Manash Biswas
Manash Biswas
Manash Biswas
On
Credit & Risk Management of Sonali Bank Limited: A Study on Sadarghat
Corporate Branch, Dhaka
Supervised By:
Dr. Md. Miraj Hossen
Associate Professor
Department of Management Studies
Jagannath University
Prepared By:
Manash Biswas
ID: B-150202003
BBA Program
Session: 2015-16
Department of Management Studies
JAGANNATH UNIVERSITY
To,
Dr. Md. Miraj Hossen
Associate Professor
Department of Management Studies
Jagannath University, Dhaka-1100
Dear Sir,
I am glad to submit you the Internship Report covering the topic “Credit & Risk Management
of Sonali Bank Ltd” that you have assigned to me as integral part of BBA program. For
preparing this report I tried my level best to accumulate relevant and up-to-date information from
all available sources.
In completing the report, I have tried my best in importing every available details of the bank
avoiding unnecessary amplification of the report. I hope that, this report will meet the standards
of your judgments.
Sincerely yours,
…………………
Manash Biswas
ID: B-150202003
BBA Program; Session: 2015-16
Department of Management Studies
Jagannath University
i
Student’s Declaration
I do solemnly declare that this report submitted in partial fulfillment of the requirement of the
BBA program, Department of Management Studies, Jagannath University, Dhaka, is the result of
my research work and written in my own language. That no part of this report consists of
materials copied and plagiarized from published or unpublished work of other material and that
all materials, borrowed or reproduced from other published or unpublished sources have either
been put under quotation or duly acknowledge with full reference in appropriate place(s).
……………………………..
Manash Biswas
ID: B-150202003
BBA Program: Session: 2015-16
Department of Management Studies
Jagannath University, Dhaka-1100
ii
Certificate of Approval
This is to certify the report entitled “Credit and Risk Management of SBL” has been prepared by
Manash Biswas bearing ID no------------ (BBA Program: Session 2015-16), Department of
Management Studies, Jagannath University, Dhaka-1100. The candidate carried out this report
under my supervision.
…………………………………..
Dr. Md. Miraj Hossen
Associate Professor
Department of Management Studies
Jagannath University, Dhaka-1100
iii
Acknowledgement
First of all, I would like to give my sincere gratitude to almighty God for giving me the strength
and ability to finish the task within the planned time.
I also want to thank especially to my supervisor Dr. Md. Miraj Hossen, Associate Professor,
Department of Management Studies, Jagannath University, Dhaka-1100 for his inspiring
guideline, valuable suggestion and constant help throughout the work and in preparation of the
report.
I am also grateful to Abdur Rashid (Principal Officer), Md. Shafikur Rahman (Principal Officer),
Md. Koesh Al Mahmud (Senior Principal Officer) and also grateful to other officer of Sonali
Bank Ltd, Sadarghat Corporate Branch, Dhaka, who helped me in preparing the report by giving
their suggestion, supervision and information which is valuable to me. They helped and support
me to complete my report successfully.
I would like to take the opportunity to express my wholehearted gratitude to my friends, family
member, near and dear who offered encouragement, information, inspiration and assistance
during preparing the report.
iv
Summary of the Report
The Internship report is prepared as requirement of BBA program of Jagannath University. This
report is on “Credit Process and Risk Management” of Sonali Bank Limited. This report is
intended to assist the reader in detailed understanding the credit risk management process. It also
attempts to capture the procedures practiced in Sonali Bank Limited (SBL) in relation to credit
handling. The purpose of this report is to have an idea about the credit process and risk
management procedure of Sonali Bank and then to assess its effectiveness in connection with.
In this report, first of all I’ve discussed about the objectives, limitations and the methodology
containing the sources of data I’ve collected from the bank and internet. In this chapter, one can
easily understand about the motives of report.
Second chapter contains the organizational part. Here, I have provided detailed information
about the organization with its bank background, company profile, banking history of
Bangladesh, Corporate Vision and Mission, product & service.
Third chapter is discussed with my practical experience at SBL, Sadarghat Corporate Branch.
Here, I have included all the things that I have learned from my internship period.
In chapter four, I am tried to analysis loan information about Sonali Bank Ltd. Sadarghat
Corporate Branch. So, I may take decision on credit and risk section of the bank. This chapter
helps to learn clear understanding about credit information.
