Dolon-Internship Report .

Internship Report
On
INVESTMENT &Credit ManageMent in banks
A look from ncc bAnk ltd
On
Investment &Credit Management in Bank A look from NCC Bank LTD
Submitted to
DR. Shyama Pada Biswas
Professor
School of Business (SOB).
Ahsanullah University of Science & Technology.
Submitted BY
Sheikh Sadi
ID No: 12.01.02.011
Batch: 29th
Section: A
Major: Finance
Program: Bachelor of Business Administration (BBA)
Ahsanullah University of Science & Technology

(AUST)
2
Letter of Transmittal
August 04, 2016
Professor DR. Shyama Pada Biswas
School of Business (SOB)
Ahsanullah University of Science & Technology
Subject: Submission of Internship Report on Investment & Credit Management in Bank A
Look from NCC Bank Ltd.
Dear Sir,
Its my pleasure to submit my internship report on Investment & Credit Management in Bank A
Look from NCC Bank Ltd. I have completed my internship in NCC Bank Ltd Bhaban Branch from 03
May to 03 August 2016, as the part of my study. In preparing this report I have given my best effort with
relevant information that I have collected from NCC Bank Ltd Bhaban Branch in Dhaka.
For the kind consideration, I would like to mention that might there be some mistakes due to limitation
of my knowledge, wisdom and some other unavoidable constrains. I expect that you will forgive me
considering that I am still learner and in the process of learning.
Finally, I have worked hard in preparing this report and hope that it will satisfy my course requirement. I
will be always available for answering any query about this report.
Sincerely yours,
.
Sheikh Sadi
ID. 12.01.02.11
Batch: 29th
Program: Bachelor of Business Administration (BBA)
Major: Finance
Ahsanullah University of Science & Technology (AUST)
Acknowledgement
At the very beginning, I would like to express my deepest gratitude to the almighty Allah for giving me
the strength & the composure to finish the task within the scheduled time. Internship report is an
essential part of BBA program as one can gather practical knowledge through this process.
I am deeply indebted to my internship supervisor Sheikh Moniruzzaman for his whole-hearted guidance
and supervision. His suggestions & comments to make the report a good one was really a great source of
spirit for me.
I am very grateful to Tanvir Ahmed Siddque (Senior Vice President) and Waliul Islam (Deputy
Manager) of NCC Bank BhabanBranch, NCC Bank Ltd for kindly accepting me for practical orientation
program in his bank for which I get this opportunity to learn about General Banking, Credit
Management & necessary things. I would like to express my deep gratitude to Shamima Ferdous,
MD.Monirul Islam, Sheful Islam (General Banking & Clearing Operation), MD.Moniruzzaman,
Ashique Rahman, Towfiq Hossain, Monzur Hossain(Credit Section) and all of my senior colleagues of
NCC Bank Bhaban Branch at NCC Bank LTD for their helping hand at the hour of my need. Their
support gives me opportunities to use various documents during my internship period & their valuable
suggestions, advices and extended helping have contributed most.
I am also grateful to Mamun Sir, for their supporting role and all other employees of NCC Bank Bhaban
Branch at NCC Bank Ltd for their sincere cooperation, careful supervision and unparalleled
encouragement.
Finally, I would like to give special thanks & greetings to my fellow BBA Teachers and students for
giving me some required information, valuable advices and suggestions to complete the report in a
comprehensive manner.
Executive Summary
The report is originated in result of my internship program which I have done as a requirement of
Bachelor of Business Administration (BBA) Program. This report is completed based on my 3 month
internship in NCC Bank Limited Bhaban Branch Dhaka. This is an orientation report that contains the
real life day to day working experience of different tasks in NCC Bank Ltd Bhaban Branch. The
objective of this study is to analyze the credit policy, financial performance regarding credit etc. To
prepare this report both primary & secondary sources of data have been used. The first section of this
report consists of an introductory part which has been developed for the proper execution of the entire
report. Second part has explained the working experience of my internship period at different division of
NCC Bank Limited Bhaban Branch. The remaining part consisted of analysis, findings,
recommendations and conclusion. NCC Bank Limited is one of the leading private banks in Bangladesh.
To serve the nation NCC Bank Ltd performs some activities for their clients like general banking, loan
and advance, capital market operation etc. Bank collects deposit from public & provides it to other
business or individual as loan. Bank pays interest to deposit holder and take interest from borrowers.
NCC Bank Limited measure all risk components before sanctioning a loan. When all the formalities
completed then respective officer disburse the loan. After disburse the loan it is duty of bank to recover
the disbursed loan. This report is based on actual information & working procedure in NCC Bank
Limited. The overall investment & credit management of NCC Bank Limited has analyzed to give a
clean idea about the policy of NCC Bank Limited & implementation of that policy by various
mechanism & process.
After completion of analysis, it is found that Banks credit deposit ratio is increasing from previous year,
which means bank can invest properly & utilize more funds to maximize their profit. Credit distribution
of NCC Bank Ltd. was increasing though its growth rate was fluctuating over the year. NCC Bank Ltd
provides a large portion of credit in Dhaka & Chittagong division which was 63.35% and 30.19%.I will
recommend the bank to give more concentration in agricultural sector for developing our country; bank
should also diversify their credit in other divisions. Bank should take necessary actions for reducing the
percentage of bad & loss loan and doubtful loan such as carefully identify the lending source which may
help to reduce the percentage of bad & loss loan.
Finally it can say honesty, reliability, thoroughness & willingness, new ideas & new ways of meeting
customer needs are most important for the success.
Contents
Chapter
Page
Chapter-01
Introduction
12-16
Introduction of the study
13
Origin of the Report
13
Objective of the Study
14
Scope of the Report
14
Methodology
14
Limitation
16
Chapter-02
Overview of NCC Bank Limited
17-30
Historical Background of NCC Bank Ltd
18
NCCBL Overview
18
Objective of NCCBL
19
Mission Statement
19
Slogan
19
Motto
20
Corporate Mission
20
Corporate Vision
20
Our Core Values
20
Group Corporate Structure
21
Departments of NCCBL
21
Products & Services
23
Deposits Products
23
Loan & Advances Products
24
Cards
25
Services
25
Remittances
25
Corporate Information
26
Board of Directors
27
Organization Structure
28
Performances of NCCBL
29
Chapter-03
Chapter-04
Chapter-05
Theoretical Aspects
31-42
Risk Management
32
Several Types of Risk
32
Risk factor in case of Export
32
Principles of the assessment of banks credit risk

management
Classification of Loan
34
Loan & Advances
39
Develop of Credit Application
40
Debt Recovery
41
Credit Management of NCCBL
36
43-52
Credit Risk
44
NCCBL Credit Risk Management Policy
44
Securities against loan and advance
46
Overall procedure of sanctioning loan
47
Credit administration
52
Credit Monitoring
52
Analysis of Credit Management
43-52
Distribution of Value Added 2014-2015
54
Year wise deposit & growth rate
55
Year wise credit & growth rate
56
Year wise investment & growth rate
58
Year remittance & growth rate
59
Year wise Export & Import
60
Year Wise CDR,ROA, ROI, ROE, EPS
61-65
Year wise P/E Ratio
66
Year wise Dividend per Share, Market value per Share
Chapter-06
67-68
Sector wise distribution of Deposit
69
Sector distribution of investment Portfolio
71
Distribution of Loan
72
Credit Distribution of Agricultural, Industry,

Construction
Geographical Location wise Credit Distribution
74
Year wise Classified Loan
78
Category Wise Classified Loan
79
Provision kept against Classified Loan
80
Recovery Rate
81
Deposit of NCCBL as a percentage of National

Deposit
Credit of NCCBL as a percentage of National Credit
82
Comparison of CDR and National CDR
84
Non Performing Loan as a Percentage of total Loan
85
Findings & Recommendation
77
83
86-89
Major Findings
87
Recommendation
88
Conclusion
89
Appendix
Abbreviation
Formula is in Use
Bibliography
Table Contents
Table
Page
2.13
Corporate Information (at a glance)
26
3.5(A)
Classification of Continuous Loan
38
3.5(B)
Classification of Demand Loan
38
3.5(C)
Classification of Fixed Loan
39
3.6
Differences between Loan & Advances
40
4.3
Securities against Loan & Advances
46
5.1
54
5.2
55
5.3
56
5.4
58
5.5
59
5.6
60
5.7-5.11
5.12

Year wise P/E Ratio
61-65
66
67-68
5.15
Year wise Dividend per Share, Market value per

Share
5.16
71
5.17
72
5.13-5.14
5.17(a)-5.17(c) Credit Distribution of Agricultural, Industry,
69
74-76
5.18
Construction
77
5.19
78
5.20
79
5.21
80
5.22
Recovery Rate
81
5.23
82
5.24

Deposit
5.25
84
5.26
85
83
Figure Contents
Table
Page
2.10
2.12
2.14
2.15
3.5
5.1(A), 5.1(B)
Group Corporate Structure

Products & Services of NCC Bank Ltd
Board of Director of NCC Bank Ltd
Organization Structure of NCC Bank Ltd
Classification Of Loan
21
23
27
28
36
54-55
5.2(A), 5.2(B)
55-56
5.3(A), 5.3(B)
56-57
5.4(A), 5.4(B)
5.5(A), 5.5(B)
5.6
5.7-5.11
5.12
5.13-5.14

Year wise P/E Ratio
Year wise Dividend per Share, Market value per
Share
58
59-60
60
61-65
66
67-68
10
5.15
69
5.16
71
5.17
72
5.17(a)-5.17(c) Credit Distribution of Agricultural, Industry,

[A-F]
74-76
Construction
5.18
77
5.19
78
5.20
79
5.21
80
5.22
Recovery Rate
81
5.23
82
5.24

Deposit
5.25
84
5.26
85
83
11
Chapter 1
IntroductIon
12
1.1 Introduction of the study

Generally the word Bank means financial institution which deals with money. There are different
types of bank like: Central Bank, Commercial Bank, Savings Bank, Investment Bank, Industrial Bank,
Co-operative Bank etc. But I am working with Commercial Bank. A Commercial Bank is a type of
financial intermediary. Commercial Banking is also known as business banking.
Ordinarily, banking business implies a routine of operations consisting chiefly in the management of
customers deposit accounts, payment of their cheques by exchange or by cash, collection of documents
for them, the arrangement of credit by discount or advances & transactions with other bodies in
pursuance of these functions
Australian Encyclopedia
Banking sector is expanding its hand in different events every day. It is also becoming faster & easier.
As the demand for the better service is increasing day by day, they are coming with different innovative
ideas & product. To survive in the competitive field of the banking sector, they are looking for better
service opportunities to provide their clients.
1.2 Origin of the report

This is an internship report prepared as a requirement for the completion of the Bachelor of Business
Administration (BBA) program. The primary goal of the internship was to provide an on the job
exposure the student and an opportunity for translation of theoretical conceptions in real life situation.
We, the students, were placed in enterprises, organizations, research institutions as well as development
projects.
In this connection, after the completion of the Bachelor of Business Administration (BBA) program, I
was assigned to the NCC Bank Bhaban Branch of the National Credit & commerce Bank Limited
(NCCBL) for practical orientation. I chose the topic Investment & Credit Management A Look from
NCC Bank LTD for my internship report.
13
1.3 Objective of the study

