Credit Risk Management of
Uttara Bank Limited
©Daffodil International University
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An Internship Report
On
Credit Risk Management of
Uttara Bank Limited :
A Study on Postagola Branch
Prepared For
M. MokarromHossain
Professor,
Dept. of Business Administration
Faculty of Business and Economics
Daffodil International University
Prepared By
Md. MustafizurRahman
ID: 131-11-3074
Program: BBA
Major: Accounting
Date of Submission: November 12, 2014
©Daffodil International University
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Acknowledgement
I feel immensely pleased to have an opportunity, on the very occasion of submitting my
internship report. Preparing a report is really a great task. A lot of efforts and studies have
gone in to make this report a reality. This would not have been possible only by me without
the genuine support and assistance from others. I thank a number of individuals for their
unprecedented support, cordial cooperation, objective direction and endless encouragement
that have significantly contributed to the preparation of this report.
First and foremost, I would like to convey my deepest gratitude to almighty ALLAH, the
omniscient and omnipotent, who bestowed me the capability of successful completion of my
internship report within the scheduled time. This report is an accumulation of many people‟s
endeavor. I am indebted to all the people, with whom I approached during the various stages
of writing this report, for their kind advices, suggestions, directions, cooperation and proper
guidelines.
My pleasure turns blooming to offer thanks to my supervisorwho has been a faculty member
of Business Administration at Daffodil international University. He directed me to prepare
this report providing with all kinds of recently updated information from his busy scheduled
time. He provided with valuable guidelines from the very beginning to the end with a friendly
behavior.
I am grateful to Mr. AtiqurRahman Manager of Uttara Bank Limited and all the personnel
working in UttaraBank atPostagola branch. Without their assistance and co-operation, this
report might not have seen the light of day.
And last but not the least, I would like to express my appreciation to Daffodil International
University and me eventually grateful to the University and it‟s excellences that works on
education and create knowledge.
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Letter of Transmittal
November 12, 2014
M. MokarromHossain,
Professor,
Daffodil International University
Subject: Submission of Internship Report.
Dear Sir,
It is my immense pleasure to submit my internship report on “Credit Risk Management of
Uttara Bank Limited”which I have prepared by performing three months internship at
Postagola Branchto fulfill the requirement of BBA degree in faculty of Business and
economics which enriches our academic background, about to enter into the professional
field.
I sincerely believe that this internship program will help me to enrich my adaptability quality
in the long run when I will involve myself in practical field. I am grateful for your valuable
advices and cooperation. I have tried my best to go deep into the matters and make full use of
my capabilities in making this report meaningful, though there may be some mistakes and
shortcomings. I shall be pleased to answer any kind of query that may arise during the
evaluation of this report. So, I am fervently requesting and hoping that you would be kind
enough to accept my report and oblige thereby.
Thanking You,
Yours Faithfully
……………………
Md. MustafizurRahman
ID: 131-11-3074
Department: Bachelors of Business Administration (BBA)
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Letter of Acceptance
This is to certify that the internship report on “Credit Risk Management of Uttara Bank
Limited”is prepared by Md. MustafizurRahman bearing ID: 131-11-3074 major in
Accounting from Daffodil International University as a partial fulfillment of the
requirement of Bachelor of Business Administration (BBA) degree. The Report has been
prepared under my guidance and is a record of the bonafide work carried out successfully.
Now he is permitted to submit the internship report.I wish his all success in his future
endeavors.
………………………………
Prof. M. MokarromHossain
Dept. of Business Administration
Faculty of Business and Economics
Daffodil International University
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Declaration
I do hereby solemnly declare that the internship report on “Credit Risk Management of
Uttara Bank Limited” has been done by me after completing three months of internship in
Uttara Bank Limited at Postagola Branch and it has not been previously submitted to any
other university, college or organization for any academic qualification, certificate or diploma
degree.
I also declare that this study is my original work and it has been prepared for partial
fulfillment of the requirement of Bachelor of Business Administration (BBA) degree.
……………………..
Md. MustafizurRahman
ID: 131-11-3074
Department: Bachelors of Business Administration (BBA)
Daffodil International University
©Daffodil International University
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Acronyms
Elaborations
AD
Authorized Dealer
A/C
Account
BAB
Bangladesh Association of Banks
BOE
Bill Of Exchange
B/L
Bill of Lading
BB
Bangladesh Bank
BTB
Back to Back
CIB
Credit Information Bureau
CIF
Cost Insurance & Freight
CEO
Chief Executive Officer
CC
Clearing Certificate
C&F
Clearing & Forwarding
CRF
Clearing Report Finding
CF
Cost and Freight
D&B
Dun & Bradstreet
FDBC
Foreign Documentary Bill for Collection
FDBP
Foreign Documentary Bill for Purchase
FOB
Free On Board
FDD
Foreign Demand Draft
FC
Foreign Currency
IBP
Inland Bill Purchase
IPO
Initial Public Offering
IBC
Inward Bills for Collection
ITC
Import Trade Control
IMP
Import Form
ICC
International Chamber of Commerce
IRC
Import Registration Certificate
LIM
Loan Against Imported Merchandise
LTR
Loan Against Trust Receipt
L/C
Letter of Credit
LCAF
Letter of Credit Authorization Form
OBC
Outward Bills for Collection
PO
Payment Order
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PSI
Pre Shipment Inspection
PAD
Payment Against Document
PI
Proforma Invoice
RM
Relational Manager
ROI
Return on Investment
ROA
Return on Asset
ROE
Return on Equity
SWIFT
PAD
TC
Society for Worldwide Interbank Financial Transaction.
Travelers Cheque
TIN
Tax Identification Number
TR
Trust Receipt
TT
Telegraphic Transfer
UCPDC
VAT
Uniform Customs and Practices for Documentary Credit
Value Added Tax
for DocumentaryCreCre
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Executive Summary
Uttara bank is one of the largest and oldest private-sector commercial bank in Bangladesh
with years of experience. Adaptation of modern technology both in terms of equipment and
banking practice ensures efficient service to clients. Uttara bank limited had been a
nationalized bank in the name of Uttara Bank under the Bangladesh Bank.
Commercial banks lend money to different categories of borrowers for various purposes with
a view to generate revenue. Accordingly, while processing and appraising a loan proposal,
banks essentially analyze the information relating to borrowers, assess the purposes of loan
and determine the viability of the loan proposal. If the proposal is sound and safe for lending,
loan is sanctioned and disbursed
Thispaper analyses the impact of Credit Risk Management of Uttara bank including various
types of credit disbursed by UBL, the process of credit management practice of UBL and
credit disbursement process of UBL on company‟s performance. To analyze the effectiveness
of their credit risk management practices and process data sources gathered from primary
data sources including practical banking work, personal discussion with the officers and
executives of UBL and personal interview with customer and from secondary data sources
including annual report, published booklet, various published document, website, text book,
circular etc.
