1.1 Origin of the report:
As a mandatory educational requirement I have to get myself indulged in internship .My firm is Prime Bank Limited. From the first February, 2009 I have been working as an intern in PBL, Bangshal branch. So, this report is linked with my duties and responsibilities that I have to perform as a member of corporate credit team of PBL‘s Bangshal branch.
1.2 Background of the study:
This report will be prepared on the basis of a research on the “ Credit Risk Grading (CRG) & Project Success”. Risk is inherent in all aspects of a commercial bank’s operation; however one of the most significant risks a bank is exposed to is credit risk. CRG is a combination of both qualitative and quantitative instruments used to calculate a “score” representing the applicants’ probability of default and to sort borrowers into different default class. CRG is also needed for outstretching the available limit or renewal of the credit facility.
With the world moving toward Basal II the need to introduce a Risk Grading System (RGS) for the banking industry became immensely essential. In 2003, Bangladesh Bank made the Core Risk Management Guidelines (CRMG) mandatory. For the first time CRMG was introduced for grading unclassified accounts. The CRMG however was not detailed enough for banks to fully implement a RGS. Therefore in January 2005, BIBM, was instruct by governor Bangladesh Bank to produce credit risk grading manual based on the core risks management guidelines. The CRGM is a mandatory replacement of Lending Risk Analysis (LRA) and will be applicable for all exposures (irrespective of amount) other then those covered under consumer and small Enterprises Financing prudential guidelines and also under the short- term agriculture and Micro- Credit.
CRG needs to be a robust process that enables banks to proactively manage loan portfolios in order to minimize losses and earn an acceptable level of return for shareholders
1.3 Objective of the study:
The purpose of this study is:
To analyze whether any significant relationship prevails between CRG and project success or not. Secondly
• To know the areas in which the CRG manual of Prime Bank differs from Bangladesh Bank guideline and to determine the impact of this phenomenon on risk grading. • To find out the loopholes in the existing CRG practice of Prime Bank Limited. • In a comparative analysis to locate the differences between the CRG process maintained by Prime Bank Limited and other P.C.Bs and to determine its impact on the risk grading. • To provide an all inclusive list of recommendations to improve the CRG practice especially in Prime bank limited.
1.4 Methodology of the study:
In this part of the report I will discuss about my way of data collection, designing of the questionnaire, sampling, data processing and my overall research design.
a) Research Design:
The basic research design is case study research method. My research design roams around. • Exploratory Research: This type of research was used to identify and define the problems related to the objective more precisely, to gain insights for developing approaches to problems. • Diary Method: I kept a personal account of daily trainings, feelings, discussions, interactions when doing the classification, recognizing policies and guidelines.
b) Data collection:
All the data was gathered personally under the guidance of Prof. Mahamood Osman Imam The interview of the experienced manager of Prime Bank Ltd. And Bandar steel mill’s mid level management was conducted in a friendly manner. Secondary data were acquired individually. Data were gathered form news papers, web-sites, books other related articles. • Type of collected Data:
• Primary Data:
- Personal Observation (structured and undisguised) - Content Analysis
- Personal Interviews
• Secondary Data:...