The objectives of the study are mentioned below:
a) General Objective: The main objective of this report is to analyze the Investment & Credit
Management of NCC Bank Limited
b) Specific Objective: The specific objective of the study are:
To understand the lending procedure of NCC Bank Limited.
To know the terms & condition of credit management of NCC Bank Limited.
To analyze the year, sector and geographical location wise loans & advances.
To analyze classified & unclassified loans & advances over the years.
Disbursement & recovery of loans & advances
To provide suggestions for the improvement of Credit Risk Management policy of the
Bank.
1.4 Scope of the Report

This report has been prepared on the basis of experience gathered during the period of internship. This
study is limited with function of credit operation system, credit risk management and general Banking
operation of NCC Bank Limited. Most of the data used in the reporting of the study are from secondary
sources. All the data related to the reporting requirements are not available due to confidential
reservation practice for the benefit of the organization.
1.5 Methodology
At the time of my internship period, I tried to collect both primary and secondary data that I have
gathered from different sources. For preparing this report, primarily I got some data from face to face
speech of different employees of NCCBL and some from various annual reports & features of this bank.
14
1.5.1 Research Design:

This report is a descriptive type of which briefly reveals the Evaluation of Credit Performance of NCC
Bank Limited. It has been administered by collecting secondary data. Annual reports of NCC Bank
Limited were the major secondary data sources in this regard. This study has been conducted by
collecting data for the period of 6 year from 2010 to 2015.
1.5.2 Source of information:

In this report, two sources of information have been used widely.
The Primary Sources are as follows:
Face to face conversation with the respective officers & staffs of the branch.
Informal conversation with the employees of the bank.
Practical work from different desk of the department of the branch.
The Secondary Sources are as follows:
Annual report of NCCBL.
Different Procedure Manual, published by NCCBL.
Official files, Newspapers etc.
1.5.3 Data Collection Procedure & Instruments:

For Evaluation of Credit Performance of NCC Bank Ltd Secondary data are mainly used. Besides this,
information is also collected by taking opinion from the officers and direct observation while I was
doing the internship program at the bank.
1.5.4 Data Analysis and Reporting:

In order to analyze the data I have trend analysis and software for graphical presentation:
1. Data Analysis:
-Trend Analysis
2. Software Used:
-MS Word
-MS Excel
-Microsoft PowerPoint
15
1.6 Limitations
Limitation of the time, 90 working days, was one of the most important factors to know all activities of
the branch and prepare the report.
1) The limitation of time was one of most important factors that shortened the present study. Due to
time limitation many aspects could not be discussed in the present study.
2) Every organization has their own secrecy that is not revealed to others. Employees did not
disclose much information for the sake of the confidentiality of the organization.
3) Sufficient books, publications and figures were not available.
4) Lack of available up-to-date information.
5) As this report is carried out for the first time, so experience is one of the main constrains of the
study.
16
Chapter 2
Overview Of NCC BaNk
Limited
17
2.1 Historical Background of National Credit & commerce Bank Limited
National Credit and Commerce Bank Ltd. bears a unique history of its own. The organization started its
journey in the financial sector of the country as an investment company back in 1985. The aim of the
company was to mobilize resources from within and invest them in such way so as to develop country's
Industrial and Trade Sector and playing a catalyst role in the formation of capital market as well. Its
membership with the browse helped the company to a great extent in these regard. The company
operated up to 1992 with 16 branches and thereafter with the permission of the Central Bank converted
into a full-fledged private commercial Bank in 1993 with paid up capital of Tk. 39.00 crore to serve the
nation from a broader platform.
Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere
personalized service to its customers in a technology based environment.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business.
Its various deposit & credit products have also attracted the clients-both corporate and individuals who
feel comfort in doing business with the Bank.
2.2 NCCBL Overview

From the very inception it is the firm determination of NCCBL to play a vital role in the national
economy. They are determined to bring back the long forgotten taste a banking service and flavors. They
want to serve each promptly and with a sense of dedication and dignity.
NCC Bank Ltd has its prosperous past, glorious present, prospective future and under processing
projects and activities. NCC Bank Ltd is fully Bangladeshi entrepreneurs owned private bank. The
member of the board of directors is creative banker of the country.
To keep rate of knots with time and in synchronization with national and international economic
activities and for rendering all modern service, NCC Bank Ltd, as a financial institution automated all its
branches with computer network in accordance with the competitive commercial demand time.
Moreover, considering its forth-coming future the infrastructure of the bank is rearranging. The
expectation of all class businessman, entrepreneurs and general public is much more to NCC Bank Ltd.
18
With its firm commitment to the economic development of the country, the Bank has already made a
distinct mark in the realm of Private Sector Banking through personalized service, innovative practices,
dynamic approach and efficient management. The Bank, aiming to play a leading role in the economic
activities of the country, is firmly engaged in the development of trade, commerce and industry thorough
a creative credit policy.
2.3 Objectives of NCCBL

To provide quick and superior service by applying modern information technology.
In all aspects the NCC Bank Ltd lanced development growth of the bank to be sustained and this
technique is to be maintained.
By improving congenial relationship between the Bank and the customers, we want to come
closer to play a vital role in national development.
By investing the liquidity of our valued shareholders income generating projects and give them
maximum dividend.
In this competitive market, the bank is to provide new innovation banking service to its valued
customers and build up its own image.
To ensure the improvement of professional quality of man power by increasing the work
efficiency and technological knowledge.
To its own position by creating creative banking service in competitive market.
2.4 Mission Statement

To become a bank of choice in serving the nation as a progressive and socially responsible financial
institution by bringing credit and commerce together for profit and sustainable growth.
2.5 Slogan
With you always.
19
2.6 Motto
The Bank will be a confluence of the following three interests:
Of the Bank
: Profit Maximization and Sustained Growth.
Of the Customer
: Maximum Benefit and Satisfaction.
Of the Society
: Maximization of Welfare.
2.7 Corporate mission

We deliver excellent financial service for our communities based on strong customer
relationship.
We provide long lasting solutions that combine our cutting edge technology, experience and
financial strength to our clients and stakeholders.
We create a cohesive and friendly environment where customers and our people can excel.
2.8 Corporate Vision

To become the Bank of Choice in serving the Nation as a progressive and Socially Responsible financial
institution by bringing credit & commerce together for profit and sustainable growth.
2.9 Our Core Values

Professionalism: We passionately drive customer delight by exceeding their needs by bringing
timely solution and initiatives.
Integrity: We will show our honesty, truthfulness, accuracy, high moral principles and
professional standard.
Accountability: We are accountable for our actions.
Confidentiality: We uphold the confidentiality of customer and personal banking information
throughout its lifecycle.
20
Commitment :We are responsible, loyal and committed for continuous improvement
Respect for individual: We treat our customers and colleagues with respect and dignity.
Respect for nature: We care for nature and practice green banking.
2.10 Group Corporate Structure
NCCB Capital
Limited
NCC BANK
LIMITED
NCCB
Securities &
Financial
Services
Limited
Figure 2.10: Corporate Structure (NCCBL Annual Report-2015)
2.11 Departments of NCCBL

If the jobs are not organized considering their interrelationship and are not allocated in a particular
department it would be very difficult to control the system effectively. If the departments are not fitted
for the particular works there would be haphazard situation and the performance of a particular
21
department would not be measured. NCC Bank Limited has does this work very well. Different
departments of NCCBL are as follows:
Human Resources Department
Personal banking Department
Treasury Department
Operations Department
Computer and Information Technology Department (IT)
CRM Department
Finance & Accounts Department (FAD)
Financial Institution Division (FID)
Audit & Risk Management Division
Other mostly important department that plays a vital role for banking operation at NCC Bank Ltd are
herewith
Central Account Opening Department (CAD)
Share Department
Internal Compliance & Control (ICC)
International Division (ID)
Common Service Department (CSD)
NITS
Marketing Department (MBD)
MIS Department
Foreign Exchange Department (FED)
22
2.12 Product and Services

The product and services that are currently available are given below:
Figure 2.12: Product and Services of NCC Bank
2.12.1 Deposit Products

NCC Bank Limited is now offering different types product for mobilizing the savings of the general
people.
Current A/C
Savings Bank Deposit A/C
Special Notice Deposit A/C
Short Term Deposit A/C
Term Deposit A/C
23
Youngster A/C
Youngster Maximums A/C
Youngster Moneyplant Scheme
Premium Term Deposit A/C
Instant Earnings Term Deposit A/C
Special Savings Scheme
Special Fixed Deposit Scheme
NFCD
RFCD
Money Double Program
2.12.2 Loan and Advance Products

The NCC Bank is offering the following loan and advance product to the client for financing
different purpose that fulfill the requirements of the bank and have good return to the investment as
well as satisfy the client. The loan and advance products are:
Working Capital Financing
Personal Loan
Education Loan
Car Loan Scheme
Commercial and Trade Financing
Long Term (Capital) Financing
House Building Financing
House Repairing & Renovation Loan
Home Improvement Loan
Loan for Maize Farmers
Retail and Consumer Financing
SME Financing
Agricultural Financing
Import and Export Financing
24
2.12.3 Cards
Debit Card
Credit Card (Local, International and Dual)
2.12.4 Services
NCC Bank offer following services for their valuable consumer
NCC Bank Smart Pay (Sure Cash)
NCCBL Securities & Financial Services
Treasury Services
Remittance Services
Locker Services
Offshore Banking Unit
ATM Booth
2.12.5 Remittances
Wage Earner Welfare Deposit Pension Scheme
Overseas Employment Loan Scheme
25
2.13 Corporate information (At a Glance)

The corporate head office is located at Dhaka and all the information are found at annual report 2015.
Particulars
Registered Address
NCC Bank Ltd

NCC Bank Bhaban, 13/1 & 13/2, Toyenbee Circular
Road, Motijheel C/A, Dhaka-1000, Bangladesh
Legal Status
Private Limited Company
Date of incorporation
12 November 1985
Name of Chairman
S.M. Abu Mohsin
Number of Employee
2,296
Authorized Capital
TK 10000 Million
Paid up capital
Tk. 8,832.18 Million
Total Reserve (Statuary + Other 5224.07 + 432.46 5657.16

Reserve)
Asset
Tk. 168,257.57 Million
Market value of Share
9.10
Shareholding Pattern
100% share owned by the govt. of Bangladesh
No of Branches
104
No Of Foreign Correspondents
405
No of ATM
73
Banking software used
Flora Bank
Earnings Per Share
1.54
E-mail
info@nccbank.com.bd
Website
www.nccbank.com.bd
26
2.14 Board of directors

Board of directors of NCCBL includes the high professional and high qualified banker of Bangladesh.
Well-designed directions of those bodies help the management to achieve the ultimate goal of the bank.
The members of the Board of directors are the very renowned banker of Bangladesh. The Board of
directors of the NCCBL is follows:
Chairman
S.M. Abu Mohsin
Vice Chairman
Sohela Hossain
Independent
Director
MD. Amirul
Islam
Independent
Director
K.A.M Haroon
Director
A.S.M Main Uddin Monem
Alhaz MD. Harun Newaz
MD. Abdul Awal
MD. Abul Bashar
Amjadul Ferdous Chowdhury
MD. Harunur Rashid
Abdus Salam
Khairul Alam Chaklader
Yakub Ali
MD. Moinuddin
Figure 2.14: Board of Directors of NCC Bank (NCCBL Annual Report-2015)
27
2.15 Organizational Structure
Figure 2.15: Organizational Structure of NCC Bank
28
2.16 Performance of NCCBL

