Internship Report

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INTERNSHIP REPORT
ON
CREDIT POLICY & PRACTICE OF PRIVATE COMMERCIAL BANKS OF BANGLADESH, A STUDY ON MERCANTILE BANK LTD.

MAIN BRANCH
61, DILKUSHA COMMERCIAL ARA
DHAKA-1000, BANGLADESH.

Submitted To:

K.M. Golam Mohiuddin
Professor
Department of Accounting &
Information Systems
University of Chittagong.

Submitted By:
Shahinor Rahaman
MBA 15th Batch
Class Roll:14488
Exam Roll: 2006/35
Session: 2005-2006
University of Chittagong.

Letter of Transmittal

May 17, 2008

K.M. Golam Mohiuddin
Professor
Department of Accounting & Information Systems
University of Chittagong.

Re: Submission of Internship Report.

Dear Sir,

I am pleased to submit my Internship Report accordingly. The report titled “Credit Policy & Practice of Private Commercial Banks of BD. A Study on Mercantile Bank Ltd.” was assigned to me by you, and was approved by my Faculty Supervisor as my “Project” during my 60 days Internship Period.

In every sphere of preparation of this report I tried my best to make good combination of my learning from the MBA program, my theoretical knowledge and working experience during my Internship Program. I have concentrated my best effort to achieve the objectives of the report and hope that my endeavor will serve the purpose. Working 60 days in Mercantile Bank Limited, Main Branch was a worth while experience for me as it helped to combine practical experience with my theoretical knowledge.

Sincerely yours,

Shahinor Rahaman
MBA 15th batch
Class Roll:14488
Exam Roll: 2006/35
University of Chittagong.

Acknowledgement

Many people have contributed to the writing of this internship report. I acknowledge my indebtedness with deep appreciation to K.M Golam Mohiuddin, honorable supervisor of my internship program and Assistant Professor of School of Business, who assigned me to prepare this report on “Credit Policy & Practice of Private Commercial Banks of Bangladesh, A Study on Mercantile Bank Ltd.’’.

I am especially indebted to Md. Rabiul Islam, Senior Vice President & Head of Branch of Mercantile Bank Ltd. whose direct cooperation & recommendation helped me to get such a nice internship immediately when getting an internship was an urgent requirement. I would convey my cordial thanks to Md. Abdus Salam, Vice President & Manager Operation of Main Branch. My innumerable thanks & heartiest gratitude always will be to Mr. Md. Fakhruzzaman Chowdhury, AVP & In charge of Credit Division of MBL Main Branch. I am indebted forever to him and without his help successful preparation of this report was really impossible for me. I am also grateful to the other executives & officers of Mercantile Bank, Main branch.

I am also grateful to our Departmental Chairman, for giving me an identity with which I could work at Main Branch of Mercantile Bank Ltd. Through doing this report, I have extracted more precise knowledge about various terms related to policy & practice of credit.

Finally, I would like to express thanks to my entire course teacher and the Department for introducing such academic work.

Shahinor Rahman
Abstract

In Banks and Financial Institutions, Credit Risk is considered as 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 the agreed terms. Credit Risk, therefore, arises from the Bank’s dealings with or lending to corporate, individuals and other Banks or Financial Institutions. Credit Risk Management 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.

Mercantile Bank prepared Credit Policy in May 2000 and circulated the same to the Branches / concerned Executives for Compliance which was revised in August 2003.In order to...
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