Final chapter, I tried to give some suggestion to the base of my knowledge and experience
which I have achieved during internship at Sonali Bank Ltd. Sadarghat Corporate Branch, for
further growth in credit and convenience in credit risk management and expansion of this
Branch.
The whole system has been described elaborately keeping in mind the most important segments.
In addition the diagrams Credit Approval Process & Credit documentation, Credit Risk Grading
score sheet add a clear understanding of the system.
v
List of Abbreviations
BB = Bangladesh Bank
CRG = Credit Risk Grading
CRM = Credit Risk Management
FDR = Fixed Deposit Receipt
SBL = Sonali Bank Limited
L/C = Letter of Credit
AGM = Assistant General Manager
GM = General Manager
DGM = Deputy General Manager
ATM = Automated Teller Machine
DMD = Deputy Managing Director
LRR= Loan Recovery Ratio
vi
Table of Contents
SL Particulars Page
No.
Title Fly
Letter of Transmittal i
Student’s Declaration ii
Supervisor’s Certificate iii
Acknowledgement iv
List of Abbreviations v
Executive Summary vi
Table of Contents vii-viii
Chapter One: Introduction 1-5
1.1 Preface 2
1.2 Background of the Study 2
1.3 Objective of the Study 3
1.4 Methodology of the Study 3
1.5 Limitation of the Report 5
Chapter Two: Company Overview 6-11
2.1 Banking History of Bangladesh 7
2.2 Background of SBL 8
2.3 Corporate Profile 8
2.4 Organizational Hierarchy 9
2.5 Vision, Mission & Slogan of SBL 9
2.6 Core Business service 10
2.7 Objectives of SBL 11
vii
Chapter Three: My Practical Experience During My Internship Period 12-14
3.1 My Job at SBL, Sadarghat Corporate Branch 13
3.2 Observation 14
Chapter Four: Analysis Credit & Risk Information at SBL, Sadarghat, 15-31
Corporate Branch
4.1 Credit 16
4.2 Credit Risk 16
4.3 Loan Facility of SBL 16
4.4 Security& Documents Required for Sanctioning loan 18
4.5 Loan Proposal and Sanction Process 19
4.6 Credit Risk Grading 22
4.7 Bad Loan Monitoring 24
4.8 Bad Loan Recovery Procedure 25
4.9 Financial Information analysis at SBL, Sadarghat Corporate Branch 26
Chapter Five: Findings, Conclusion & Recommendation 32-35
5.1 Findings of the Report 33
5.2 Conclusion 34
5.3 Recommendation 35
Reference 36
viii
CHAPTER ONE
INTRODUCTION
1.1 Preface
1.2 Background of the Study
1.3 Objective of the Study
1.4 Methodology of the Study
1.5 Limitation of the Report
1.1 Preface
1
In today’s world only academic education does not give a student perfect knowledge to become
competitive with the outside competitive world. Internship is highly needed to gain idea,
knowledge and experience practically. From this internship program students get the chance to
learn facing the real business world. This report is an internship report prepared as a requirement
for the finishing of BBA program (Major in Management Studies) of Jagannath University. The
primary goal of internship is to provide the job experience to the student and an opportunity to
application of theoretical knowledge in real life situation. The program covers a period of 45
days of organizational attachment. This organization has a positive image to the customer’s mind
giving better service. As it maintain the motion with the competitive business world, its
activities, culture and style operate an intern student to be best at any field of working life.
Sonali Bank Ltd is the place where I could do my internship program. The report titled “Credit
Risk Management of Sonali Bank Limited”: An analysis on Sadarghat Corporate Branch, Dhaka
has been prepared an internship report fulfillment of BBA program authorized by the
Department of Management Studies of Jagannath University, Dhaka-1100.
As an intern, I have get opportunity to work with the organization from 30 December, 2019 to 12
February, 2020 and acquired idea about credit and risk management. To be a skilled banker only
theoretical knowledge is not sufficient, practical knowledge is also needed. This report gives a
clear idea about performance, activities and strategies of Bangladesh Credit and Risk
Management.
The report entitled “Credit Risk Management System of Sonali Bank Limited : An analysis on
Sadarghat Corporate Branch, Dhaka” has been prepared as an internship report fulfillment of
BBA Program authorized by the Department of Management Studies of Jagannath University,
Dhaka-1100.