The business of banking consists of borrowing and lending. As in other business, operation must base on
capital, but employ comparatively little of their own capital in relation to the total volume of their
transactions. The purpose of capital and reserve accounts is primarily to provide an ultimate cover
against losses on loans and investment.
NCCBL is a private commercial bank. The Bank started commercial banking operations effective from
18 November 1985.During this short span of time the bank has been successful to position itself as a
progressive and dynamic financial institution in the country. The Bank widely acclaimed by the business
community, from small business/entrepreneurs to large traders and industrial conglomerates, including
the top rated corporate borrowers from forward looking business outlook and innovative financing
solutions.
2.16.1 Foreign exchange Steps

Foreign exchange is the means and methods by which rights to wealth in a countrys currency are
converted into rights to wealth in another countrys currency. In banks when we talk of foreign
exchange, we refer to the general mechanism by which a bank converts currency of one country into that
of another. Foreign exchange Department (FED) is the international department Bangladesh bank issues
license to schedules banks to deal with foreign exchange. These banks are known as Authorized Dealers.
If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local
country to foreign countries. So NCCBL, Principal branch is an authorized dealer.
There are 3 kinds of foreign exchange transaction:
1. Import
2. Export
3. Remittance
2.16.2 Import
The goods and products that are coming from foreign or outside of the country are to be known as
imported goods or products. To import, a person should be competent to be an importer. According to
Import and Export Control Act, 1950, the office of Chief Controller of Import and Export provides the
registration (IRC) to the importer. In an international business environment, buyers and sellers are
generally unknown to each other. So seller of goods always seeks security for the payment of his
29
exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the
buyer does not pay. This guarantee is called Letter of Credit and officially known as Documentary
Credit. Thus the contract between importer and exporter is given a legal shape by the banker by Letter
of Credit.
2.16.3 Export
The goods and services sold by Bangladesh to foreign households, businessmen and Government are
called export. The export trade of the country is regulated by the Import and Export Control Act, 1950.
There are a number of formalities, which an exporter has to fulfill before and after shipment of goods.
The exports from Bangladesh are subject to export trade control exercised by the Ministry of Commerce
through Chief Controller of Import and Exports (CCI & E). No exporter is allowed to export any
commodity permissible for export from Bangladesh unless he is registered with CCI & L and holds valid
Export Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number
is to be incorporated on EXP forms and other documents connected with exports.
2.16.4 Foreign Remittance

This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a bank
must provide some services to the clients regarding foreign exchange and this department provides these
services.
The basic function of this department are outward and inward remittance of foreign exchange from one
country to another country. In the process of providing this remittance service, it sells and buys foreign
currency. The conversion of one currency into another currency takes place at an agreed rate of
exchange, which the banker quotes, one for buying and another for selling. In such transactions the
foreign currencies are like any other commodities offered for sales and purchase, the cost (convention
value) being paid by the buyer in home currency, the legal tender.
30
Chapter 3
TheoreTical
Aspects
31
3.1 Risk Management

Risk is the risk of loss arising from fund, unauthorized activities, errors, omission, inefficiency, system
failure from the external event. It means that when the failure may arise due to unwillingness than the
bank must be managing those risks by designed to address all those risks and achieve the goal.
From the banks management perspective, risk result from the changes in the value of securities due to
changes in financial market condition. Such as interest rate movement, exchange rate movements, and
equity prices. As banks pursuer new service related to the trading of security, they have become much
more susceptible to risk.
3.2 Several types of risk

There are 5 types of risk we can saw, those are;
Credit Risk
Liquidity Risk
Market Risk
Operational Risk
Reputation Risk
In case of credit risk there are 5 categories of risk, those are;
Financial Risk
Business / Industry Risk
Management Risk
Security Risk
Relationship Risk
3.3 Risk factor in case of export

In case of Export there are 3 types of risk, those are;
Non Performance Risk
Non Repatriation Risk
Document Discrepancies
32
A. Non Performance Risk:

Manufacturers make a contract with a bank when he exports something. In that case all responsibility of
the export comes to the bank and can do the work in behalf of the exporter. It means that all the liability
of export comes in the bank and that case bank pay all the payment in behalf of the exporter. If the
exporter cannot produce the export product than the bank comes in a travel and bank can face the
financial losses because bank make the agreement on behalf of the exporter and all the liabilities of the
agreement can pat the bank. So in this way banks can easily fall in Non Performance Risk.
B. Non Repatriation Risk:

In this case exporter can make a contract and agreement with the bank that the bank can export the
exporters product on behalf of the exporter and on against bank can pay the exportable product market
price to the exporter. But when bank export the product if the product market price is decrease then the
bank can face the losses. In the same way when bank import the product on behalf of the importer and in
that time if the product market price are increase then the bank also face the loss because bank make the
contract with the exporter or importer to the product present market price. What is happen in future they
dont forecast that.
C. Document Discrepancies Risk

Exporter or importer makes L/C with the bank when they export or import the product. When they make
the L/C they must be submit much more paper and so much information about their business and their
exportable or importable product. These types of risk can happen when the exporter or importer dont
submit all the paper or dont give all the correct information or they dont fulfill document correctly in
that time Bangladesh Bank cannot accept the document and dont accepts the contract and agreement.
For that time bank can also face much more travel and losses.
33
3.4 Principles for the Assessment of Banks Credit Risk Management

A. Establishing an appropriate credit risk environment
Principle 1: The board of directors should have responsibility for approving and periodically (at least
annually) reviewing the credit risk strategy and significant credit risk policies of the bank. The strategy
should reflect the banks tolerance for risk and the level of profitability the bank expects to achieve for
incurring various credit risks.
Principle 2: Senior management should have responsibility for implementing the credit risk strategy
approved by the board of directors and for developing policies and procedures for identifying,
measuring, monitoring and controlling credit risk. Such policies and procedures should address credit
risk in all of the banks activities and at both the individual credit and portfolio levels.
Principle 3: Banks should identify and manage credit risk inherent in all products and activities. Banks
should ensure that the risks of products and activities new to them are subject to adequate risk
management procedures and controls before being introduced or undertaken, and approved in advance
by the board of directors or its appropriate committee.
B. Operating under a sound credit granting process

Principle 4: Banks must operate within sound, well-defined credit-granting criteria. These criteria
should include a clear indication of the banks target market and a thorough understanding of the
borrower or counterparty, as well as the purpose and structure of the credit, and its source of repayment.
Principle 5: Banks should establish overall credit limits at the level of individual borrowers and
counterparties, and groups of connected counterparties that aggregate in comparable and meaningful
manner different types of exposures, both in the banking and trading book and on and off the balance
sheet.
Principle 6: Banks should have a clearly-established process in place for approving new credits as well
as the amendment, renewal and re-financing of existing credits.
Principle 7: All extensions of credit must be made on an arms-length basis. In particular, credits to
related companies and individuals must be authorized on an exception basis, monitored with particular
care and other appropriate steps taken to control or mitigate the risks of non-arms length lending.
34
C. Maintaining an appropriate credit administration, measurement and monitoring process

Principle 8: Banks should have in place a system for the ongoing administration of their various credit
risk-bearing portfolios.
Principle 9: Banks must have in place a system for monitoring the condition of individual credits,
including determining the adequacy of provisions and reserves.
Principle 10: Banks are encouraged to develop and utilize an internal risk rating system in managing
credit risk. The rating system should be consistent with the nature, size and complexity of a banks
activities.
Principle 11: Banks must have information systems and analytical techniques that enable management
to measure the credit risk inherent in all on- and off-balance sheet activities. The management
information system should provide adequate information on the composition of the credit portfolio,
including identification of any concentrations of risk.
Principle 12: Banks must have in place a system for monitoring the overall composition and quality of
the credit portfolio.
Principle 13: Banks should take into consideration potential future changes in economic conditions
when assessing individual credits and their credit portfolios, and should assess their credit risk exposures
under stressful conditions.
D. Ensuring adequate controls over credit risk

Principle 14: Banks must establish a system of independent, ongoing assessment of the banks credit
risk management processes and the results of such reviews should be communicated directly to the
board of directors and senior management.
Principle 15: Banks must ensure that the credit-granting function is being properly managed and that
credit exposures are within levels consistent with prudential standards and internal limits. Banks should
establish and enforce internal controls and other practices to ensure that exceptions to policies,
procedures and limits are reported in a timely manner to the appropriate level of management for action.
Principle 16: Banks must have a system in place for early remedial action on deteriorating credits,
managing problem credits and similar workout situations.
35
E. The role of supervisors

Principle 17: Supervisors should require that banks have an effective system in place to identify
measure, monitor and control credit risk as part of an overall approach to risk management. Supervisors
should conduct an independent evaluation of a banks strategies, policies, procedures and practices
related to the granting of credit and the ongoing management of the portfolio. Supervisors should
consider setting prudential limits to restrict bank exposures to single borrowers or groups of connected
counterparties.
3.5 Classification of Loan
Figure 3.5: Classification of Loan

There are mainly 2 types of loan:
1. Unclassified Loan
2. Classified Loan
These are discussed below:
36
1. Unclassified Loan:
These are loans that do not have greater than normal risk and do not possess the characteristics of
classified loans. The borrower has the apparent ability to satisfy his obligations in full and therefore no
loss in ultimate collection is anticipated.
2. Classified Loan:
Any bank loan that is in danger of default is classified loan. Classified loans have unpaid interest and
principal outstanding, and it is unclear whether the bank will be able to recoup the loan proceeds from
the borrower. Banks usually categorize such loans as adversely classified assets on their books.
Classified loans have failed to meet acceptable credit standards according to bank examiners. The credit
quality has essentially declined since initial approval was granted. This type of loan has a high rate of
borrower default, and raises the cost of borrowing money for the other customers.
There are three types of Classified Loans. These are discussed below:
1. Sub Standard Loan:
A Sub Standard Loan is the term used for any loan that a bank examiner has deemed to be in danger of
defaulting. The borrower does not necessarily need to miss payments order for a bank to label the
account in this manner. A borrower can have what the bank calls a Sub Standard Loan for different
reasons. This is simply a precaution that financial institutions take to prepare for a possible loss and to
prevent any further risk.
2. Doubtful Loan:
Doubtful loan is a loan where full repayment is questionable and uncertain. Degree of repayment of
loans in question range from a complete loss to uncertain loss unless corrective actions are taken.
Doubtful loans are usually non-performing loans on which interest is overdue and full collection of
principal is uncertain.
A loan classified as doubtful has all the characteristics of a substandard loan and credit weakness
making full collection questionable and improbable. Fifty per cent of loans classified as doubtful are
deducted from adjusted bank capital in computing regulatory capital adequacy.
37
3. Bad / Loss Debt:

