CREDIT OPERATING SYSTEM OF BASIC BANK LIMITED

Abstract

This internship report is prepared on the basis of my three months particle experience at BASIC Bank Limited (Bangshal Branch). The internship report is on “Credit Operating System of BASIC Bank Limited”. It covered its overall position as well as an overview of this Bank. BASIC is meant to patronize mainly the small industries of Bangladesh and that is why its credit policy obligates to forward at least 50% of its Total Loans and Advances to small industries. BASIC channels its loans through a number of ways which can be divided into General and Trade Financing (Import & Export). General Loan includes – OD, CC, Term Loan etc. whereas Trade Financing includes L/C, B2B L/C, PAD, LTR, LIM and so many others. A number of steps are followed while granting loan to a client some of which claim more attention are - calculating the creditworthiness of the clients, his ability to create sufficient cash flow to repay the loan i.e. project appraisal, proper securitization and documentation of the loan and strict follow-up activities to ensure that the loan is being used for which it meant. Credit is the most fundamental issue in our banking sector. Default culture is the most common phenomenon in the banking sector of Bangladesh. Like other Govt. banks, private banks also suffer from this problem. But, the Credit Management in BASIC is relatively sound compared to all other similar banks operating in the country. As a result, the bank has a very low rate of classified loans, which is around 4% only. Since the process of recovery of classified loan involves lengthy legal procedures, the percentage of recovery of such loans is very low. BASIC therefore emphasizes on persuasion rather than going for legal action in order to recover its classified loans. Bank considers the practical aspects of the projects being sick and extends further finance or reschedules the repayment period. Thus, BASIC is playing a pivotal role in developing and promoting the small scale industries in Bangladesh which hardly draw the attention of today’s private commercial banks as they are now aggressively consumer loan oriented. At the same time, it’s also serving the interest of its shareholders (Govt.) as well as other stakeholders by making a handsome return on its investments.