2
1.3 Objective of the Study
Broad Specific
Objective Objective
Objectives
of the
Study
In preparation of the report, both the primary and secondary sources are used during data
collection. The monitoring techniques to primary data, the officers and employees of Sonali
Bank Ltd. will be collected through informal interviews with the author’s data observation. To,
conduct this study the following methodology was implemented.
3
1.4.1 Data sources
To complete the report effectively I use two types of data. These are-
i. Primary source:
Personal observation
Desk work in different section, of the bank.
Conversation with bank’s employees.
Collected information have then processed & compiled with the aid of MS Word & Excel.
Necessary tables have been prepared on the basis of collected data and various statistical
techniques (like bar chart, pie chart) have been applied so that the result will easily
understandable at a glance.
4
1.5 Limitation of the Report
In preparing these reports I have faced some problems which are as follows:
i. Limitation of time: It was one of the main constraints that hindered to cover all
aspects of the study.
ii. Lack of Secondary Information: The secondary source of information was not
enough to complete the report.
iii. Limitation of the Scope: Some confidential information was not disclosed by various
personnel of their respective department. Such as:
iv. The in sufficiency of information basically various information are not provided
v. To me by the employees of the bank in terms of security and other corporate
vi. Obligation.
vii. Bank employees are very busy; they could not pay enough time.
viii. Legal action related information was not available.
ix. Some consumers’ of the bank did not give answers in some issues.
5
CHAPTER TWO
COMPANY OVERVIEW
6
2.1 Banking History of Bangladesh
The first modern bank in Bengal was Bank of Hindusthan, established in 1770 in Calcutta. It was
an offshoot of trading company Messrs. Alexander and Co. operated until 1832 when the trading
Company failed. The circulation of its notes was limited to Calcutta and its immediate environs.
The first modern bank headquarter in Dhaka was Dacca Bank, established in 1846. It did a very
limited business and did not issue banknotes. It was purchased by Bank of Bengal in 1862. Bank
of Bengal opened branches in Sirajganj and Chittagong in 1873 and in Chadpur in 1900. In 1947,
upon the Partition of Bengal, it had six branches in East Bengal, in Dhaka, Chittagong,
Chandpur, Mymensingh, Rangpur and Narayanganj.
After the Liberation War, the banking system consisted of two branches of former State Bank of
Pakisthan and seventeen large commercial banks, two of which were controlled by Bangladeshi
interests and three by foreigners other than West Pakisthanis.
The newly independent government immediately designated the Dhaka branch of the State Bank
of Pakisthan as the central bank and renamed it the Bangladesh Bank. The bank is responsible
for regulating currency, controlling credit and monetary policy and administering exchange
control and the official foreign exchange.
The undertakings of previous banks specified in the 2nd column of the table below stands
transferred to and vested in the new banks mentioned in the 1st column of the said table:
Nationalization of Banks:
7
Bank of Bahawalpur and Premier Bank branches located in East Pakistan until the
1971 Bangladesh Liberation War. When it was established, Sonali Bank had a paid up capital of
30 million taka. In 2001, it’s authorized and paid up capital were Tk 10 billion and Tk 3.272
billion respectively. Presently, it’s authorized and paid up capital is Tk 10 billion and Tk 9
billion respectively. The bank's reserve funds were Tk 60 million in 1979 and Tk 2.050 billion
on 30 June 2000. In 2013, $250,000 was stolen from the bank by Cyber criminals using the Swift
International payments network. In 2016 the Bank signed a Memorandum of Understanding
with PayPal.
8
Managing Director
General Manager
Principal Officer
Officer
Mission
9
Dedicated to extend a whole range of quality products that support divergent needs of people
aiming at enriching their lives, creating value for the stakeholders and contributing towards
socio-economic development of the country
Slogan
10
Locker Service
Utility Bills Collection
CHAPTER THREE
MY WORLING EXPERIENCE DURING MY INTERNSHIP
PERIOD
11
3.1 My Job at SBL, Sadarghat Corporate Branch
3.2 Observation
12
3.1 My Job at SBL, Sadarghat Corporate Branch
I have completed 45 days internship on Sonali Bank Limited, Sadarghat Corporate Branch,
Dhaka. At the very first day, Aminul Islam (AGM) sir, introduced me to the other members of
this branch. The officials of this bank are very helpful and energetic. From very beginning of my
interne period, I have learned about General Activities that are given below:
After 2 weeks, my superior told me to assist him on some tasks. By this way I have learned some
General Banking activities. When one can learn new things, it may charm on him/her. Here g
found interest to learn new things. These are
The last fifteen days, I have worked at loan department that is assigned me to make a report.