A debt that is not collectible and therefore worthless to the creditor. This occurs after all attempts are
made to collect on the debt. Bad debt is usually a product of the debtor going into bankruptcy or where
the additional cost of pursuing the debt is more than the amount the creditor could collect. This debt,
once considered to be bad, will be written off by the company as an expense.
There is another classification of Loan based on sub-standard, doubtful & bad/loss Loan.
Classification of Continuous Loan
Category
Details
Sub
If the loan is past due/overdue for 3 months or beyond but less than 6 months.
standard
Doubtful
If the loan is past due/overdue for 6 months or beyond but less than 9 months.
Bad/Loss
If the loan is past due/overdue for 9 months or beyond.
Classification of Demand Loan

Category
Details
Sub
If it remains past due/overdue for 3 months or beyond but not over 6 months
standard
from the date of expiry or claim by the bank or from the date of creation of
forced loan.
Doubtful
If it remains past due/overdue for 6 months or beyond but not over 9 months
from the date of expiry or claim by the bank or from the date of creation of
forced loan.
Bad/Loss
If it remains past due/overdue for 9 months or beyond from the date of expiry
or claim by the bank or from the date of creation of forced loan.
38
Classification of Fixed term Loan

Category
Details
Sub
If the amount of past due installment is equal to or more than the amount of
standard
installment(s) due within 3 months.
Doubtful
Bad/Loss
3.6 Loans & Advance
In times of financial difficulties, individuals/corporations find means from which they can obtain extra
funding to fulfill their personal needs, business commitments, investments, etc. There are a few options
that can be explored which are to take out a loan or an advance in order to fulfill obligations. Whether a
loan is taken out or advance is obtained will depend on the time period for which the money is needed,
the amount of money that is needed, and the individual/corporations other requirements. The article that
follows provides a clear explanation of loans and advances and highlights their similarities and
differences.
Loan: A loan is when one party agrees to give another party a sum of money that is to be paid back after
a certain period of time. The lender will charge the borrower an interest on the money that has been lent
and will expect the interest payments to be made on a periodic basis. At the end of the loan term, the full
repayment of the principal and interest should be made. The terms of the loan should be set out in a loan
contract which lays out the terms for repayment, interest rates, and deadlines for payment.
Loans are taken out for a number of reasons such as to purchase vehicles, to pay college tuition,
mortgages to purchase housing, personal loans, etc. Lenders such as banks and financial institutions
usually test the borrowers credibility before lending funds. There are a number of criterions that should
be met by the borrower; which include credit history, salary/income, assets, etc. Lenders also require an
asset to be pledged as collateral, which will be liquidated and proceeds will be used to recover losses in
the event that the borrower defaults.
39
Advance: An advance is a credit facility that is provided to an individual/corporation by the financial

institution, bank, employer, friend, relative etc. Advances are generally for shorter term and will be
recovered by the bank during a shorter period of time. Advances are commonly taken on an employees
salary. Advances usually do not carry an interest payment and, therefore, it can be a cheaper and
convenient method for obtaining some extra cash on a short term. Loans and advances are generally
used for the same purpose; to obtain some extra funding during times of financial difficulties.
Loans
Advances
A loan is when one party (called the lender, An advance is a credit facility that is
which
is usually a
bank or
financial provided to the individual/corporation by the
institution) agrees to give another party financial institution, bank, employer, friend,
(called the borrower) a sum of money that is relative etc.
to be paid back after a certain period of time.
A loan is treated as a debt where a lender such An advance is a credit facility, which is
as a bank will formally lend funds to a usually less formal than a loan.
borrower.
A loan requires an asset to be pledged as This is not the case for advances.
collateral
Loans are for a longer period of time, and Advances are taken for shorter time periods,
need to be repaid with interest
and interest is not charged on the amount

borrowed.
Table 3.6: Difference between Loan & Advance
3.7 Develop a Credit Application

Develop a credit application form and have the draft checked by lawyer. The credit application &
approval process could include, but is not limited to the following steps:
i.
The completion of a credit application form which requests full business and personal contact
details, trading name, credit guarantors, referees, and the number of years in business
ii.
Asking for details of suppliers who can be contracted as referees and then checking the clients
payment habits with the referees
iii.
Requesting bank references
40
iv.
Asking the client to sign a directors guarantee which makes the directors of a company
personally liable for any debts incurred with business
v.
Checking the clients business registration
Obtaining a credit report to determine whether the client is credit worthy and a range of credit reports
can be obtained from commercial information brokers listed. Discuss the reports available and the costs
involved with individual broker firm and periodically evaluating the credit rating of existing credit
clients.
3.8 Debt Recovery

Generally, debt collection options include:
A. Personal communication & consultation with client
Contact client by phone or email the day after the invoice is due. This lets client know that keep close
track of accounts receivable. Sometimes invoices get lost or overlooked, so maintain positive
relationships with client & be polite and friendly.
Ask if the client is experiencing a short-term problem or if theres a valid reason for not making the
payment. Decide how valuable the client is to business. May be willing to temporarily extend their credit
terms, or might cancel the clients credit agreement if late payments become a persistent problem.
B. A written request to settle the debt (letter of demand)
If communication and consultation with the client does not result in payment of debt, may decide to send
a letter of demand. This gives client the opportunity to pay the debt without spending the time and
money associated with legal proceedings. Keep a copy of the letter of demand send the client as it may
be required as evidence that tried to recover the debt if proceed with legal action. When drafting a letter
of demand we should not harass the debtor or design it to look like a court document. The debt
collection practices are illegal. The letter of demand should:
State details of the debt (dates, agreements, amounts due, and days overdue)
Include copies of applicable quotes or invoices
Request that payment be made by a certain date
Warn that debt recovery options will be pursued if payment is not received by the nominated
date
41
C. Debt recovery options

In looking at debt recovery options consider
The real chances of recovery
The time taken away from business in pursuing the debt
Debt collector agency costs
The legal and court costs
Whether costs will be recoverable from the debtor
The need to obtain legal advice
D. A debt collection agency

A debt collector recovers payment on behalf of another person for outstanding debts that individuals or
businesses are legally obliged to pay. Demand for payment can be made in writing, verbally over the
telephone, or in person.
42
Chapter 4
Credit ManageMent of
NCCBL
43
4.1 Credit Risk

Credit policy is comprised of basic principles that govern the extension, administration, monitoring and
recovery of credit in line with the prudential of Bangladesh Bank and other regulatory authorities of the
Government.
4.2NCCBLs Credit risk Management Policy

1. Prudential Authority: Banks credit policy will be in line with the policy and guideline of
Bangladesh Bank and other regulatory authorities of the Government.
2. General Lending Policy:
i) Short term finance to trade, industry and service sector.
ii) Selective long time finance.
3. Product and Services: Design and re-engineer products to meet customer demand.
4. Loan - Deposit Ratio: Maximum 90%
5. Name Lending: Lending based solely on general standing and reputation of borrow is not
permitted. In all cases, Credit requirement, Viability, Cash Flow, Risk level, Mitigation and
security etc. are to be analyzed.
6. Single Customer expose limit:
i) Export oriented: Maximum 50% of Banks Capital Where funded will be Maximum
15%.
ii) Non - export oriented: Maximum 35% where funded 15%.
7. Large Loan: The loan equivalent to 105 of Banks Capital. The Bank can extend large loan
upto56% of its portfolio.
8. Diversification and Sector Allocation: Credit is diversified to different sector and industries
annual Budget is made and reviewed.
9. Maximum Tenor: The tenor of loan generally shall be based on repayment capacity, projected
cash flow, and payback period. Product wise maximum tenor has been defined in the credit
manual.
10. Security / Collateral: Bank will try to have as much collateral security as possible based on force
sale value.
44
11. Support Security: Bank will try to have additional comfort by way of having support security
like personal Guarantee, post-dated cheque, creation of charges at RSJC & Corporate guarantee
etc.
12. Pricing: Pricing will be based on Risk & market condition within guideline of Bangladesh Bank.
ALCO Committee of Head Office will revise pricing through Board of Directors. Managing
Director has authority to increase or decrease interest rate by 1.40% when mid-rate prevails.
13. CIB: Up-to-date CIB be collected before approval of credit.
14. Handling of Different Credits at Head Office:
i) Corporate Credit.
ii) SME Credit.
iii) Retail Credit.
iv) Consumer Credit.
v) Staff Loan
15. Segregation of Authority: Credit Function will be segregated from each other.
i) Credit Marketing: Be done by separate relationship officer at Branch and Head Office
corporate Banking Division and other specialized Division.
ii) Credit Approval: Credits be approved by different authorities after due assessment and
appraisal by different term.
(1) Board of Directors: Full Authority.
(2) EC of Board: As delegated by Board
(3) MD: As delegated by Board
(4) Other Executive at Head Officer and Branch Manager: As delegated by MD
iii) Credit Administration: Will handle Documentation, Disbursement and control procedure.
iv) Credit Monitoring: Be primarily done by marketing and relationship team at Branch and at
Head Office. They will also ensure Early Alert reporting.
v) Credit Recovery: Be done by different term at Branch and Head Office division.
16. Credit Risk Grading: All credits are to be graded into 8 categories. Analysis of credit risk
grading is made before any approval. Periodical review of Grading also be made by marketing
term and approved by Credit Risk Managing Division.
17. Corporate set-up at branch level: In here, Head is the Head Branch manager (Relationship
Manager) and then in his under, there are 4 departments, those are:
(1) Relationship Officer
(2) Credit Risk Review Unit
(3) Credit Administration Unit
45
(4) Recovery Unit

18. Credit Committee: There will be credit committee at Branch and Head Office for processing
approval of Credit.
19. Legal Vetting: All charge documents and mortgage document be vetted by legal counsel.
20. Document Maintenance: Credit file and Loan Document are to be minted and recorded properly
by responsible officer with written authority.
21. Management of Problem Account: Specific team of Executive will work at Branch and at Head
Office to manage and recover of problematic Account.
22. Renewal of Credit: Renewal of report proposal is sent to Head Office 2 months ahead of expiry.
23. Rescheduling: Rescheduling of Credit will have to be done as per BRPD Circular no.
4.3 Securities against loans and advances

Types of credit
Securities
House building loan
Primary securities: mortgage of the land or

any property
Transport loan
Primary securities: joint registration and

comprehensive
insurance
policy.
Two
valuable guarantors. Collateral securities:

mortgage of land or any property. Any type
financial obligation.
Auto loan
Primary securities: joint registration and

comprehensive
insurance
policy.
Two
valuable guarantors and postdated cheques.

Any purpose loan
Primary securities: Two valuable guarantors

and postdated cheques.
Payments against documents(PAD)
Pledge or Hypothecation of stock-in trade,

goods,
produce
and
merchandise,
machineries, loan or building on which

machineries are installed.
Loan against imported merchandise
Loan against trust receipt
Pledge of imported merchandise.