This report has several chapters and different aspects regarding the topic have been discussed
in each chapter.
I conduct hypothesis testing in the important criteria of credit risk management and justify
those subjective judgments on the basis of quantitative analysis to analyze the effectiveness
of their credit risk management practices and policies. I also examine some important ratio of
credit risk and analyze their current situation based on profitability, profit margin and market
share and ROI. Quantitative analysis reveals that UBL go through rigid credit risk
management to manage their credit risk though they still need to improve on some areas such
as relying more on debt may affect their liquidity and solvency and eventually affect credit
risk. Bank must have sophisticated information system and analytical techniques that enable
management to measure the credit risk andBank 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.
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Table of Content
Particulars
Title Page
Acknowledgement
Letter of Transmittal
Letter of Acceptence
Declaration
Acronyms
Elaborations
Page
No.
II
III
IV
V
VI
VIIVIII
IX
Executive Summary
Table of Contents
Chapter One: Introduction
1.1Introduction
1.2 Objective
1.2.1 Broad objective
1.2.2 Specific objectives
1.3 Methodology
1.3.1 Research design
1.3.2 Data sources
1.3.2.1 Primary data sources
1.3.2.2 Secondary data sources
1.4 Scope of the work
1.5 Limitation of the work
Chapter Two: Organizational profile
2.1Background of the company
2.2 Organizational Analysis
2.2.1 Strategic posture
2.2.1.1 Mission
2.2.1.2 Vision
2.2.1.3 Objective
2.2.1.4 Corporate Profile
2.2.1.5 Products and Services of the Organization
Chapter Three: Credit Risk Management
3.1Management of Loans in Commercial Banks
3.2 Risk
3.2.1 Sources of Risks of UBL
3.3 Risk Profile of UBL
3.4 Credit Risk Management
3.4.1 Bank Credit
3.4.2 Definition of Credit Risk Management
3.4.3 Importance of Credit Risk Management
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X-XI
1
2
3
3
3
3
3
4
4
4
5
6
7
8
8
8
8
8
9
10
11
12
12
13-14
15
16
16
16-17
17-19
3.4.4 Credit Risk Management Process of UBL
3.5 Pre-Credit Application Activities
3.5.1 Identification of Sector-wise Credit Limit
3.5.2 Sector-wise Loan
3.5.3 Industry and Business Segment Focus in Details
3.5.4 Discourage Business Types
3.6 Post-Credit Application Activities
3.6.1 Evaluation of 6C‟s
3.6.2 Loan Sanction & Disbursement
3.7 After Credit/Loan Disbursement
3.7.1 Monitoring Loan Performance
3.7.2 Collection of Installment
3.8 Recover the Losses
3.8.1 Debt Rescheduling
3.8.2 Non-judicial Foreclosure
3.8.3 Judicial Foreclosure
3.8.4 Adjust with Reserve and Provision
3.9 Some Important Ratios of Credit Risk
Chapter Four: Findings
4.1Findings
Chapter five:Recommendations and Conclusion
5.1 Recommendation
5.2 Conclusion
Chapter Six: Reference
6.1 Bibliography
6.2Websites
19
20
20
21
21-22
23
23
23-25
26
27
27
27
27
27
28
28
28
29-33
34
35
36
37
38
39
40
41
List of Figure
Figure 01: Products and Services of UTTARA Bank Ltd
Figure 02: Risk Profile of Uttara Bank Ltd.
Figure 03: Credit Risk Management Process of Uttara Bank
Figure 04: Credit Diversification Criteria of UBL
Figure 05: Procedures of UBL Loan Sanction and Disbursement
Figure 06:Debt to assets
Figure 07: Equity multiplier ratio
Figure 08: Net interest Margin ratio
Figure 09: Noninterest income to Asset
Figure 10: Noninterest income to operating income
Figure 11: Liquid assets to liability
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26
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Introduction
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1.1Introduction:
Theoretical knowledge gets its perfection with practical application. As the student of BBA,
we have to gather practical knowledge and skills to meet the future competition. Without
practical exposure, theory can never be fruitful. Recognizing the importance of practical
experience, three months practical exposure is one of the most important parts of four year
BBA Program.As practical orientation is integral part of BBA program
requirement, I have worked as an intern e at Uttara Bank Limited, Postagola Branch.
By apractical program in a bank for three months, it would be a great opportunity where
student should learn practical knowledge and experience on the various spheres of banking
business. The report is prepared on the basis of three months practical experience at Uttara
Bank Limitedthat helps a lot to learn about the practical situation of a financial institution and
implementation of theoretical knowledge in to practical and realistic work environment. After
discussion and getting consent, I started to work on the project titled“Credit Risk
ManagementofUttara Bank Limited”. The report covers theCredit Risk Management of
Uttara Bank Limited.The report discusses about the different credit facilities, approval
process, monitoring and performance.The purpose of this study is to find and analyze the
Credit facilities, approval, monitoring collection and recovery process of UttaraBank
Limited. It will also include the performance of bank in recent years. Find out different credit
facilities that Uttara Bank is providing for their customers. The main objective of conducting
this project is to show upgrade information to analyze the credit system of Uttara bank more
conveniently. For the academic requirement of faculty of Business Administration, I have
been assigned to do my practicum program in Uttara Bank of Ltd, Postagola Branch; internal
supervisor, Md. MokarramHossain,Professor, faculty of Business Administration,Daffodil
International University, has assigned to conduct the research study on the topic of “Credit
Risk Management of Uttara Bank Limited”. Actually classroom discussion solely cannot
make students to be acquainted with the real life situation; therefore it is an opportunity for
the students to know about the practical environment of the real business world through this.
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1.2Objective:
The objective of the Internship report is to provide on the job exposure to any student and
gives opportunity the student to relate the theoretical conceptions in real life situation.
Students are placed in enterprises, organizations, financial institutions, research institutions as
well as development projects. The program covers a period of 12 weeks of organizational
attachment.
1.2.1Broad Objective:
The broad objective of this report is to know about the credit risk management of Uttara Bank
of Limited.
1.2.2 Specific Objectives:
 To identify the various types of credit disbursed by UBL.
 To evaluate about the process of credit management practices of UBL.
 To analyze the credit disbursement process of UBL.
 To suggest some recommendations based on findings.
1.3 Methodology:
The study requires a systematic procedure from selection of the topic to preparation of the
final report. To perform the study, the data sources were to be identified and collected, to be
classified, analyzed, interpreted and presented in a systematic manner and key points were to
be found out. The overall process of methodology has been given as below.
1.3.1 Research Design:
Exploratory research has been conducted for gathering better information that will give a
better understanding on different financial data. Both primary and secondary sources of data
collection procedure have been used in the report. Primary data has been collected mainly
through the writer‟s observation of the approval process and monitoring techniques, informal
interviews of executives, officers and employees of Uttara Bank Limited.
