Internship Report On Loan Processing, Credit Appraisal, Follow-Up &Recovery Procedure of IFIC ...

93 Pages·2014·2.51 MB·English

by  Milad Khan

Internship Report
On
Loan Processing, Credit Appraisal, Follow-Up &Recovery
Procedure of IFIC Bank Limited
Internship Report
On

Loan Processing, Credit Appraisal, Follow–up &
Recovery Procedure
Of
IFIC Bank Limited

Prepared For:
Mohammad Tanvi Newaz
Assistant Professor,
BRAC Business School
BRAC University
Prepared By
Nafisa Marzan
ID: 10304087
BRAC Business School
Major in HRM & Finance
BBA (Summer 2014)

Date of Submission: 10September, 2014
Letter of Transmittal

Date: 18th September, 2014
Mohammad Tanvi Newaz
Assistant Professor, and
Coordinator, MBA Program
BRAC Business School
BRAC University
Subject: Submission of Internship Report on “Loan Processing, Credit Appraisal, Follow –
up& Recovery Procedure of IFIC Bank Limited”.
Dear Sir,
With due respect and humble submission, I like to state that I have completed my Internship
report on “Loan Processing, Credit Appraisal & follow-up Recovery Procedure of IFIC Bank
Limited”. The internship program has given me the opportunity to learn about different aspects
of this well reputed organization. Before facing the corporate world, I have gathered general idea
about the organization culture and activities. Without sincere cooperation and proper guidance
of you it was not possible for me to prepare this report. For this act of kindness, I am grateful to
you.
I have tried my best to make this report as informative, practical, reliable and relevant as
Possible. In preparation of this report, I have reviewed few books, journals, articles from
internet, taking few interviews and on the basis of this available information I drew a set of
Recommendation which I believe will help the credit department to improve their competence.
Yours sincerely,

Nafisa Marzan
ID: 10304087
Major in HRM & Finance
BBA (Summer 2014)
BRAC Business School

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Acknowledgement

At the beginning, I would like to express my sincere gratitude to Almighty, the most merciful
and beneficial for empowering me to prepare the report within the scheduled time.
As a student of BBA Program, Internship is one of the most important partial requirements of the
total courses four years BBA program. In this regard I would like to thank all the faculties of
BRAC University who helps me to finish my courses. This is a synopsis of my recent study on
“Loan Processing, Credit Appraisal & Follow –Up Recovery Procedure of IFIC Bank Limited”
as a part of the internship report program.
I would like to thank my honorable teacher and internship supervisor Md. Tanvi Newaz,
Assistant Professor, BRAC Business School, BRAC University, for his kind guidance and
support in the preparation of this report. I will remain indebted to him for the valuable
suggestions and the time he has given in supervising my work on report. I am very much
thankful to him because without his support and suggestion my effort would not be materialized.
I feel myself very lucky to be in touch of his great faculty. I also thank all the staffs of this
department for their sincere support.
I would also like to acknowledge my appreciation toward MD Mehboob Alam Chowdhury
(SAVP) senior assistant Vice president of IFIC Bank, Kawran Bazar Branch for being patient
and supporting me throughout my 3 months long program.My peers and colleagues at the bank
had also been very kind and helpful and they made my internship a more comfortable one. I
would like to specially thank Bohnni Saha (Credit Analyst), Habibur Rahman (Credit Analyst)
for being there whenever I needed their support.

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EXECUTIVE SUMMERY

Banking system of Bangladesh has through three phases of development Nationalization,
Privatization and lastly Financial Sector Reform. IFIC Bank Limited has started its journey as a
private commercial bank on June 24, 1983.As a part of my under graduation program, have
completed my internship in this organization. Throughout the period of my internship, I hadbeen
working in several departments. However, I was officially appointed to work in the
creditdepartment. The report will reveal the background of the company, description of the
loans,findings and recommendations based on the experience gathered.
One of my major responsibilities was to assist the clients in opening new accounts. Alongside,
my work was limited to Account opening section, Bills and clearing section. I had been given
access to unique software, called MYSIS. I would be required to log in with username and
password, and then search for specific clients. In one hand, I was assigned to provide account
opening related information to the new customers. Every day, one of my responsibilities was to
capture new or existing information related to account opening and then, disseminate those
information to the clients who are interested to open accounts in IFIC BANK. On the other hand,
I was assigned to keep a database of the information collected. Alongside, I prepared and fill up
new and existing files for the department.
The report is based on my critical observation while working in the credit division of IFIC Bank.
Lending is one of the principal functions of the bank. Sound lending practice therefore, is very
important for profitability and success of a bank. For the sake of sound lending, it is necessary to
develop a sound policy and modern credit management techniques to ensure that loans/ advances
are safe and the money will come back within the time set for repayment. For this purpose,
proper and prior analysis of credit proposals is required to assess the risk. The comparative
analysis shows that IFIC is in better position, but there are some obstacles it faces to sustain the
position. However, the continuous improvement of the services will certainly place the bank in
the best position in one decade.

