Abstract:
This report is based on practical working experience at Retail Finance Center Of City Bank Limited as a part of internship program. City Bank Limited is a schedule bank under private sector. It was incorporated as a pubic Limited Company in 1983. The bank started commercial banking operations since inception. The main function of the bank is intermediation i.e. collecting funds from the surplus units of the economy in the form of deposit and mobilizing deposit to the difficult units of the economy in the form of credit.
The City Bank follows some specific principles for its credit activities, which involve know your customer (KYC), safety, liquidity, profitability, purpose and spread.
The lending procedure followed by City Bank limited consists of a set of sequential activities. The lending process formally starts with the submission of a loan application from a client who must have an account with the Bank. Lending process generally starts from the branch level. The customer has to provide required MIS information to the bank for credit analysis. Meanwhile the bank sends inquiry to the credit information Bureau Of Bangladesh Bank in prescribed format to know whether the borrower has classified loans with other banks and whether the borrower has good repayment behavior.
If the CIB report obtained from Bangladesh bank signifies that the customer is a good borrower, the bank precedes further to process the loan application. At this stage the bank conducts credit analysis. The outcomes of the MIS spreadsheet analysis are specific MIS ratios and through the credit Risk Grading (CRGs). The credit analysis is undertaken for the quantitative measurement of the risk associated with a loan. If the loan amount exceeds one corer taka, the bank conducts lending Risk Analysis (LRA). Lending Risk Analysis primarily identifies two components of the lending risk – business risk and security risk.
After credit analysis if the borrower is found sound for lending, the bank proceeds to prepare the proposal.
After board approval the sanction advice is sent to the borrower who returns the duplicate copy duly signed meaning that he/she complies with the terms and conditions of the bank’s credit policy. Then the loan is disbursed through creating a loan account.