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1.3.2Data Sources:
The information included in this report has been gathered from equally primary and
secondary sources. These information is collected from the various divisions and departments
of Uttara Bank through face to face conversation and different' manuals of Uttara Bank
Limited, in addition to these other necessary information has been collected from the below
sources.
1.3.2.1 Primary Data Sources:
 Practical banking work.
 Personal discussion with the officers and executives of UTTARA Bank
Limited.
 Personal interview with the customers.
1.3.2.2 Secondary Data Sources:
 Annual Reports of UTTARA Bank Ltd.
 Published Booklet of the Bank.
 Various published documents.
 Website of UTTARA Bank Ltd.
 Files and documents of the branch.
 Different text books.
 Different circular sent by Head Office of UTTARA Bank and Bank.
 The daily news papers, relevant journals
1.4Scope of the Work:
The scope of the study is UTTARABankLtd, at Darussalam Road Branch. The report has
been prepared through extensive discussion with the bank employees and the clients. The
scope of the study is limited to the branch level only. UTTARA Bank is now giving emphasis
to create a constructive and meaningful competition with the private sector banking.
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1.5Limitation of the Work:
The present study was not out of limitations. But as an interne, it was a great opportunity for
me to know about banking activities in Bangladesh especially in UTTARABank of Ltd. I
have faced the following problems that may be termed as the limitation or shortcomings of
the study. These are given below:
 No remuneration was provided.
 Lack of records.
 Lack of time.
 Insufficient data.
 Lack of proper support.
 Lack of my experience
 Unavailable information in website
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Organizational
Profile
O
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2.1Background of the Company:
Uttara Bank formed in 1972 as a scheduled bank with assets and liabilities of the Eastern
Banking Corporation set up in East Pakistan on 28 January 1965.It started banking business
22 June 1965 and became a member of the UBL Clearing House on 17September 1965. At
the time of establishment, Eastern Banking Corporation had a paid-up capital of Tk 1.42
million and deposit resources of about Tk 10 million. It was the only scheduled bank formed
with capital raised entirely from the small income group of people of East Pakistan. Eastern
Banking Corporationwas nationalized under the Bangladesh banks nationalization order 1972
and its name was changed to Uttara bank. At that time, the bank had 82 branches. The
government retracted 95% of its share capital and allowed into operate as a private bank. It
was transformed into a limited company on 15 September 1983. At present, there are 215
branches in operation spread all over the country.
branches
230
220
210
200
190
180
170
160
branches
2009
2010
2011
2012
2013
Within a very short period of time, UTTARA BANK LTD. has been able to create an image
for itself and has earned significant reputation in the banking sector of Bangladesh. This
institution attracted the customer‟s attention through its different schemes. All these efforts
ultimately lead to the profit generation for the Bank. For survival and growth of any business
institution profit generation is must. Like other commercial banks. UTTARA BANK LTD.
has specific target for collecting as well as distributing those deposits through different Credit
programs for consumers and businesses. Prudent investing by the management and constant
monitoring helps the Bank to attain its target and contributes to the growth of the bank as a
whole and particularly its branches.The company philosophy –“Local Bank global network”
has been precisely the essence of the legend of the banks success.
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2.2 Organizational Analysis: It reflects bank‟s strategic posture.
2.2.1 Strategic Posture:
It combines Company‟s Mission, Vision, Objective, Products and services etc.
2.2.1.1Mission:The Bank‟s mission gives emphasis to:
“To assist in bringing high quality service to our customers and to participate in the
growth and expansion of our national economy.
To set high standards of integrity and bring total satisfaction to our customers,
shareholders and employees.
To become the most sought after bank in the country, rendering technology driven
innovative services by our dedicated team of professionals.”
2.2.1.2 Vision:
UTTARA BANK LTD. aims at excellence and has a new vision to fulfill and a new
goal to achieve. The bank has following objectives:
To provide a wide range of quality products and services comparable with
those available with any modern bank in the world.
To explore the needs of the common people including businessman and
professionals.
Extend Credit to private sector of economy
To serve with quality at a price competitive to anyone in the financial market
Contribute to the GDP of the country.
Total commitment to quality.
2.2.1.3Objectives:
 To create a technology based most efficient banking environment for its
customer.
 To ensure ethics and transparency at all level.
 To ensure sustainable growth and establish full value to the honorable
stakeholder
 And above all, to add effective contribution to the national economy.
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2.2.1.4 Corporate Profile of UBL Ltd:
Name:
Uttara Bank Limited
Essence:
Local Bank Global Network
Nature of Business:
Banking service and Profit oriented
Registered office:
Uttara-1000, Bangladesh
90, Motijiheel Commercial Area,
GPO Box: 818 & 217
PABX: 880-2-9551162
Website: www.uttarabank-bd.com
SWIFT: UTBLBDDH
Date of Incorporate:
June 29, 1983
Chairman:
Vice Chairman:
Mr.Azharul Islam
Mr. Iftekharul Islam
Company Secretary:
Mr. MdFazlurRahman
Managing Director & CEO: Mr. Shaikh Abdul Aziz.
Chief Financial Officer (CFO):
Mr. Md. Golam Mustafa, ACA
Credit Rating:
Long Term `AA3-` (Very Strong Capacity &
Very High Quality)
Short Term `ST-2` (High Grade)
Number of Branches:
220
Total Manpower:
Nearly 3600
Authorized Capital:
Paid up Capital:
Statutory Fund:
Tk.6000 million (Up to 2012)
Tk. 3306.4 million (Up to 2012)
Tk. 6,758.8 million (Up to 2012)
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2.2.1.5 Products and Services of the Organization:
Product and Services
DEPOSIT PRODUCT
INVESTMENT/FINANCE
PRODUCT
Savings Account
Corporate Finance
Industrial Finance
Lease Finance
Syndicate Finance
Special Notice Deposit
Fixed Deposit Receipt
Account
Double Benefit Deposit
Scheme
Uttaran Marriage
Deposite Scheme
UttaranSawpnapuran
Deposit Scheme
Foreign Exchange
service
Export Finance
Import Finance
Inward Remittance
Issue L/C
Foreign DD
Foreign TT
Shipping Guarantee
Bonded warehouse
Service
SWIFT Facility
IME, Prabhu, Xpress
Money, Western
Union Money
Transfer.
Education Deposit
Scheme
PLASTIC CARD PRODUCT
ATM card services in many
brunches.
Special Loan Scheme
Other products
Customer Credit
Locker Services.
Personal Loan
.
Building Repair Loan
SME Loan
Figure 01: Product and Services of UttaraBank Ltd.
