CHAPTER - 1
1.1 Background of the Report
The report is an attempt to provide an orientation to real life scenario wherein one can observe and evaluate the uses and applicability of theoretical concepts that were taught in BBA program. As a partial fulfillment of Program, every student has to undergo an internship program. The author of the study is employed with NCC Bank Limited; a well reputed private sector commercial bank has been assigned to prepare a project paper on “Credit Risk Management of NCC Bank Limited”. Eventually a report with proper analysis and possible solutions of the organization is hereby submitted to Rony Kumar Datta, Lecturer, Department of Business Administration, Shanto-Mariam University of Creative Technology.
1.2 Objectives of the Study
To examine the overall credit risk management of NCC Bank Limited- a commercial Bank of Bangladesh.
- To analyze various credit policies of NCC Bank Limited.
- To examine the credit appraisal procedures followed by NCC Bank Limited. - To study the control mechanisms followed by NCC for lending. - To observe the overall asset quality of NCC.
- To recommend some suggestions for further development of NCC
Sources of data:
Both Primary and Secondary data have been used in preparing this report. The details of the sources of data are as follows:
1.3.1 Primary Sources:
Practical work exposure with NCC Bank Limited
Face to face conversation / Interview with the Bank Officials Observations
1.3.2 Secondary Sources:
• Annual Report of NCC Bank Limited
• Credit Operational Manual
• Training materials of the Bank
• Periodicals published by Bangladesh Bank
• Various books, journals, articles etc.
• Web Sites.
Risk is the chance that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the original investment. It is usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. A fundamental idea in finance is the relationship between risk and return. The greater the amount of risk that an investor is willing to take on, the greater the potential return. The reason for this is that investors need to be compensated for taking on additional risk. All credit extension must comply with the requirements of Bank’s Memorandum and Article of Association, Banking Company’s Act, Bangladesh Bank’s instructions, other rules and regulation as amended from time to time. Loans and advances shall normally be financed from customer’s deposit and not out of temporary funds or borrowing from other banks. The Bank shall provide suitable credit services for the markets in which it operates. It should be provided to those customers who can make best use of them. The conduct and administration of the loan portfolio should contribute within defined risk limitation for achievement of profitable growth and superior return on bank capital. Interest rate of various lending categories will depend on the level of risk and types of security offered. By analyzing the total risk, some indexes have taken to analyze only the credit risk of NCC Bank Limited except other risks e.g. market risk, operational risk etc. The credit risk has been taken into consideration for analyzing because of the fact that it is our related matter. For that purpose firstly the deposit of the branch is analyze. Then calculation of the cost of deposit is needed, which helps to set the lending rate. Thus samples of the full set of data are taken to analyze the total scenario of risk management of NCC Bank Limited. Sample of data is taken such a way to ensure that the sample reflects over the full dataset and gives a detail overview about the risk of credit management. For analyzing the credit risk Balance sheet, Income Statement and Cash Flow...
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