Wednesday 27 January 2016

INTERNSHIP REPORT ON CREDIT RISK MANAGEMENT OF SIBL(CHAPTER-1)

Chapter One
Introduction
&
Organization  Introduction:
Credit management is a vital part of any financial institution. Institution’s existence depends on good credit management. It must be an ongoing process that would enable the firm to manage the loan portfolio proactively and earn satisfactory return to the shareholders. The current world is very dynamic and fast changing economy is pressurizing the market players to move very quickly. Every financial institution in this situation is facing various level of difficulty to adjust with various
changing factors of the economy. Credit management which is one of the most important parts of their management is requiring special interest because it involves a lot of risk and a good credit management involves different aspects.
A business report is defined as an orderly, objective communication of information that serves some business purpose. Therefore, in order to serve this business purpose a topic of the report has to be clearly stated. The topic that has been defined for studying in this report is in infinitive phase. It means that there are further scopes to improve and study on the topics that are discussed in this report. The topic has been defined as,
1.2 Rationale of the Study
Due to the increased competition of the increased number of commercial banks and the growing economy, the expectations of the customers have also increased than ever before.
Realizing the present condition, banks, especially the commercial banks are trying to attract more and more people to use bank as their trusted saving way. So banks are coming more reachable to their customers. Presently the most serious difficulty facing the financial sector is the low level of interest rate and high level of inflation rate, due to political anarchy and syndicating of products. So it is the duty of the top management of the commercial banks to deal with the situation.
1.3 Background of the Report:
Banking in Bangladesh has passed through an era of unprecedented all round growth since the nationalization of commercial banks aftermath our independence. The branch network has widened and functional dimensions broadened. Loan activities in the banks now-a-days have assumed new dimensions and this requires up to date knowledge and skill on the part of the bank managers and those in the field of banking profession about the state of art of lending wisely.
Extending credit always bears the risk of being defaulted. So policy of credit expansion and credit management style has inherent importance to the bankers. And the recent wary about the classified loan hints the importance of studying the credit management of the private commercial banks. Since the MBL is enjoying the lowest rate of classified loan among the commercial banks operating in the country.
1.4 Objective of the Study:
The objective of the report is to analyze the credit management of Al-Arafa Islami Bank Ltd. Other objectives are:
To analyze the services provided by AIBL.
To evaluate the performance and specifically assess the credit risk management policy of AIBL.
To analyze the comparative performance of AIBL with respect to industry.
To find out some key problems regarding the credit risk management
1.5 Scope of the Report:
This report helps me to understand the clear real-time experience about the total management of AIBL. It helps me to understand, how the bank manages its total processes. It also helps me to understand how they deal with the customers as well as the foreign policy of their bank like- the process of doing LC and export & import etc.
1.6 Benefits:
It gives us knowledge about islami shariah based Banking system.
It helps to know about overall general banking activities of AIBL.
It provides knowledge about deposit product and services.
1.7 Methodology of the Report:
Certain methodologies were followed when preparing this report to fulfill the objective of the report, to make maximum utilization of the scopes and to avoid the limitation as much as possible.
1.8 Data collection Method:
Data refers to know facts or things used as a basis for inference. There are two main sources of
Data:
Primary Data
Secondary Data
1.8.1 Primary Data:
Face-to- face conversion with the executive and officers of bank
Informal conversation with the client
Practical work exposure from the different desks of the various department of the Branch covered.
Relevant file study as provided by the officer’s concerned.
1.8.2 Secondary Data
Annual Report of Al- Arafa Islami Bank Ltd
Periodicals Published by Bangladesh Bank
Various books, articles, compilations etc. Regarding general banking functions.
1.9 Limitations of the Report
Due to some legal obligation and business secrecy the bank was reluctant to provide some sensitive data. Thus, this study limits only on the available published data and certain degree of formal and informal interview and limited survey. Although the particular study is extensive in nature, hard effort was given to make the study worthwhile and meaningful even then there exists some limitation. Altogether the internship period in the bank was not free from limitations.
I faced some problems during the study, which I am mentioning below:
The main constraint of the study are insufficiently of current information, relevant to the study
All required information are not available in any specific branch of the bank and there are also limited opportunity to visit more then one branch
Due to time limitations many of the aspects could not be discussed in the present report
Lack of experience in internship report writing.

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