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Credit Risk
Management
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3.1Management of Loans in Commercial Banks
Lending is one of the two principal functions of commercial banks not only because of their
social obligations of catering to credit needs of different sections of the community but also
lending is most profitable, the rates realized on loans have always been well above those
realized on investments. Having sterilized a portion of deposits in cash reserves and highly
liquid assets which yield little or no earnings for the purpose of satisfying liquidity
requirements, a banker has to deploy the residual funds in profitable outlets so that he may be
able to pay interest on deposits, salary to the staff, meet other establishment expenses, buildup reserves and to pay dividend to the shareholders. This is why bank loan accounts form a
major portion of the residual funds of a commercial Bank.
3.2 Risk:
Definition:
Risk is the potential that a chosen action or activity (including the choice of inaction) will
lead to a loss (an undesirable outcome). The notion implies that a choice having an influence
on the outcome exists (or existed). Potential losses themselves may also be called "risks".
 Risk can be seen as relating to the Probability of uncertain future events.
(http://en.wikipedia.org/wiki/Risk)
 The chance that an investment's actual
return will
be different than
expected. Risk includes the possibility of
losing some or all of the original
investment. Different versions of risk are
usually measured by calculating the standard deviation of the historical returns or
average returns of a specific investment. High standard deviations indicate a high
degree of risk.
A fundamental idea in finance is the relationship between risk and return. The greater the
amount of risk that an investor is willing to take on, the greater the potential return. The
reason for this is that investors need to be compensated for taking on additional risk
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3.2.1 Sources of Risks of UBL:
UBL recognizes risks under two broader aspects viz. Pillar-I risk and pillar-II risk
under regulatory framework of Basel-II accord and Bangladesh Bank.
Pillar-I risk
Credit
risk,
market
risk
and
operational risks etc.
All others risks i.e. management risk,
Pillar-II risk
security risk
 Credit Risk:
Credit risk is an investor's risk of loss arising from a borrower who does not make payments
as promised. Such an event is called a default. Another term for credit risk is default risk.
Credit risk is risk due to uncertainty in a counterparty's (also called an obligor's or credit's)
ability to meet its obligations. Institutions manage it in different ways. Credit risk is one of
the major risks, UBL has to confront in the course of business everyday Credit risk
corresponds to potential financial loss as a result of customers‟ inability to honor the terms
and conditions of credit facility.
 Market Risk:
Market Risk is common to an entire class of assets or liabilities. The value of investments
may decline over a given time period simply because of economicchanges or other events
that impact large portions of the market. Asset allocation and diversification can
protectagainst market risk because different portions of the market tend to underperform at
different times also known as systematic risk.
It is the risk that the value of a portfolio, either an investment portfolio or a trading portfolio,
will decrease due to the change in value of the market risk factors. The four standard market
risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices.
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The associated market risks are:
 Equity risk, the risk that stock prices and/or the implied volatility will change.
 Interest rate risk, the risk that interest rates and/or the implied volatility will change.
 Currency risk, the risk that foreign exchange rates and/or the implied volatility will
change.
 Commodity risk, the risk that commodity prices (e.g. corn, copper, crude oil) and/or
implied volatility will change.
It is impossible to reduce systemic risk for the global economy (complete global shutdown is
always theoretically possible), but one may mitigate other forms of systemic risk by buying
different kinds of securities and/or by buying in different industries.
 Operational Risk:
An operational risk is a risk arising from execution of a company's business functions. It is a
very broad concept which focuses on the risks arising from the people, systems and processes
through which a company operates. It also includes other categories such as fraud risks, legal
risks, physical or environmental risks. A widely used definition of operational risk is the one
contained in the Basel II regulations. This definition states that operational risk is the risk of
loss resulting from inadequate or failed internal processes, people and systems, or from
external events.Operational risk can be summarized as human risk; it is the risk of business
operations failing due to human error.
 Management Risk:
As regards management risk, UBL evaluates management competence of the applicant
firm/company and its integrity. The Bank identifies the persons who are actually calling the
shots and their integrity as well as ability to guide or make decisions to carry on business.
Other considerations include past experience in business especially in the proposed, the way
management consults or discuss issues, the strength of making unpleasant decisions such as
various cost cutting measures, rationalizing workforce, etc. the management of the
firm/company must know the financial conditions of its line of operation.
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3.3 Risk Profile of UBL:
Risk
Financial
Risk
Business
Risk
Management
Risk
Security
Risk
Leverage
Business
Size
Experience
Security
Coverage
Liquidity
Business
Age
Succession
Collateral
Coverage
Profitability
Business
Outlook
Team Work
Support
Coverage
Industry
Growth
Relationship
Risk
Account
Conduct
Limit
Utilization
Compliance of
Condition
Personal
Deposit
Market
Competitor
Business
barriers
Business
Size
Fig-8: Risk profile of UTTARA Bank Ltd.
15
©Daffodil International University
3.4 Credit Risk Management:
3.4.1 Bank Credit:
The two main functions of a bank are to borrow money from public by accepting deposit and
lending it to the public for the development of trade, commerce, industry and agriculture.
Banks give some interest to depositors for deposit and take higher interest for lending. The
margin is the bank‟s profit. So, lending is by far the most important function of modern bank.
The strength of a bank is, thus, primarily judged by the soundness of its advances. A wise and
prudent policy in regard to advances is considered an important factor inspiring confidence in
the depositors and prospective customers of a bank.
In general term, “Bank credit is a bankloan to an individual or a company, with a
fixedmaturity and often featuring amortization of principal.” i.e. When a consumerpurchases
something using a credit card, they are buying on credit (receiving the item at that time, and
paying back the credit card companymonth by month). Any time when an individualfinances
something with a loan (such as an automobile or a house), they are using credit in that
situation as well.
Advances not only play an important part in gross earnings of bank, but also promote the
economic development of the country. All types of business activity includes trade, industry
and agriculture have to depend on bank finance in one form to offer. Bank by channeling
accumulate savings of the nation into productive uses, help both the depositors and the
borrowers
3.4.2 Definition of Credit Risk Management:
Banks are constantly faced with risks. There are certain risks in the process of granting loans
to certain clients. There can be more risks involved if the loan is extended to unworthy
debtors. Certain risks may also come when banks offer securities and other forms of
investments.
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Effective credit risk management is vital for success of any bank, as banks are operating at a
low margin compared to other business. They should strike a proper balance between
profitability and liquidity and should always be careful about default probability and Credit
Value at risk.
Credit risk management is the process or set of
method
by
which
one
calculates
the
creditworthiness of a business or organization or
of a person. Or a type of analysis an investor or
bond portfolio manager performs on companies or
other debt issuing entities encompassing the
entity's ability to meet its debt obligations. The
credit risk management seeks to identify the
appropriate level of default risk associated with
investing in that particular entity, and committed
with the minimization of the risk of bad debt or
default risk associated with a particular credit.