Trust receipt in lieu of import document.
Local bills purchased
Bill itself.
Foreign bill purchased
Shipping documents for exports
46
Overdraft
Primary securities: Hypothecation of book

depth. Collateral securities: mortgage of
landed property and IPA.
Secured overdraft
Primary securities: Lien on any types of

financial obligation.
Cash credit
Primary securities: Hypothecation of stock of

goods
in
trade
duly
insured
produce
merchandise. Collateral securities: mortgage

of land and building, any financial obligation.
4.4 Overall procedure for sanctioning loan

The following procedure need to be followed for giving advances to the customer. These are:
A. Partys application
B. Filling form-A
C. Collecting CIB report from Bangladesh Bank
D. Processing loan proposal
E. Project appraisal
F. Head office approval
G. Sanction letter
H. Documentation
I. Disbursement
A. Partys application
At first borrower had to submit an application to the respective branch for loan, where he/she has to
clearly specify the reason for loan. After receiving the application from the borrower, bank officer
verifies all the information carefully. He also checks the account maintains by the borrower with the
bank. If the official becomes satisfied then he gives form-A to the prospective borrower.
47
B. Filling form-A
After satisfying with partys application the applicant need to fill Form-A. It is the prescribed form
provides by the respective branch that contains information of the borrower. It contains name with its
factory location, official address and telephone number, details of past and present business, its
achievement and failures, type of loan needed etc.
C. Collecting CIB report from Bangladesh Bank

After receiving the application for advance, NCC Bank sends a letter to Bangladesh Bank for obtaining
a report from there. This report is called CIB (Credit Information Bureau) report. NCC Bank generally
seeks this report from the head office for all kinds of investment. The purpose of this report is to being
informed that whether the borrower has taken loan from any other Bank; if yes then whether the party
has any overdue amount or not.
D. Processing loan proposal

After receiving CIB report from Bangladesh Bank, then respective branch prepare an Investment
proposal, which contains terms and conditions of Investment for approval of Head Office. Documents
those are necessary for sending Investment Proposal is:
Necessary Documents: While advancing money, banks create a lot of document, which are required to
be signed by the borrowers before the disbursement of the loan. Of them some are technically called
charge documents. Necessary steps and documents:
1. Loan application form duly signed by the customer.
2. Acceptance of the term and conditions of sanction advice.
3. Trade license.
4. In case of partnership firm, copy of registered partnership deed duly certified as true copy or a
partnership deed on non-judicial stamp of taka-150 denomination duly notarized.
5. In case of Limited Company
a. Copy of memorandum and articles of association of the company including certificate of
incorporation duly certified by Registered Joint Stock Companied (RJSC) & attested by
the managing director and accompanied by an up-to-date list of directors.
48
b. Copy of board resolution of the company for availing credit facilities & authorizing
managing director/chairman/director for execution of documents and operation of the
accounts.
c. An undertaking not to change the management of the company & the memorandum &
article of the company without prior permission.
d. Copy of last audited financial statement up to last 3 years.
e. Personal guarantee of the directors including the chairman & managing director.
f. Certificate of registration of charges over the fixed and floating assets of the company
duly issued by RJSC.
g. Certificate of registration of amendment of charges over the fixed and floating assets of
the company duly issued by RJSC in case of repeat loan amount and securities etc.
6. Demand promissory notes.
7. Letter of hypothecation of stocks and goods.
8. Letter of hypothecation of books debts and receivable.
9. Letter of hypothecation of plant and machinery.
10. Personal letter of guarantee.
E. Project Appraisal
It is the pre-investment analysis. Project appraisal in the Banking sector is important for the following
reasons:
To achieve organizational goals
To recommend if the project is not designed properly
To justify the soundness of an investment
To ensure repayment of Bank finance
Techniques of project appraisal

An appraisal is a systematic exercise to establish that the proposed project is a viable preposition.
Appraising officer checks the various information submitted by the promoter in first information sheet,
application for Investment & Investment proposal.
49
The Head Office (HO) mainly checks the technical, commercial & financial viability of the project. For
others, HO is dependent on branchs information. But when the investment size is big, then the HO
verifies the authenticity of information physically.
F. Head Office Approval

When Head office receive appraisal from the branch then, Head Office again appraises the project. If it
seems to be a viable one, the HO sends it to the Board of Directors for the approval of the Investment.
The Board of Directors (BOD) considers the proposal & takes decision whether to approve the
Investment or not. If the BOD approves the investment, the HO sends the approval to the concerned
branch. The respective officer of Head Officer appraises the project by preparing a summary named
Top Sheet or Executive Summary & then he sends it to the Head Office Credit Division for the
approval of the Loan. The Head Office Credit Division considers the proposal and takes decision
whether to approve the Investment or not. If the committee approves the investment; the HO sends the
approval to the concerned branch.
G. Sanction Letter
After getting the approval of the HO the branch issues sanction letter to the borrower. A sanction letter
contains:
Name of borrower,
Facility allowed,
Purpose,
Rate of interest,
Period of the Investment and mode of adjustment
Security and Other terms and condition.
H. Documentation
If the borrower accepts the sanction letter, the Documentation starts. Documentation is a written
statement of fact evidencing certain transactions covering the legal aspects duly signed by the authorized
persons having the legal status. The most common documents used by the NCC Bank for sanctioning
different kinds of Investment are:
50
Joint Promissory Note (Demand Promissory Note- DP Note)

Letter of Arrangement
Letter of Disbursement
Letter of Installment
Letter of Continuity
Trust Receipt
Counter Guarantee
Stock Report
Letter of Lien
Status Report
Letter of Hypothecation
Letter of Guarantee
Documents Relating to Mortgage
I. Disbursement
After sanction and completion of all formalities the respective officer disburses the loan. The officer
writes cheques and provides it to the borrower. For this borrower has to open an account through which
he/she van withdraw the money.
Strategy for Recovery: Recovery of loan can be made in following 3 methods:
i.
Persuasive Recovery: The first step in recovery procedure is private communication that creates
a mental pressure on borrower to repay the loan. In this situation bank can provide some advice
to the borrower for repaying the loan.
ii.
Voluntarily: In this method, some steps are followed for recovering loan. These are::
a. Building Task Force
b. Arranging Seminar
c. Loan Rescheduling Policy
d. Waiver of Interest Rate
iii.
Legal Recovery: When all steps fail to keep an account regular and the borrower does not pay
the installments and interests then the bank take necessary legal steps against the borrower for
51
realization of its dues. In this case Artha Rin Adalat Law 2003 plays an important role for
collecting the loan.
4.5 Credit Administration

The administration function is critical in ensuring that proper documentation & approvals are in place
prior to the disbursement of loan facilities. For this reason it is essential that the function credit
administration be strictly segregated from relationship management/marketing in order the possibility of
controls being compromised of issues not being highlighted at the appropriate level.
4.6 Credit monitoring

To minimize credit losses, monitoring procedures and systems shall be in place that provides an early
indication of the deteriorating financial health of a borrower. At a minimum system shall be in place to
report the following exceptions to relevant executives in CRM & RM team:
Past due principal or interest payments, past due trade bills, account excesses, and breach of loan
covenants.
Loan terms and conditions are monitored, financial statements are received on regular basis, and
any covenant braches or exceptions are referred to CRM and the RM team for timely follow-up.
Timely corrective action is taken to address finding of internal, external or regulator
inspection/audit.
All borrower relationship/loan facilities are reviewed and approved through the submission of a
credit proposal at least annually.
52
Chapter 5
AnAlysis of
Credit ManageMent
53
5.1 Distribution of Value Added: 2014-2015
Distribution of Value Added-2015

Category
Amount(Percent)
Expansion & Growth

Statutory Reserve
NCC Bank Foundation
25.53%
10.17%
0.58%
Income Tax
Salaries & Allowances
Table 5.1(A): Trends of Distribution of Value Added-2015
20.62%
43.11%
Expansion & Growth
43%
25%
Statuatory Reserve
NCC Bank Foundation
21%
10%
Income Tax
Salaries and Allowances
1%
Figure 5.1(A): Distribution of Value Added-2015(Annual Report-2015)

Category
Amount(Percent)
Expansion & Growth

Statutory Reserve
NCC Bank Foundation
28.92%
11.31%
0.57%
Income Tax
Salaries & Allowances
Table5.1(B): Trends of Distribution of Value Added-2014
19.67%
39.54%
54
Salaries and
Allowances,
39.54%
Expansion &
Growth,
28.92%
Statuatory
Reserve,
Income Tax 11.31%
20%
NCC Bank
Foundation,
0.57%
Figure 5.1(B): Distribution of Value Added-2014
5.2 Year wise Deposit & Growth rate:
Total Deposit
Year
2010
2011
2012
2013
2014
2015
Tk. In millions
67,961
81,127
96,918
98,229
105,703
112722
Growth rate
26.09%
19.37%
19.46%
1.35%
7.61%
6.64%
Table 5.2: Trend of deposits & Growth Rate (Annual Report-2015)

Geographical Presentation
Total Deposit ( tk. In millions)

120000
100000
80000
60000
40000
20000
0
2010
2011
2012
2013
2014
2015
Figure 5.2(A): Total Deposit (in millions)
55
Growth Rate
Growth Rate
30.00%
26.09%
19.37%
19.46%
20.00%
10.00%
7.61%
6.64%
2014
2015
1.35%
0.00%
2010
2011
2012
2013
Figure 5.2(B): Growth rate of Total Deposits
Interpretation: The above graph shows an upward trend in total deposit mobilization of NCCBL. In
2010 the deposit was tk. 67,961 million but in 2015 it was TK. 112722 million. Due to attractive interest
rate deposit was increased but the growth rate was fluctuating over the years and graph show that 2010
to 2012 it was increasing stage but 2013 it was rapidly decreasing but from 2014 it was gradually
increasing. It is good signing for growth rate.
5.3 Year wise Credit (Loan &Advances) and growth rate:

Total Credit (Loan & Advances) (Tk. In millions)
Year
2010
2011
2012
2013
2014
2015
Tk. In millions
63230
72734
79948
88147
90921
104855
Growth rate
25.49%
15.02%
9.91%
10.25%
3.14%
15.33%
Table 5.3: Trend of Credit and Growth Rate (Annual Report-2015)
56
Graphical Presentation:
Total Credit Loan &Advances (tk. in millions)

120000
100000
104855
80000
60000
40000
63230
72743
79948
88137
90,921
2013
2014
20000
0
2010
2011
2012
2015
Figure 5.3(A): Total Credit (tk. in millions)
Growth rate
30.00%
25.49%
25.00%
20.00%
15.33%
15.02%
15.00%
9.91%
10.25%
10.00%
3.15%
5.00%
0.00%
2010
2011
2012
2013
2014
2015
Figure 5.3(B): Growth of Rate of Credit
Interpretation:
Year wise Loan and Advances was increasing year by year of NCC Bank Limited. In 2010 the Credit
(Loan & Advances) was tk. 572743 million but in 2015 it was Tk. 104855 million. The second graph
shows that growth rate of year wise Loan and Advances was fluctuating over the years but in 2015 it
was 15.33% and it was increasing.
57
5.4 Year wise Investment & Growth rate:

Total Investment (Tk. In millions)
Year
2011
2012
2013
2014
2015
Tk. In millions
20840
30852
19908
26569
21458
Growth rate
----
48.04%
(35.47)%
33.46%
(19.24)%
Table 5.4: Trend of Investment and Growth Rate (Annual Report-2015)

Total Investment ( tk. In millions)

40000
30000
20000
10000
0
2011
2012
2013
2014
2015
Figure 5.4(A): Total Investment (tk. in millions)
Growth Rate
60.00%
48.04%
40.00%
33.46%
20.00%
Growth Rate
0.00%
-20.00%
-40.00%
2012
2013
2014
-35.47%
2015
-19.24%
Figure 5.4(B): Growth of Rate of Investment
Interpretation: The graph shows that year wise Investment was fluctuating year to year. In 2011 it
was TK 20840 million but in 2013 the investment was decrease and it was TK 19908 million. In the last
58
year 2015 the investment stand for TK 21458 million a little bit change in 2013 but if we compare in
2014 it was very much low. The second graph shows that in 2013 and 2015 the growth rate was negative
and it was (35.47) % and (19.24) %. It was not good for investment policy.
5.5 Year wise Remittance & Growth rate:

Total Remittance (Tk. In millions)
Year
2011
2012
2013
2014
2015
Tk. In millions
16079
21706
16323
18703
15371
Growth rate
----
35%
(24.80)%
14.58%
(17.81)%
Table 5.4: Trend of Remittance and Growth Rate (Annual Report-2015)
Remittance( tk in millions)
25000
21706
20000
16323
16079
18703
15371
15000
Remittance
10000
5000
0
2011
2012
2013
2014
2015
Figure 5.5(A): Total Investment (tk. in millions)
59
Growth Rate(Remittance)
40%
35%
20%
14.58%
0%
Growth Rate
0%
2011
-20%
2012
2013
2014
2015
-17.81%
-24.80%
-40%
Figure 5.5(B): Growth of Rate of Remittance
Interpretation: The graph shows that year wise Remittance was fluctuating year to year. In 2011 it
was TK 16079 million but in 2013 the Remittance was decrease and it was TK 21706 million. In the last
year 2015 the Remittance stand for TK 15371 million a little bit change in 2013 but if we compare in
2014 it was very much low. The second graph shows that in 2013 and 2015 the growth rate was negative
and it was (24.80) % and (17.81) %.
5.6 Year wise Export and Import:

Total Export-Import (Tk. In millions)
Year
2011
2012
2013
2014
2015
Export
20981
13347
14549
14354
17138
Import
55044
45283
52614
51308
49995
Table 5.6: Trend of Export- Import (Annual Report-2015)

Total Export-Import(tk in million)

Export
55044
45283
20981
2011
13347
2012
Import
52614
14549
2013
51308
13354
2014
49995
17138
2015
60
5.7 Year wise Credit to Deposit Ratio (CDR):

Credit to Deposit Ratio measures the portion of Deposit is in the form of loan and advances.
Credit to Deposit Ratio = (Total Credit/ Total Deposit)*100
Credit to Deposit Ratio (CDR in %)

Year
2010
2011
2012
2013
2014
2015
Percentage
93.04%
83%
77%
83%
77.41%
83.57%
Table 5.7: Trend of Credit to Deposit Ratio (Annual Report-2015)

100.00%
93.00%
Credit to Deposit Ratio%

83%
77%
83%
77%
83.57%
80.00%
60.00%
40.00%
20.00%
0.00%
2010
2011
2012
2013
2014
2015
Figure 5.7: Credit to deposite ratio
Interpretation: The graph shows that the Credit to Deposit Ratio (CDR) is decreasing year by year
except 2013. It was decreased from 2010 to 2012 at the rate of 93% to 77% but in 2012 to 2014 the rate
was fluctuating from 77% to 77%. In the last year 2015 the rate was stand for 83.57%.
61
5.8 Year wise Return on Asset (ROA):

Return on Asset measures how the management will effectively and efficiently uses their available
assets for generating profit.
Return on Asset = (Net profit after tax/ Total Asset)*100
Return on Assets (ROA in %)

Year
2011
2012
2013
2014
2015
Percentage
2.12%
1.14%
0.91%
1.16%
0.97%
Table 5.8: Trend of Return on Assets (Annual Report-2015)

Return on Assets %
2.50%
2.12%
2.00%
1.50%
0.97%
0.91%
Return on Assts %
1.00%
1.14%
0.50%
1.16%
0.00%
2011
2012
2013
2014
2015
Figure 5.8: Return on Assets
Interpretation: The graph shows that the Return on Assets (ROA) is decreasing year by year except
2014. It was decreased from 2011 to 2013 at the rate of 2.12% to 0.91% but in 2013 to 2015 the rate was
fluctuating from 0.91% to 0.97%. In the last year the rate was stand for 0.97%.
62
5.9 Year wise Return on Investment (ROI):

Return on Investment (ROI in %)
Year
2011
2012
2013
2014
2015
Percentage
13.99%
9.05%
11.04%
11.50%
11.25%
Table 5.9: Trend of Return on Assets (Annual Report-2015)

Return on Investment%
15.00%
13.99%
11.50%
10.00%
11.25%
11.04%
9.05%
5.00%
0.00%
2011
2012
2013
2014
2015
Figure 5.9: Return on Investment (ROI)
Interpretation: The graph shows that the Return on Investment (ROI) is decreasing year by year
except 2014 and the rate was 11.50%. It was decreased from 2011 to 2013 at the rate of 13.99% to
11.04% but in 2013 to 2015 the rate was fluctuating from 11.04% to 11.25%. In the last year 2015 the
rate was stand for 11.25%.
63
5.10 Year wise Return on Equity (ROE):
Return on Equity measures the common stockholders how many money will earn for their investment in
the organization.
Return on Equity = (Net profit after tax/ Common Stock Equity)*100
Return on Equity (ROE in %)

Year
2011
2012
2013
2014
2015
Percentage
18.98%
11.81%
8.96%
10.93%
9.12%
Table 5.8: Trend of Return on Equity (ROE) (Annual Report-2015)

Return on Equity%
20.00%
18.98%
15.00%
11.81%
10.93%
10.00%
9.12%
8.96%
5.00%
0.00%
2011
2012
2013
2014
2015
Figure 5.10: Return on Equity (ROE)
Interpretation: The graph shows that the Return on Equity (ROE) is decreasing year by year except
2014 and the rate was 10.93%. It was decreased from 2011 to 2013 at the rate of 18.98% to 8.96% but in
2013 to 2015 the rate was fluctuating from 8.96% to 9.12%. In the last year 2015 the rate was stand for
9.12%.
64
5.11 Year wise Earning Per Share (EPS):
EPS represents the number of money earned during the period on behalf of each outstanding share of
common stock.
Lawrance J. Gitman (Principles of managerial finance, ch-2)
EPS = (Net profit after tax/ No of share outstanding)
Earnings per Share (EPS in tk)

Year
2011
2012
2013
2014
2015
TK
3.70
2.06
1.49
1.70
1.54
Table 5.11: Trend of Earnings per Share (EPS) (Annual Report-2015)

EPS in tk
4
3.7
2.06
1.49
1.54
1.7
EPS in tk
0
2011
2012
2013
2014
2015
Figure 5.11: Earnings per Share (EPS)
Interpretation: The graph shows that the Earnings per Share (EPS) are decreasing year by year. It
was decreased from 2011 to 2014 tk 3.7 to 1.7 for the reason of share market collapse. In the last year
2015 EPS was stand for 1.54 tk that is very low if we compare in 2014.
65
5.12 Year wise Price Earnings Ratio (PE Ratio):
The P/E ratio measures the amount that investors are willing to pay for each dollar of a firms
earnings. Lawrance J. Gitman (Principles of managerial finance, ch-2)
P/E Ratio = (Market price per share of common stock/ EPS)
Price Earnings Ratio (P/E Ratio in times)

Year
2011
2012
2013
2014
2015
TK
8.21
8.73
8.80
6.59
5.89
Table 5.12: Trend of Price Earnings Ratio (P/E Ratio) (Annual Report-2015)
P/E Ratio in times

10
8
8.8
8.21
8.73
6.59
5.89
4
2
0
2011
2012
2013
2014
2015
Figure 5.12: Price Earnings Ratio (P/E)
Interpretation: The graph shows that the Price Earnings Ratio (P/E) is decreasing year by year. It was
decreased from 2011 to 2014, 8.21 times to 6.59 times. In the last year 2015 P/E ratio was stand for 5.89
times that is very low if we compare in 2014.
66
5.13 Year wise Dividend per Share:
Dividend Per Share

Year
2011
2012
2013
2014
2015
TK
2.70
1.10
1.28
Table 5.13: Trend of Dividend per Share (Annual Report-2015)
Dividend Per Share

3
2.7
2.5
2
1.5
1
1.1
2012
2013
2014
1.28
0.5
0
2011
2015
Figure 5.13: Dividend Per Share
Interpretation: The graph shows that the Dividend per Share is fluctuating year by year. It was
fluctuating from 2011 to 2014 at 2.7 to 1.00. In the last year 2015 dividend per share was stand for 1.28
that is high if we compare in 2014.
67
5.14 Year wise Market value Per Share:
Market value Per Share

Year
2011
2012
2013
2014
2015
TK
30.40
18.20
13.10
11.20
9.10
Table 5.14: Trend of Market value per Share (Annual Report-2015)
Market value per share

40
30.4
30
18.2
20
10
13.1
9.1
11.2
0
2011
2012
2013
2014
2015
Figure 5.14: Market value Per Share
Interpretation: The graph shows that the Market value per Share is decreasing year by year. It was
decreased from 2011 to 2014 at tk 30.40 to 6.59 11.20. In the last year 2015 the market value per share
was stand for tk 9.10 that is very low if we compare in 2014.
68
5.15 Sector wise distribution of Deposits:

Deposit Distribution
Amount in Percentage
(%)
Fixed Deposit
40.06%
Current Deposit
7.05%
Special Notice Deposit(SND A/C))
7.87%
Savings Deposit
13.77%
Special Savings Scheme (SSS A/C)
3.68%
Sundry Deposit & Others A/C
4.55%
7.90%
Premium Term Deposit
0.01%
Money Triple Program
0.54%
Sector Wise Deposit Portfolio-2015

0% 1%
Fixed Deposit
9%
Current Deposit
6%
SND A/C
4%
47%
Savings Deposit
SSS A/C
16%
Sundry Deposit
Premium Term Deposit
9%
8%
Money Triple Program
Figure 5.15: Sector wise distribution of Deposit (in NCCBL Annual Report 2015)
69
Interpretation: NCC Bank Limited provides 40.06% of total deposit in fixed deposit site, 13.77% in
savings A/C and 7.87%, 7.90%, 7.05% of deposits are found in Money Double program SND A/C and
Current Deposit A/C. Very lowest deposit are collected from premium term deposit and money triple
program.
70
5.16 Sector wise distribution of Investment Portfolio:

Investment Portfolio
(%)
Government treasury Bond
91.72%
Investment in Share
5.28%
Government Treasury Bill
1.62%
Zero Coupon bonds & Other bonds
1.35%
Prize bond
0.03%
100.00%
91.72%
80.00%
60.00%
40.00%
20.00%
5.28%
1.62%
1.35%
0.03%
0.00%
Govt treasury Investment in Govt treasury Zero Coupon Prize Bond
Bond
Shares
Bill
Bonds &
Other
Amaount in %
Figure 5.16: Sector wise distribution of loan (in NCCBL Annual Report 2015)
Interpretation: NCC Bank Limited provides 91.72% of total investment to purchased Government
treasury bonds, 5.28% investment in shares and 1.62%, 1.35% of investment to purchased government
Treasury bill and zero coupon bonds. Very lowest portion of investment to purchased prize bond and it
was 0.03%.
71
5.17 Sector wise distribution of loan:

