Credit Management Systems of Jamuna Bank Limited
Theoretical Framework with Graphical Representation
3.1 Primary Discussion:
Risks are by their nature uncertain and management of risks relies on judgment of risks and predictions about the future. Since uncertainty can adversely affect the profitability of the Bank and it can also deplete the Liquidity. So Jamuna Bank Limited always try to avoid any unforeseen problem. Credit risk is the risk or loss that may occur from the failure of any counter party to make required payments in accordance with agreed terms and conditions. This section lends the fund what the bank mobilizes through its various deposit accounts This is the second function of banks two generic function deposit mobilization and credit creation. The major part of banks income is derived from credit and since the banks credit is customer’s fund, bank takes extreme caution in lending.
The true core business of banking is the profitable management of risk. The risk Management of Jamuna Bank Limited evolves identification, measurement and controlling risks to ensure that
a. The Bank’s risk exposure is within the limits established by Board of Directors.
b. The Bank’s risk taking decisions are in the line with the business strategy and objectives set by the Board of Directors of the Bank as well as Bangladesh Bank guidelines.
c. The Bank’s risk taking decisions are explicit and clear.
d. Sufficient capital as a buffer is available to take risk.
One of the most crucial side of arising risk is the credit department. The following graph might clear about that: The above circle makes us clear that JBL’s major portion of risk weight is carried by the credit section. So the proper credit management systems are required to avoid or minimize the credit risk which contains possibility of affecting the Bank’s profit.
3.2 Concepts of Credit Risk of JBL:
It arises mainly from lending trade finance, leasing and treasury business. This can be described as potential loss arising from the failure of a
3.1 Primary Discussion:
Risks are by their nature uncertain and management of risks relies on judgment of risks and predictions about the future. Since uncertainty can adversely affect the profitability of the Bank and it can also deplete the Liquidity. So Jamuna Bank Limited always try to avoid any unforeseen problem. Credit risk is the risk or loss that may occur from the failure of any counter party to make required payments in accordance with agreed terms and conditions. This section lends the fund what the bank mobilizes through its various deposit accounts This is the second function of banks two generic function deposit mobilization and credit creation. The major part of banks income is derived from credit and since the banks credit is customer’s fund, bank takes extreme caution in lending.
The true core business of banking is the profitable management of risk. The risk Management of Jamuna Bank Limited evolves identification, measurement and controlling risks to ensure that
a. The Bank’s risk exposure is within the limits established by Board of Directors.
b. The Bank’s risk taking decisions are in the line with the business strategy and objectives set by the Board of Directors of the Bank as well as Bangladesh Bank guidelines.
c. The Bank’s risk taking decisions are explicit and clear.
d. Sufficient capital as a buffer is available to take risk.
One of the most crucial side of arising risk is the credit department. The following graph might clear about that: The above circle makes us clear that JBL’s major portion of risk weight is carried by the credit section. So the proper credit management systems are required to avoid or minimize the credit risk which contains possibility of affecting the Bank’s profit.
3.2 Concepts of Credit Risk of JBL:
It arises mainly from lending trade finance, leasing and treasury business. This can be described as potential loss arising from the failure of a