Credit Risk Management process enables Banks to proactively manage loan Portfolios in
order to minimize losses and earn an acceptable level of return for shareholders. A
comprehensive IT system is essential which should have the ability to capture all key
customer data, risk management and transactions information including Trade and Foreign
Exchange. In order to establish an effective and efficient management of the credit risk the
Bank must have robust credit risk management policies and procedures.
3.4.3 Importance of Credit Risk Management:
Credit risk is most simply defined as the potential that a bank borrower or counterparty will
fail to meet its obligations in accordance with agreed terms. The goal of credit risk
management is to maximize a bank‟s risk-adjusted rate of return by maintaining credit risk
exposure within acceptable parameters. Banks need to manage the credit risk inherent in the
entire portfolio as well as the risk in individual credits or transactions. Banks should also
consider the relationships between credit risk and other risks. The effective management of
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credit risk is a critical component of a comprehensive approach to risk management and
essential to the long-term success of any banking organization.
Credit Risk Management Policy of UBL captures the core principles for identifying
measuring and managing credit risk in the Bank. These policies are approved by the Board of
Directors (BoD) and are designed to meet the organizational requirements that exist today
and to provide flexibility for the nature UBL recognizes that a critical factor in the Banks
continued profitability and stability is its effective risk management capabilities. UBL
ensures its risk management strength and strives to continuously promote a proactive risk
management culture in the bank. Effective measures are now being taken towards the
compliance of Basel II risk management standards.
The importance of credit risk management for
banking is tremendous. Banks and other financial
institutions are often faced with risks that are
mostly of financial nature. These institutions must
balance risks as well as returns. For a bank to
have a large consumer base, it must offer loan
products that are reasonable enough. However, if the interest rates in loan products are too
low, the bank will suffer from losses. In terms of equity, a bank must have substantial amount
of capital on its reserve, but not too much that it misses the investment revenue, and not too
little that it leads itself to financial instability and to the risk of regulatory non-compliance.
Credit risk management, in finance terms, refers to the process of risk assessment that comes
in an investment. Risk often comes in investing and in the allocation of capital. The risks
must be assessed so as to derive a sound investment decision. Likewise, the assessment of
risk is also crucial in coming up with the position to balance risks and returns.
The risk of losses that result in the default of payment of the debtors is a kind of risk that
must be expected. Because of the exposure of banks to many risks, it is only reasonable for a
bank to keep substantial amount of capital to protect its solvency and to maintain its
economic stability. The second Basel Accords provides statements of its rules regarding the
regulation of the bank's capital allocation in connection with the level of risks the bank is
exposed to. The greater the bank is exposed to risks, the greater the amount of capital must be
when it comes to its reserves, so as to maintain its solvency and stability. To determine the
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risks that come with lending and investment practices, banks must assess the risks. Credit risk
management must play its role then to help banks be in compliance with Basel II Accord and
other regulatory bodies.
Credit risk management for banking is a very useful system, especially if the risks are in line
with the survival of banks in the business world.
3.4.4 Credit Risk Management Process of UBL:
The Credit Risk Management (CRM) process of UBL is shown as follows:
Identification of Sector-wise Loan Limit
Pre-Credit Application
Activities
Evaluation of 6 C’s
Post-Credit Application
Activities
Loan Sanction and Disbursement
Monitoring loan performance
After Credit/Loan
Disbursement
Collection of Installments
If Fail
Debt Rescheduling
Non-judicial Foreclosures
Recover the losses
Judicial Foreclosures
Adjust with Reserve and
Provision
Fig- 3: Credit Risk Management Process of UTARA Bank Ltd.
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3.5 Pre-Credit Application Activities:
3.5.1 Identification of Sector- wise Credit Limit:
Identification of sector-wise loan limit means identify limit of total creditable amount into
different sectors or diversification of total loan into different sector. Diversification in UBL
involves spreading credit into a broader range of financial loans, i.e. Business loan, Personal
Loan, Credit card, auto and educational loan etc. UBL don‟t provide total credit in same
sector. If they provide all credit in the same sector and then if somehow that particular sector
become nosedive, their credit may become unrecoverable. So before providing credit UBL
splits their total creditable amount in different sector. To provide credit in the different
sectors helps UBL to diverse their credit risk.
Loans and Advances of the Bank as on December 31, 2012 stood at Tk. 63.59 billion
compared to Tk. 52.91 billion of 2011 reflecting an excellent growth of 20%. The growth in
the loan book was an outcome of Bank concerted efforts and enhanced participation in local
corporate and credit-lines, syndicated and structured finance along with broadening of
business relationship in the country, the attractiveness of our retail and consumer credit
products, careful selection of borrower. Strong credit risks assessment and protection under
good security coverage. Outstanding loans and advances of Off-shore Banking Units was
TK.1491.28billion evidencing a growth of 114%. Our Capital Market Services extended
margin loans to the investors, volume of which TK.1943.64 million in 2011. Yield on loan
and advances decreased to 13.56 percent from the level of 14.37 percent of previous year due
to reduction of lending rates on corporate and medium scale financing as per guidelines of
Bangladesh Bank and gradual up trend in rates of deposits in the competitive market.
Concentration of loans and advances was well diversified details of which are explained in
note 7.6 percent from 4.57 from 5.57percent on 2010 based on contractual maturity terms,
68% of the current loan portfolio matures within 5 years of the balance sheet date.
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3.5.2 Sector-wise Loan:
Sector wise loans & Advanced
Pharmaceuticals Agriculture
1%
1%
Other Industries
38%
Electronics & Auto
0%
Holding &
Construct
12%
Agriculture
Textiles &
Garments
21%
Pharmaceuticals
Textiles & Garments
Chemical Industries
Chemical
Food & allied Industries
Industries
Transport & Communication
Food1%
& allied
Industries Service Industries
7%
Energy & Power
Transport &
Communication Engineering & Metal
3%
Service Industries Holding & Construct
4%
Electronics & Auto
Energy
&
Power
Engineering &
Other Industries
2%
Metal
10%
Fig-4: Credit Diversification Criteria of UBL in 2013
3.5.3 Industry and Business Segment Focus in Details:
As a general practice Uttara Bank Limited definitely concentrates its business in trade finance
/Export-Import business and all types of commercial loans, industrial / project finance except
otherwise restricted by the Government or indicated as unethical and banned items. The Bank
emphasizes on diversification of its business portfolio commensuration with economic &
business trend, life cycle of the products, demand supply gap, social obligation etc. The
Bank‟s policies for financing in different major sectors are summarized as follows:
Sl.
Sectors
Policies
No.
a.
Textiles / Spinning/ Sweater / Knitting / Denims & Garments To expand
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b.
Cement
To maintain
c.