Credit Distribution
(%)
Industrial Loan
34.69%
Commercial Lending
17.07%
Export Finance
4.24%
Import Finance
22.76%
Retail Loan
7.95%
Agricultural Loan
2.16%
House Building
4.48%
Transport Loan
1.63%
Staff Loan
0.57%
Others
4.46%
Sector Wise Loan Portfolio-2015

2% 1%
2%
4%
Industrial Loan
4%
Commercial Lending
Export Finance
35%
8%
Import Finance
Retail Loan
Agricultural Loan
House Building
23%
17%
4%
Transport Loan
Staff Loan
Others
Figure 5.17: Sector wise distribution of loan (in NCCBL Annual Report 2015)
72
Interpretation: NCC Bank Limited provides 34.69% of total credit in industry, 22.76% in import
financing and 17.07% of in commercial lending. NCC Bank Limited basically distributes their credit on
Industry & Business sector because it is more profitable than other sectors.
73
5.17 (a) Credit Distribution in Agriculture:
Credit Distribution in Agriculture

Year
2010
2011
2012
2013
2014
2015
(Tk. In Core)
169.81
44.03
123.40
173.73
131.17
226.83
Percentage
2.69%
0.61%%
1.54%
1.97%
1.43%
2.16%
Table 5.17(a): Year wise Credit Distribution in Agriculture (Annual Report-2015)
Credit Distribution in Agriculture

250
200
226.83
173.73
169.81
150
131.17
123.4
100
44.03
50
0
2010
2011
2012
2013
2014
2015
Figure5.17 (A): year wise Credit Distribution in Agriculture (in Core tk.)
3.00%
Percentage
2.69%
2.16%
1.97%
1.54%
2.00%
1.43%
0.61%
1.00%
0.00%
2010
2011
2012
2013
2014
2015
Figure 5.17(B): Trend of year wise Credit Distribution in Agriculture (in percentage)
Interpretation: From the above graph it has seen that Credit Distribution in Agriculture in 2012, 2013
& 2014 were 1.54%, 1.97% & 1.43% but in 2011 and 2015 it was in highest position at the rate 2.69%
and 2.16% and 2011 it has lowest rate 0.16%.
74
5.17 (b) Year wise Credit Distribution in Industry:
Credit Distribution in Industry

Year
2010
2011
2012
2013
2014
2015
(Tk. In millions)
25842.16
25,332.81
25687.8
26084.71
31713.31
36368.92
Percentage
40.87%
34.83%
32.13%
29.59%
34.88%
34.69%
Table 5.17(b): Percentage of year wise Credit Distribution in Industry (Annual Report-2015)
Credit Distribution in Industry(Tk. In millions)

40000
30000
25842.16
25332.81
25687.80
26084.71
2010
2011
2012
2013
31713.31
36368.92
20000
10000
0
2014
2015
Figure5.17 (C): Year wise Credit Distribution in Industry (TK. in millions)
Credit Distribution in Industry (in percentage)

50.00%
40.87%
40.00%
34.83%
30.00%
34.88%
32.13%
34.69%
29.59%
20.00%
10.00%
0.00%
2010
2011
2012
2013
2014
2015
Figure 5.17(D): Year wise Credit Distribution in Industry (in percentage)
Interpretation: From the above graph it has seen that Credit Distribution in Industry in 2012, 2013,
2014 and 2015 were 32.13%, 29.59% & 34.88%, 34.69% but in 2010 it was in highest position.
75
5.17 (c) Credit Distributions in Construction:

Credit Distribution in Construction
Year
2010
2011
2012
2013
2014
(Tk. in millions)
1119.17
1156.46
614.87
765.80
495.09
Percentage
1.77%
1.59%
7.69%
8.50%
3.50%
Table 5.15(c): Trends of year wise Credit Distribution in Construction
Credit Distributions in Construction:

1500
1000
1156
1119
500
614
765
495
0
2010
2011
2012
2013
2014
Credit Distributions in Construction:
Figure 5.17(E): Credit Distribution in Construction (TK. in millions)
Credit Distribution in Construction

10.00%
7.69%
8.50%
8.00%
6.00%
4.00%
3.50%
1.77%
1.59%
2010
2011
2.00%
0.00%
2012
2013
2014
Figure 5.17(F): Credit Distribution in Construction (in percentage)
Interpretation: The above graph show that the percentage of their credit distribution in construction
was increasing from 2012 to 2013 which was desirable but 2014 was decreased in 3.50%.
76
5.18 Geographical location wise credit distribution in 2015:

Division
Taka in Core
Percentage
Dhaka
6796.53
64.82%
Chittagong
2867.66
27.35%
Rajshahi
101.6
0.97%
Rangpur
294.79
2.81%
Sylhet
227.43
2.17%
Khulna
128.43
1.22%
Barisal
19.22
0.18%
Mymensingh
49.81
0.48%
Total
10485.47
100%
Table 5.18: Geographical location wise credit distribution (Annual Report-2015)
Geographical location wise credit distribution

1% 3% 2%
1%
0%
1%
Dhaka
Chittagong
27%
Rajshahi
65%
Rangpur
Sylhet
Khulna
Barisal
Mymensingh
Figure 5.18: Geographical location wise credit distribution (in percentage)

Interpretation:
The graph shows that, NCCBL distributes a large portion of credit in Dhaka division. In Dhaka division
the bank distributes 64.82%, where in Chittagong division is 27.35%. It has been viewed that NCC BL
distributes only 1.22% in Khulna, 0.97% in Rajshahi, 2.81% in Rangpur, 2.17% in Sylhet and 0.18% in
Barisal division and 0.48% in Mymensingh. Most of the business & industry are centralized in these two
divisions. For this reason credit distribution in these two divisions is very attractive.
77
5.19 Year wise classified loan (as a percentage of total loan):
Year
2010
2011
2012
2013
2014
2015
Classified loan
1,425.28
1,938.30
4,369.02
4,862.41
6,735.52
7409.95
63,230
72,734
79,948
88,147
90,920
104855
2.27%
2.68%
5.51%
5.56%
7.49%
7.07%
(Taka in millions)
Total loan
(Taka in millions)
% of classified loan
as total loan
Table 5.17: Classified loan as a percentage of total loans (Annual Report-2015)
% of classified loan
8.00%
7.00%
6.00%
5.51%
5.56%
2012
2013
7.49%
7.07%
5.00%
4.00%
3.00%
2.27%
2.68%
2.00%
1.00%
0.00%
2010
2011
2014
2015
Figure 5.19: Classified loan as a percentage of total loans
Interpretation: The graph shows that, percentage of classified loan increased from 2010-2014. The
rate was increasing year by year. In 2014 the rate was 7.49%. It indicates that the bank become
inefficient in managing its classified loan but in 2015 classified loan was decrease and it was stand
7.07%.
78
5.20 Category wise Classified Loan and Advances:

Any classified loan will be categorized as Sub-standard if it is past due/overdue for 6 month or beyond but less than 9 month.
Doubtful if it is past due/overdue for 9 month or beyond but less than 12 month.
Bad-loss if it is past due/overdue for 12 month or beyond.
Classified loan
2015
2014
Classified
Classified
Classified loan (TK.
Classified loan
loan
loan as a %
in million)
as a % of total
(TK. in
of total
Loan
Loan
million)
Loan
Sub-standard
236.07
3.19%
442.70
6.57%
Doubtful
604.59
8.16%
678.18
10.07%
Bad/Loss
6569.29
88.65%
5,614.64
83.36%
Amount of nonperforming loans &

advances
7409.95
100%
6,735.52
100%
Table 5.20: Classified loan Composition (Annual Report-2015)
Classified Loan
Composition 2015
Sub-standard
Doubtful
Bad/Loss
Classified Loan
Composition 2014
Sub-standard
Doubtful
3% 8%
89%
7%
Bad/Loss
10%
83%
Figure 5.20: Classified loan Composition

Interpretation:
The pie chart shows that, major portion of classified loan was bad & loss category. In 2015 their substandard loan was 3.19% in 2014 it was increased to 6.57%. Doubtful loan was decreased from 10.07%
to 8.16% in 2015. Bad/loss loan was increased from 83% to 88.65% in 2015.
79
5.21 Provision kept against classified loans:

Provision kept against classified loans
Year
Tk. in millions
2010
742.80
2011
780.01
2012
1,705.13
2013
2,663.39
2014
2,705.15
2015
3169.66
Table 5.21: Provision kept against classified loans (Annual Report-2015)
Provision kept against classified loans (Tk. in

millions)
3500
3169.66
3000
2500
2000
2,663.39
2,705.15
2013
2014
1,705.13
1500
1000
742.8
780.01
2010
2011
500
0
2012
2015
Figure 5.21: Provision kept against classified loans (Tk. in millions)
Interpretation:
In above graph shows that there was an upward trend, the amount of provision kept against classified
loan of NCCBL. Provision kept against classified loans increased from 2010-20115. In the last year the
amount of provision kept against classified loan was 3169.66 million tk.
80
5.22 Recovery Rate:
The recovery rate of NCCBL is shown below:

Year
2010
2011
2012
2013
2014
2015
Recovery rate in
97.53%
97.72%
97.85%
96.38%
98.40%
97.8%
percentage
Table 5.22: Year wise Recovery Rate
Recovery in percent
140.00%
120.00%
100.00%
97.53%
98%
98%
96%
98%
97.80%
2010
2011
2012
2013
2014
2015
80.00%
60.00%
40.00%
20.00%
0.00%
Figure 5.22: Year wise Recovery Rate
Interpretation:
The graph shows that, in 2010 the recovery was 97.53%. It became 97.72% in 2011, 97.85% in 2012
and 96.38.00% in 2013. In 2014 the bank was improved its recovery rate which is 98.40% and 2015 it
was 97.80%.
81
5.23 Deposit of NCCBL as a percentage of National Deposit

Year
2010
2011
2012
2013
2014
2015
National deposit
3,037.8
3,858.9
4,484.4
5,230.3
6330.33
7156.30
67,971
81,127
96,918
98,229
105,703.61
112722.21
2.23%
2.10%
2.16%
1.91%
1.67%
1.58%
(TK. In billions)
Deposit of NCCBL
(TK. in millions)
Deposit NCCBL as
% of total National
Deposit
Table 5.23: Deposit of NCCBL as % of total National Deposit
Deposit of NCCBL as a % of National Deposit

2.50%
2.00%
1.50%
2.23%
2.10%
2.16%
1.91%
1.00%
1.67%
1.58%
2014
2015
0.50%
0.00%
2010
2011
2012
2013
Figure 5.23: Deposit NCCBL as % of total National Deposit
Interpretation:
The graph shows the deposit of NCCBL as percentage of National deposit has fluctuated over the years.
However, the deposit as percentage of total national deposit has decreased over the year from 2.16% in
2012 to 1.58% in 2015. This indicates that comparative deposit performance of NCCBL has decreased
over the years.
82
5.24 Credit of NCCBL as a % of National Credit
Year
2010
2011
2012
2013
2014
2015
National Credit
2439.8
3297.5
3642.6
4743.8
6819.75
7586.53
63,230
72,734
79,948
88,147
2.59%
2.20%
2.19%
1.85%
(TK. In billions)
NCCBL
90,920.77 104854.73
(TK. in millions)
Credit of NCCBL as
1.3%
1.38%
% total National
Deposit
Table 5.24: Credit of NCCBL as % of total National Deposit
Credit of NCCBL as a % of National Credit

