement of foreign and local banks the competition are on its peak. So only improving the product is not enough to be competitive in the market. Enhancing the service quality is also becoming very important .There are abundant opportunities are present in the market. . It needs only continuous upgrading and customer orientation to be able to avail those opportunities to a broad degree. In the recent years, Banking Industry in Bangladesh has seen a considerable growth. Significant numbers of investors are becoming interested to invest their money in this sector. Besides the local banks, foreign banks are continuously competing for the opportunities established in this market. The profit-making drive stimulated by the ample of opportunities has exaggerate the rivalry among the bank and so as the extent of influence of customer orientation.. As of this competition innovation on new products and services are resulted in. Consumer Credit Scheme (CCS) is one of the more popular and visible schemes in all over the world. CCS play a vital role to create a distinctive image in consumer’s mind because it deals with one to one consumer, so by CCS products, its very easy to come near to consumer and to know their perception about a bank.

1.2. Problem statement:

Retail credit is deal with one to one customer so it’s is less volatile than that Corporate Credit. Credit risk segments in small, because of the small amount of loan. In PBL, asset quality at the portfolio level is generally expected to be better in retail lending than corporate lending because of dispersion of risk, product Structuring based on customer life cycles, strong collection mechanisms etc. Every bank in Bangladesh both local and private focuses CCS as one of their prime product because of this product visibility and most of the time CCS lending it self play a vital role in promotion. Beside these, increasing economic growth, awareness of living standard makes CCS lending is much popular. Thus, the target of the local banks is continuously innovating new ways of this product to attract and satisfy customers and want to bit their foreign competitors .Given the fast changing dynamic economy and changing pressure of globalization and liberalization, consolidation and disintermediation, it is essential that Prime Bank adopts a robust credit risk management policy to proactively manage its loan portfolio in order to minimize losses and also to earn an acceptable level of return for stakeholders. To provide guidelines from the board for Retail Credit Operations towards efficient management of the Retail Credit portfolio of the Bank, a well-defined Credit Risk Management approach, as part of retail banking credit policy, is a pre-requisite. To...
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