Construction/Real estate/ House building
To expand
d.
Telecommunication
To expand
e.
Communication
Selective basis
f.
Information Technology (IT) Project
To expand
g.
Agrobased Industry
To expand
h.
Hospital/ Clinic/School/ Universities
Selective basis
i.
Healthcare/pharmaceuticals/medicine
To expand
j.
Electrical/Electronic appliance
To expand
k.
Finance to NBFI
To maintain
l.
Special program – CCS, Personal Loan, Supervised To expand
Credit Loan to SME clients
m.
Plastic/packaging
Selective basis
n.
Leather
Selective basis
o.
Steel and Engineering
To expand
p.
Scrap vessel
Restricted way
q.
Edible Oil
To expand
r.
Paper / pulp / partex
To expand
s.
Chemicals
Restricted way
t.
Others
Based on merit with the
approval of Head Office.
Table: Loan segmentation.
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3.5.4Discouraged Business Types:
Uttara Bank Ltd. usually discourages lending to following areas of business:
 Military Equipment/Weapons Finance.
 Tobacco sector.
 Lending to companies listed on CIB black list or known defaulters.
 Highly Leveraged Transactions (Maximum debt to equity ratio should be @
60:40).
 Finance of Speculative Investments (Not more than 40% of share value: Face
value or last 6 months average whichever is lower).
 Logging, Mineral Extraction/Mining, or other activity that is ethically or
environmentallysensitive.
 Counterparties in countries subject to UN sanctions.
 Share Lending (Not more than 40% of share value or as per guidelines of
Bangladesh Bank).
 Taking an Equity Stake in Borrowers.
Bridge Loans relying on equity/debt issuance as a source of repayment.
3.6Post-Credit Application Activities
3.6.1 Evaluation of 6C’s:
Lending money is one of the main functions of a commercial bank. In the lending process,
selection of borrower is the most crucial and vital job for a banker. Before a customer enjoys
credit facilities it is important that the applicant should qualify for 6 Cs.
The 6 Cs‟ are:
 Character or Trustworthiness:
The first thing that loan officers look for when reviewing a proposal is evidence of
applicant‟s trustworthiness. The loan application can be rejected without even reviewing your
proposed business idea if loan officers find any evidence in your background indicating lack
of integrity. Officer may ask questions like: "Who are you? How long have you lived where
you live? How long have you been in business? Do you live up to your obligations? What is
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your standing in the community? The answers to these questions will normally come from
your business plan and references.
 Capability:
Banks need to be sure that the person/people making the business decisions know what they
are doing. Mismanagement is the foremost reason for the failure of new businesses, and
banks naturally would want to avoid that. Loan officers would want to know the professional
background, previous business experience, relevant education, and level of success of the
business owner.
 Capacity:
If the bank feels that confident about applicant‟s personal background and applicant‟s ability
to make good judgments when making business decisions, the next step for them is to
determine the capability of applicant‟s business to turn up a profit. They will now ask: "What
is applicant‟s ability to repay the loan? How the loan is proceeds to be used? How will they
be repaid?" Banks are particularly interested in: (a) how soon you can generate a positive
cash flow; (b) when you will show a profit; (c) how large will it be; (d) whether applicant‟s
profit will be lasting; and (e) whether various assets will be financed via debt or equity. The
answers to these questions come from a review of applicant‟s financial statements,
particularly applicant‟s cash flow statements, profit and loss statements, and personal and
corporate tax returns.
 Collateral:
Applicant‟s collateral is important. Applicant‟s collateral represents an "escape hatch" for
applicant‟s bank, and banks normally want it to be large enough to be able to cover their
losses (if at all) and easily convertible to cash. From applicant‟s projected cash flow and list
of assets, bankers will ask "How can you be sure of applicant‟s ability to repay the loan?
What can you offer the bank as an alternative source of repayment? In most instances, the
bank will require the personal guarantees of all principals. Besides providing another source
of repayment, it also shows applicant‟s commitment to the business.
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 Capital:
No business exists in a vacuum, and loan officers would look at a number of factors that may
potentially impact on applicant‟s kind of business. Property and other assets that total more
than debts are known as capital. In other words, when borrower adds up all that own (assets)
and subtract all that borrower owe (liabilities), the difference (net worth or capital) should be
sufficient to ensure payment of another bill. Capital would refer to the financial resources
obtained from financial records that a company may have in order to deal with its debt. Many
a time's credit analysts would make this portion of the credit analysis the most important one.
Weight is given on Balance Sheet items and components like Working Capital, Net Worth
and Cash Flow. One must know how to read financial statements and that too from the
perspective of a creditor. Short term liquidity is important if you are expecting to get paid in
the short term. You should be able to see whether this company has the ability to absorb more
debt and then where does your loan (selling on credit is a loan - isn't it?) fit in the overall
debt-framework of this business. You should also evaluate to see if you can depend on the
numbers whether they are audited, unaudited or company prepared. If required speak with the
firm or person who has prepared the statements.
 Conditions or Terms of Loans:
The nature of applicant‟s loan request is another important factor that could affect the results
of applicant‟s application. Banks would want to know three important things: "How much
money are you requesting? What will it are used for? And For how long will it be needed?"
Banks oftentimes prefer to approve loans for items that can be identified, has lasting value,
and can be repossessed and sold if things fail.
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3.6.2 Loan Sanction and Disbursement:
Bank follows some necessary steps to sanction loan to borrower. This procedure mainly
applicable for sanctioning and disbursing term loan although other advancing procedures are
also follows nearly the same procedure.
Branch or Unit Office
Transaction Report:
Voucher Posting and
Printing.
Loan Disbursement
Documents Collect
Other Bank’s lien
Confirmation (For
Secured Loan)
Entry in FINACLE
Documents check
before Sanction.
Lien Confirmation
Loan Activation
Sanction and Repayment
schedule setup
Charge Document
preparation
Fig-05:Procedures of UBL Loan Sanction and Disbursement
After successful completion of these steps bank allocate credit to a credit applicant. If
anyhow authority becomes unsatisfied about a credit application, the credit will not sanction
for that applicant.
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3.7 After Credit/Loan Disbursement:
3.7.1 Monitoring Loan Performance:
After disbursement of credit it‟s an essential task for the bank to monitor the loan/credit
performance. If the loan/ credit doesn‟t work then it will categorized as Non-Performing
Loan (NPL). NPL increase the risk of bad debt. Typically, loans that have not received
payments for three months are considered to be non-performing loans, though specific
contract terms may differ occasionally. Bank will take initiative to turn the loan performance
start.
3.7.2 Collection of Installment:
Loan is allowed for a single purpose where the entire amount may be required at a time or in
a number of installments within a period of short span. After disbursement of the entire loan
amount, there will be only repayment by the borrower. Bank send reminder over phone or via
mail to the borrower about the installment payment date, amount etc.