3.00%
2.50%
2.00%
1.85%
2.59%
2.20%
1.50%
2.19%
1.38%
1.00%
1.30%
0.50%
0.00%
2010
2011
2012
2013
2014
2015
Figure 5.24: Credit of NCCBL as % of total National Deposit
Interpretation: The graph shows the credit of NCCBL as percentage of National credit has decreased
over the years. However, the credit as percentage of total national credit has decreased over the years
from 2.59% in 2010 to 1.38% in 2015. This indicates that comparative credit performance of NCCBL
has decreased over the years.
83
5.25 Comparison of Credit to Deposit ratio & National Credit to Deposit ratio
Year
2010
2011
2012
2013
2014
2015
National Credit to
80.3%
85.5%
79.7%
86.7%
70.5%
77.42%
93.04%
83.00%
77.00%
83.00%
77.41%
83.57%
Deposit ratio (%)

NCCBL (%)
Table5.25: Comparison of Credit to Deposit ratio of NCCBL and National Credit to Deposit ratio.
Comparison of Credit to Deposit ratio &

National Credit to Deposit ratio
100.00%
93.04%
Axis Title
80.00%
60.00%
80.30%
83%
85.50%
77%
79.70%
83%
77%
86.70%
70.50%
83.57%
77.42%
NCCBL
40.00%
Industry Average
20.00%
0.00%
2010
2011
2012
2013
2014
2015
Figure5.25: Comparison of Credit to Deposit ratio of NCCBL & National Credit to Deposit ratio.
Interpretation: The graph shows that credit to deposit ratio of NCCBL is lower than industry average
over each year of analysis except 2010. This graph indicates that NCCBL uses less of deposit in credit in
comparison with industry average except in the year 2010. But 2011 to 2013,s credit to deposit ratio of
NCCBL is nearly to industry average each year. But in 2015 NCCBLs National Credit to Deposit ratio
is 83.57%% and National Credit to Deposit ratio 77.42%.
84
5.26 Non-performing loan as a % of total loan
Year
2010
2011
2012
2013
2014
Industry Average
9.2%
7.3%
6.1%
5.6%
7.49%
NPL NCC BL
2.27%
2.68%
5.51%
5.56%
5.86%
Table5.26: Non-performing loan as a % of total loan
Non-performing loan as a % of total loan

10.00%
9.20%
7.30%
Axis Title
8.00%
5.60%
5.51%
5.56%
5.86%
2012
2013
2014
6.00%
4.00%
2.00%
0.00%
2.27%
2.68%
2010
2011
6.50%
6.10%
NPL of NCCBL
Industry Average
Figure5.26: Non-performing loan as a % of total loan
Interpretation: The graph shows that NPL ratio of NCCBL is lower than the industry average over
the each year of analysis. This indicates that recovery performance of NCCBL is better than that of the
most of the banks in the banking industry. However, Non-performing loan of NCCBL has increased
over years.
85
Chapter 6
Findings &
Recommendation
86
6.1 Major findings:
There are several steps in the lending procedure & lots of terms and condition of credit
management of NCC Bank Limited.
There was an upward trend of total deposit mobilization of NCC Bank Ltd. from 2010 to 2015
but the growth rate of deposit was fluctuated over the years.
Year wise Credit distribution of NCC Bank Ltd. was increasing though its growth rate was
fluctuating over the year.
NCCBL provides 34.69% of total credit in industry, 3.50% in construction, 17.06% in
business, 2.16% in agriculture sector and 4.467% in other sectors.
There was an upward trend of agriculture credit distribution from 2011 to 2013 but in 2014
credit distribution in agriculture was decreasing and again 2015 it was increasing.
NCCBL provides a large portion of credit in Dhaka & Chittagong division which was 64.82%
and 27.35%.
In the classified loan the amount of Bad & loss was 88.65% in 2015, which was increased
83.36% in the year 2014. Doubtful loan decreased 8.16% in 2015 to 10.07% in 2014. Substandard loan decreased from 3.19% to 6.57% in 2015 to 2014.
There was an upward trend that the amount of provision kept against classified loan of
NCCBL.
The recovery rate of NCC BL was increasing from 2010 (97.53%) to 2012 (97.85%) but in
2013 it was decreased to 96.38%. In 2014, it was increasing 98%.
Deposit of NCCBL as a % of total National Deposit was a fluctuating trend from 2010 to 2013.
In the last two years 2014 and 2015 Deposit of NCCBL as a % of total National Deposit is
decreasing from 1.67% to 1.58%.
Credit of NCC BL as a % of total National Credit was a decreasing trend from 2010 to 2014. In
the last two years total credit of NCCBL as a % of total National Deposit was increasing from
1.30% to 1.38%.
87
6.2 Recommendations:
The analysis of credit management of national Credit and Commerce Bank Ltd. requires the following
recommendation that may help the bank to improve its credit management process:
The deposit mobilization of NCCBL increased but the growth rate was fluctuated over the years.
The bank should increase deposit mobilization by creating new deposit scheme so that growth
has been positively increased.
Total Credit (Loan and Advances) and growth of NCCBL has increased in the preceding five
years. So, the bank should try to keep and improve this performance.
NCC Bank Limited provides little bit loans in agriculture sector; it was only 2.16% of total
investment in this sector. So bank should give more concentration in this sector for developing
our country.
NCC Bank Limited provides more credit facilities in Dhaka division and Chittagong division.
So, Bank should diversify their credit in other divisions.
Proper and effective monitoring should be developed in order to decrease the trend of classified
loan.
Though the trend of recovery rate is increasing except 2014. Afterward it should try to maximize
the recovery rate and minimize the default rate.
Non-performing loan have increasing in the last three years. So NCCBL should give
concentration to control the classified loan by continuous communication with the client and
should properly check the document of the applied clients before the disbursement of the funds.
88
6.3 Conclusions:
NCC Bank Limited setting new standards in the banking area in the time of turbulent economic
conditions. NCC Bank Limited, one of the most renowned commercial banks in Bangladesh and is
catering the need of the mass business people. NCC Bank Ltd helps to mobilize the resources to stay
strong in the key areas of operation. The bank is to actively participate in the socio-economic
development of the nation by operating a commercially sound banking organization, providing credit to
viable borrowers, efficiently delivered and competitively priced, simultaneously protecting depositors
funds and providing a satisfactory return on equity to the owners.
The bank is currently doing average. By analyzing its performance, it is observed that a potential growth
might be accelerated through effective implications of competitive strategies. It has an advantage
compared to newly established bank in the form of wide range of activities. However, strategy
implication needs to be as fast as possible to grab the early mover advantage. It can hedge poor
performance of one sector by some other sector for its wide range of offering. Capital market operation
has become a great potential for the bank to increase its profitability.
The bank has been able to create a multi component loan portfolio. However, default is increasing for
lack of monitoring. The bank is trying to increase its loan quality by accelerating its recovery policy.
The bank can concentrate on the loan sector where default risk is low and its investment is profitable.
The loan procedure has been made more calculative, logical to keep the credit sound.
89
Appendix
90
Abbreviation:
A
I.
ALCO: Asset Liability Committee
B
II.
III.
BRPD: Bank Reconstructing Policy Department

BOD: Board of Director
C
I.
II.
CRM: Credit Rating Management

CAD: Central Account Opening Department
III.
CSD: Common Service Division
IV.
CCI: Chief Controller of Import
V.
CIB: Credit Information Bearue
VI.
CDR: Credit Deposit Ratio.
D
I.
DP Note: Demand Promissory note
E
II.
ERC: Export Registration Certificate
III.
EXP: Export
IV.
EPS: Earnings per Share
V.
EC: Executive Committee
F
I.
II.
III.
FAD: Finance & Accounts Department

FID: Financial Institution Division
FED: Foreign Exchange Department
91
H
I.
HO: Head Office
I
II.
IT: Information Technology
III.
ICC: Internal Compliance & Control
IV.
ID: International Division
V.
IRC: Import Registrations Certificate
L
I.
L/C: Letter of Credit
M
II.
III.
MBD: Marketing Branches Division

MD. : Managing Director
R
I.
II.
RJSC: Registered Joint Stock Company

ROA: Return on Asset
III.
ROI: Return on Investment
IV.
ROE: Return on Equity
92
Formula in Use:
i.
Growth Rate = (P1- P0)P0
ii.
Credit to Deposit Ratio =
iii.
Return on Asset =
iv.
Return on Equity =
v.
Earnings per Share =
vi.
Price Earnings Ratio =
100
100
100
93
Bibliography
Books
C.R. Kotheri Research Mythology Second Edition 2003-4. Wishwa Parkashan, Calcutta, India.
Lawrence, J Gitman (2003), Principle of Managerial Finance 10th Edition, Pearson
Education.lti, Singapur.
Van Horne & Wachowicz, Fundamental of Financial Management 12th Edition, Pearson
Education.lti, Singapur.
Weygandt Kieso & Kimmel, Mnagerial Accounting
Annual Report
NCC Bank Limited, Annual Report 2010
NCC Bank Limited, Annual Report-2015
Journal
Bangladesh Bank Financial Stability Report-2013
Bangladesh Bank Financial Stability Report-2014
Credit Pollicy
Websites
www.nccbank.com.bd
www.Bangladesh bank.org.bd
Wekipedia
Investopedia
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Introduction of the study

Origin of the Report

Objective of the Study

Scope of the Report

Overview of NCC Bank Limited

Historical Background of NCC Bank Ltd

Our Core Values

Group Corporate Structure

Products & Services

Loan & Advances Products

Several Types of Risk

Risk factor in case of Export

Principles of the assessment of banks credit risk

Loan & Advances

Develop of Credit Application

Credit Management of NCCBL

NCCBL Credit Risk Management Policy

Securities against loan and advance

Overall procedure of sanctioning loan

Analysis of Credit Management

Distribution of Value Added 2014-2015

Year wise deposit & growth rate

Year wise credit & growth rate

Year wise investment & growth rate

Year remittance & growth rate

Year wise Export & Import

Year Wise CDR,ROA, ROI, ROE, EPS

Year wise P/E Ratio

Year wise Dividend per Share, Market value per Share

Sector wise distribution of Deposit

Sector distribution of investment Portfolio

Credit Distribution of Agricultural, Industry,

Year wise Classified Loan

Category Wise Classified Loan

Provision kept against Classified Loan

Deposit of NCCBL as a percentage of National

Comparison of CDR and National CDR

Non Performing Loan as a Percentage of total Loan

Findings & Recommendation

Corporate Information (at a glance)

Classification of Continuous Loan

Classification of Demand Loan

Classification of Fixed Loan

Differences between Loan & Advances

Securities against Loan & Advances

Distribution of Value Added 2014-2015

Year wise deposit & growth rate

Year wise credit & growth rate

Year wise investment & growth rate

Year remittance & growth rate

Year wise Export & Import

Year Wise CDR,ROA, ROI, ROE, EPS

Year wise Dividend per Share, Market value per

Sector distribution of investment Portfolio

5.17(a)-5.17(c) Credit Distribution of Agricultural, Industry,

Year wise Classified Loan

Category Wise Classified Loan

Provision kept against Classified Loan

Deposit of NCCBL as a percentage of National

Comparison of CDR and National CDR

Non Performing Loan as a Percentage of total Loan

Group Corporate Structure