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Table of Content
Chapter Name Topic Page
Executive Summery
1.1 Background of Study 1

1.2 Objective of the Report 1
Chapter 1:
Introduction
1.3 Scope 2
1.4 Limitations 2
1.5 Methodology of the Report 3
2.1 Background of IFIC Bank Limited 4
Chapter 2:
2.2 Management Structure 5
Company Overview
2.3 Remittance Arrangement 5
2.4 Organogram of IFIC Bank Limited 6
3.My Job Descriptions 7-8
3.2 Credit Division 7

3.3 Creating Spread and updating previous spreads 7
Chapter 3:
3.4 Entering reported figures 7
Job Description
3.5 Factory visit report 8
3.6 Other activities 8
3.7 Experience 8
4.1 The Depositors 9

4.2 The Borrowers 9
Chapter 4:

4.3 The Economy 9
Credit Risk
Management: A 4.4 Credit Risk: 10
Theoretical Framework
4.5 Objectives Of CRM (Credit Risk Management) 11
4.6 Credit Risk Management Process 12
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5.1 Credit flow of IFIC 13

5.2 Organogram of Credit Risk Management 14

5.3 Types of Advance on the basis of Security 15

5.4 Types of advance as per Bangladesh Bank Criteria for 15
classification
5.5 Continuous Loan 16
Chapter 5:
5.6 Demand Loan: 19
Loan processing 5.7 Term Loan 22
Credit Appraisal 5.8 Unsecured Loan 22
&Follow-Up 5.9 Loan Products of IFIC Bank 23
Recovery Process of
5.10 Credit Assessment 24
IFIC Bank Ltd.
5.11 General Consideration 25
5.12 Industry and business segment focus 26
5.13 Credit Risk Grading (CRG) 31
5.14 Loan proposal of Small Enterprise & Consumer 32
Finance
5.14 Approval Process 33
5.15 Credit Administration 34
5.16 Appeal 34
5.17 Early Alert Process 35
6.1 Features 36

6.2Points to be considered before initiating the proposal 36

6.3 Security 37
Chapter 6:
Loan procedure of IFIC
6.4 Approval 37
BANK
6.5 Mode of Financing 37
6.6 Charge Documents/ Property documents 38
6.7 Disbursement 39
6.8 Record Keeping 39
6.9 Accounting Procedure 39-40
7.1 Credit Recovery 41-42
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7.2 NPL Account Management: 42

7.3 Classification & Provisioning 43

Chapter 7:
7.4 Qualitative Judgment: 44

Follow –Up & Recovery 7.5 Assignment of Accounts (Account Transfer 45
Procedures) to RAM Division:
Process
7.6 Persuasion & Follow Up 46
7.7 Re-Schedulement 48
7.8 Sale of Pledged Goods, Mortgaged Properties And 49
Filing of Suit
8.1 Findings Based on Total credit management system 50
Chapter 8: Of IFIC BANK
Findings And 8.2 Recommendations 50-51
Recommendations
Chapter 9: 9.1 Survey Analysis 51-73

9.2 Findings And Recommendation Based on Survey 74
Findings and Analysis
Based On Survey
Chapter 10: Conclusion 75
Conclusion
Chapter 11: Glossary 76

Chapter 12: Reference 77
Reference

Chapter 13: Appendix 78-81
Appendix

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Table of Figures

SL Chart Name Page No.
1 Organogram of IFIC Bank Limited 06
2 Organogram of Credit Risk Management 14
3 Loan Products of IFIC Bank 22-23
4 Industry and business segment focus 26-27
5 Approval Process 34
6 Objective criteria for determining the preliminary classification 43-44
status
7 Did the Bank get itself credit rated by a credit rating agency, 51-52
which is on the approved by Bangladesh Bank?
8 Did the Bank update its credit rating for the last financial year 52-53
within six months from the date of close of the financial year?
9 Did the Bank submit the credit rating report complete in all 53-54
respects to the Bangladesh Bank within seven days of its receipt
from credit rating agency?
10 Did the Bank make public the credit rating report within seven 54-55
days of its receipt from the credit rating agency?
11 Did the Bank disclose prominently its credit rating in its published 55-56
annual and quarterly financial statements?
12 Q. 6 Did the Bank fully secure itself against all guarantees issued 56-57
for the conditions mentioned in the Regulation of Bangladesh
Bank?
13 In Bank’s view, is the credit rating score of an applicant a valid 57-58
predictor about future credit loss experience?
14 Which credit reporting agency does your company use? 58-59
15 What type of Credit rating score does Bank use? 59-60
16 How long has bank been using any form of credit rating score in 60-61
the evaluation of personal property risks?
17 When there is more than one applicant, which credit rating score 61-62
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does bank use in the qualification of new business if the scores are
different?
18 Does your company use CIB scores as a factor in deciding 62-63
whether or not to underwrite or renew a personal property
insurance policy?
19 How is the consent obtained? Select all that apply. 63-64
20 If bank uses a credit rating score that results in an adverse effect 64-65
on qualification or rating of the applicant, do you advise the
applicant?
21 Does bank provides credit agency information to the applicant so 65-66
that the applicant can verify the information?
22 If an applicant has credit information corrected or changed by the 66-67
credit agency and informs you, will bank make rating changes?
23 How often is the credit rating score updated? 67-68
24 When your company accesses a CIB score, does its inquiry have 68-69
an impact on the applicant/policyholder’s credit rating?
25 Is a credit rating score shared with other insurers? 69-70
26 Does factory visits are made before approved the loan? 70-71
27 Does the officers well aware of different business type? 71-72
28 What kind of credit is more profitable? 72-73

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