3.8 Recover the Losses:
If bank is unable to recover the entire amount of loan then bank can take these steps:
 Debt Rescheduling,
 Non-judicial Foreclosures,
 Judicial Foreclosures,
 Adjust with Reserve and Provision.
3.8.1 Debt Rescheduling:
Debt rescheduling means extending the repayment period of an existing loan. This
opportunity is given according to the capability and condition of clients. If bank find that
client will be able to repay the unpaid amount if he get some extra time and if the client has
good history of previous repayment, then bank may allow this opportunity. Extra interest on
unpaid amount of loan for extra time will be imposed.
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3.8.2 Non Judicial Foreclosure:
Non-judicial foreclosures are processed without court intervention, with the requirements for
the foreclosure established by state statutes. When a loan default occurs, the debtor will be
mailed a default letter. If the debtor does not cure the default, a Notice of Sale will be mailed
to the debtor, posted in public places and newspaper, recorded at the country recorder's office
(Notary public), and published in area legal publications. After the legally required time
period has expired, a public auction will be held, with the highest bidder becoming the owner
of the property, subject to their receipt and recordation of the deed.
3.8.3 Judicial Foreclosures:
Judicial foreclosures are processed through the courts, beginning with the lender filing a
complaint and recording a notice. The complaint will state what the debt is, and why the
default should allow the lender to foreclose and take the property given as security for the
loan. The debtor will be served notice of the complaint, either by mailing, direct service, or
publication of the notice, and will have the opportunity to be heard before the court. If the
court finds the debt valid, and in default, it will issue a judgment for the total amount owed,
including the costs of the foreclosure process. After the judgment has been entered, a writ
will be issued by the court authorizing. An auction, opens to anyone, and is held in a public
place, which can range from in front of the courthouse steps, to in front of the property being
auctioned. Auction will require either cash to be paid at the time of sale, or a substantial
deposit, with the balance paid from later that same day up to 30 days after the sale. Check
applicant‟s local procedures carefully. At the end of the auction, the highest bidder will be the
owner of the property, subject to the court's confirmation of the sale. After the court has
confirmed the sale, a deed will be prepared and delivered to the highest bidder, when that
deed is recorded, the highest bidder is the owner of the property.
3.8.4 Adjust with Reserve and Provision:
Usually like other all bank and company UTTARA Bank doesn‟t disburse or distribute its all
profit to its shareholders. Some portion are set aside from net profit/earning as provision to
meet future loss arise from bad debt. This provision is known as bad debt. When a bad debt
occur UTTARA bank try to recover the loan by using this loan loss provision.
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3.9 Some important ratios of credit risk:
Leverage Measurement:
Leverage ratio used to calculate the financial leverage of a company to get an idea of the
Company‟s methods of financing or to measure its ability to meet financial obligations. There
are several different ratios, but the main factors looked at include debt, equity, assets and
interest expenses.
Debt to Assets:
Debt to Assets (DTA) is important tools for measuring the leverage of a bank. The higher
portion of DTA, the greater is the degree of risk because creditors must be satisfied before in
the bankruptcy. The lower ratio of DTA provides to mitigate of protection for the supplier of
debt. The DTA ratios of Uttara Bank Limited are given bellow:
Debt to assets
96%
95%
94%
93%
92%
91%
90%
89%
88%
87%
86%
95%
94%
91%
90%
89%
2009
2010
2011
2012
Figure 06: Debt to assets
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2013
Equity Multiplier:
Equity Multiplier (EM) is very important indicator of evaluating a company‟s ability to use
its debt for financing its assets. EM ratio is also known as the financial leverage ratio. A
higher equity multiplier indicates higher financial leverage, which means the company is
relying more on debt to finance its assets. The EM ratios of Uttara Bank Limited are given
bellow:
25.00
22.54
20.00
15.84
15.00
11.59
9.46
10.11
10.00
5.00
0.00
2009
2010
2011
2012
2013
Equity Multiplier
Fig:07 Equity Multiplier Ratio
Profitability Measurement:
Profitability ratios measure a company‟s ability to generate earnings relative to sales, assets
and equity. These ratios assess the ability of a company to generate earnings, profits and cash
flows relative to relative to some metric, often the amount of money invested. They highlight
how effectively the profitability of a company is being managed. For most of these ratios,
having a higher value relative to a competitor's ratio or the same ratio from a previous period
is indicative that the company is doing well.
Net Interest Margin:
Net Interest Margin (NIM) is very important tools for measuring banks profitability
performance because small changes in a bank‟s lending margin can translate into large
bottom line changes. The higher the ratio the cheaper the funding or higher the margin the
bank is obtaining. A bank‟s net interest margin is a key performance measure that drives
ROA. The NIM ratios of UttaraBank Limited are given bellow:
The NIM ratio of UBL was increasing from FY2008 (2.12%) to FY2009 (3.22%) and then it
shows decreasing trend from FY2009 (3.22%) to FY2011 (2.31%) after then it slightly
increases till FY2012 (2.52%) which was good sign for a bank. The highest NIM ratio was
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3.22% in FY2009 and the lowest NIM ratio was 2.12% in FY2008. On an average, the bank
maintained 2.51% NIM ratio
Net Interest Margin
Axis Title
4.00
3.00
3.22
2.12
2.37
2.00
2.52
2.31
1.00
0.00
2009
2010
2011
2012
2013
Fig:08- Net Interest Margin Ratio
Noninterest Income to Assets:
Noninterest Income to Assets (NITA) is an indicator of the operational performance. It
indicates the proportion of fees and other income in respect of total assets of banks. Highest
NITA ratio is better for a bank. The NITA ratios of Uttara Bank Limited are given bellow:
Noninterest Income to Assets
6.00
4.82
5.00
4.00
3.83
3.81
4.04
2009
2010
2011
4.17
3.00
2.00
1.00
0.00
2012
Fig:09- Noninterest Income to Assets
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2013
Noninterest Income to Operating Income:
(NITOI) is another indicator of the operational performance. It indicates to what extent fees
and other income represent a percentage of operating income of banks. The NITOI ratios of
Uttara Bank Limited are given bellow:
Noninterest Income to Operating Income
100%
80%
60%
64.34%
54.20%
63.05%
67.60%
62.33%
2009
2010
2011
2012
2013
40%
20%
0%
Fig:10- Noninterest Income to Operating Income
Assets Utilization Ratio:
Assets Utilization Ratio (AUR) indicates the proportion of total operating income to total
assets. The higher AUR ratio is better for a bank. The AUR ratios of Uttara Bank Limited are
given bellow:
Liquidity Measurement:
Liquidity ratios attempt to measure a company's ability to pay off its short-term debt
obligations. This is done by comparing a company's most liquid assets (or, those that can be
easily converted to cash), its short-term liabilities. In general, the greater the coverage of
liquid assets to short-term liabilities the better as it is a clear signal that a company can pay its
debts that are coming due in the near future and still fund its ongoing operations. On the other
hand, a company with a low coverage rate should raise a red flag for investors as it may be a
sign that the company will have difficulty meeting running its operations, as well as meeting
its obligations.
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Liquid Asset to Liability:
According to Bangladesh Banking companies Ordinance 1962, subject to amended time to
time, liquid assets to commercial banks consists of cash in hand, statutory reserves (with
Bangladesh Bank), balance with other banks, and money at call and short- notice and
approved securities. This composition of liquid assets is known as structural allocation liquid
assets. The Liquid Assets to Liability (LATL) ratio used in this study is measured by taking
the structural allocation of liquid assets. The LATL ratios of Uttara Bank Limited are given
bellow:
Liquid Asset to Liability
17.22%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
13.30%
14.23%
11.81%
2009
2010
2011
12.96%
2012
Liquid Asset to Liability
Fig:11--Liquid Asset to Liability
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2013
Findings
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4.1 Findings:
Findings based on current situation and strategic focus:
1.Fewer Products and Services.
2. Still not efficient in online banking service.
3. Generates good return for the shareholders.
4. Shares are mostly owned by the directors/ sponsors.
5. Ups and downs situation in return on investments.
6. Overall current performance is good.
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Recommendations
and Conclusion
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5.1 Recommendations:
 The bank should plan to minimize the administrative cost.
 The bank should emphasize on investment policies.
 On line banking service should be further developed.
 Initiate new products and services to attract the customers.
 Though the bank‟s overall current performance is good, they should be more careful
to continue an effective performance
 Bank should try to excel in the criteria of important ratio of credit risk management
and take into consideration of movement of this ratio over the time period.
 Banks should identify and manage potential credit risk in all products and activities.
Banks should ensure that the risks of products and activities new to them are subject
to adequate procedures and controls before being introduced or undertaken, and
approved in advance by the board of directors or its appropriate committee.
 Banks must have in place a system for monitoring the condition of individual credits,
including determining the adequacy of provisions and reserves.
 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.
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5.2 Conclusion:
Credit risk management is a very important area for the banking sector and there are wide prospects of
growth and other financial institutions also face problems which are financial in nature. Also, banking
professionals have to maintain a balance between the risks and the returns. For a large customer base
banks need to have a variety of loan products. If UBL bank lowers the interest rates for the loans it
offers, it will suffer in terms of equity, bank must have substantial amount of capital on its reserve, but
not too much that it misses the investment revenue, and not too little that it leads itself to financial
instability and to the risk of regulatory non-compliance.
Credit risk management is risk assessment that comes in an investment. Risk often comes in investing
and in the allocation of capital. The risks must be assessed so as to derive a sound investment
decision. And decisions should be made by balancing the risks and returns. Giving loans is a risky
affair for bank sometimes and certain risks may also come when banks offer securities and other
forms of investments. The risk of losses that result in the default of payment of the debtors is a kind of
risk that must be expected. A bank has to keep substantial amount of capital to protect its solvency
and to maintain its economic stability. The greater the bank is exposed to risks, the greater the amount
of capital must be when it comes to its reserves, so as to maintain its solvency and stability. Credit
risk management must play its role then to help banks be in compliance with Basel II Accord and
other regulatory bodies. For assessing the risk, UBL banks should plan certain estimates, conduct
monitoring, and perform reviews of the performance of the bank. They should also do Loan reviews
and portfolio analysis in order to determine risk involved.
UBL Banks must be active in managing the risks in various securities and derivatives. Still progress
has to be made for analyzing the credits and determining the probability of defaults and risks of
losses. So credit risk management becomes a very important tool for the survival of UBL banks .
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References
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7.1 Bibliography:
Books:
Rose, Peter S. (2005). “Commercial Bank Management” Irwin McGraw-III, New York, 8th
edition
 Brigham, Eugene F and Ehrhardt, Michael C (2001), “Financial Management Theory
and Practice. 10thed”, pp.75-99.
 Rose, P (1996) “Commercial Bank Management. Boston: McGraw-Hill Companies
Inc.”
 Gorry, G. and Scott Morton, M.S. (1991) A Framework for Management Information
Systems. Sloan Management Review, 13(1), pp.55-70
 Zikmund. , & Thomson. Business Research Methods (8th Ed.)
 “19 banks still crippled by liquidity crisis”, The New Nation, 11thAug, 2013.
 Abdullah, A. and Khan, A. R. (eds.) (1996),”State, Market and Development”,
theUniversity Press Limited.
 Barrister Harunur Rashid, “How does global financial crisis affect Bangladesh?”,
Former Bangladesh Ambassador to the UN, Geneva.
 Boner, R.A. and Krueger, R. (1991), “The Basics of Antitrust Policy: A Review of Ten
Nations and the European Communities”, the World Bank Technical Paper 160,
World Bank, Washington.
 UBL Bank Annual Report 2012
 “Guidelines to Fill in the Banking Statistics Returns SBS-1, 2 & 3(4th Edition)”,
Statistics Department of Bangladesh Bank.
 JasimUddinSarker, “Banks introduce new saving schemes to tackle liquidity crisis”,
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 The World Bank (2006), “Doing Business 2006”, Washington, D.C.
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 Rashid, M 2010, „Green banking comes to focus’ ,viewed: August 7,2012
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, Issue 1
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 Star, D 2010, ‘Green banking comes to focus‟, viewed: August 7,2012
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7.2Websites:
i.
http://www.Uttarabankltd.com
ii.
http://www. wikipedia.com/
iii.
http://www.bangladesh-bank.org/
iv.
http://www.bangladesh-bank.org/circulars
v.
http://isqpm.org/2006%20Journal/Government%20policy%20and%20competitive%2
0bsiness%20environment%20in%20Bangladesh%20by%20Mondal%20and%20Ahm
ad.pdf
vi.
http://ezinearticles.com/?The-Importance-of-Credit-Risk-Management-for
Banking&id=1102802
vii.
http://www.bis.org/publ/bcbs54.html
viii.
http://toostep.com/trends/the-importance-credit-risk-management-for-banking
ix.
http://www.uttarabank-bd.com/
x.
http://www.uttarabank-bd.com/HTML/solarPlant.htm
xi.
http://www.uttarabank-bd.com/HTML/Branches.htm
xii.
http://www.uttarabank-bd.com/html/onlinebranches.pdf
xiii.
http://www.thedailystar.net/newDesign/newsdetails.php?nid=154690
xiv.
www.ijrcm.org.in.
xv.
http://www.thedailystar.net/newDesign/newsdetails.php?nid=154690
xvi.
http://www.bangladesh-bank.org
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