The officials of this department are very intelligent. They help me to know significant
information about loan section. This information are fruitful for making the report. Here I have
learned:
13
How to Calculate Credit Risk Grading (CRG)
Required Documents for Sanctioning loan
Varieties of interest rate on loan
How they manage Credit Disbursement (Theory)
How they recover Bad loan (Theory)
The internship period on SBL taught me various things about the bank. I am very thankful to my
3.2 Observation
It was very interesting working at SBL, Corporate Branch, Dhaka. The people there are really
nice and talented. The things that I have noticed and observed are:
14
CHAPTER FOUR
ANALYSIS CREDIT & RISK INFORMATION AT SBL
SADARGHAT CORPORATE BRANCH
4.1 Credit
4.2 Credit Risk
4.3 Loan Facility of SBL
4.4 Security& Documents Required for Sanctioning loan
4.5 Loan Proposal and Sanction Process
4.6 Credit Risk Grading
4.7 Bad Loan Monitoring
4.8 Bad Loan Recovery Procedure
4.9 Recent Loan Information
15
4.1 Credit
Bank is a financial institution. The main objective of bank is to make profit. Credit is the main
source of profit of a bank. Sonali Bank Limited, Sadarghat Corporate Branch, Dhaka earns more
profit through credit medium.
16
General Advanced Housing Loan 9%
Division Bridge Financing 13%
Grocery Shop Loan 9%
Employer Loan Employer Housing Loan 5%
Employer Motor Bike Loan 5%
Employer Bi Cycle Loan 5%
Figure 4.3.1: Different types of loan & Interest Rate
Farmer, of our country plays a vital role in the economic progress of our country. Realizing the
importance of agricultural finance in creating self-employment opportunities and socio-economic
development of the country, Sonali Bank Limited has been providing Agriculture & Rural credit
facilities through its own branches across the country since its inception. This type of loan has a
low interest rate. The bank official inspires farmers to receive this type of loan.
17
customer proper usages of the borrowing fund. The division of SBL Corporate Branches
provides huge amount of loan to its customer. Indirectly these funds are helping in the progress
of nation.
Note: SBL Provides huge amount of loan in different sector. Here included few sectors Sonali
bank prove loans.
There are securities for loans and advances which are as follows:
Trade License copy
Stock Report
Payment Receipt of Tax in City Corporation
CIB inquiry form & payment for this
NID Card Photocopy
Recent 3 years Company’s financial statement for calculating CRG
Tax Identification Number (TIN)
Most preferred business’s income or cash flow from which the customers will repay the
loan
Second security consists of customer's balance sheet/his assets that can be liquidated for
adjustment of loan.
Goods, mortgage of real estate from owners or from a third party.
Insurance policy as per security
Collateral security serves two purposes for a lender, first if the borrower cannot pay, the
collateral gives the lender the right to seize or sell those properties to cover the amount of
loan default. Secondly, collateral security gives the lender a psychological advantage
18
over the borrower. Borrowers in this situation feel more obligated and work hard to repay
the loan to avoid losing valuable assets.
Application of Loan
Proposal
Preliminary Screening
of Credit Proposal
Proposal Feasibility
Study & Appraisal of
loan
Documentation Study
of Loan Proposal
Disbursement of Loan
and Advance
A client must have a bank account to take a loan. The client applied for loan with a particular
amount. He/she has to fill up a loan application form given by the bank. Here, he/she has to
mention about the purpose of loan, loan amount, and mortgage property. After completing loan
application the officials of this bank studies the past record of the client and an interview with a
loan officer usually follows right away, giving the customer the opportunity to explain his or her
credit needs.
19
Interview is particularly important because it provides an opportunity for the bank’s loan officer
to assess the customer’s character and sincerity of purpose. The officer tries to find out the
following process:
The bank officials of SBL, Corporate Branch screen the credit proposal at the primary stage. The
bank manager and the loan officer are responsible to visit client’s farm. They have to prepare a
credit report mentioning the present condition, assets and liabilities ratio, and reputation along
with the origin of the concern. The following documents are collected to screening the credit
proposal:
In this step, the bank officials of the SBL, Corporate Branch inquiry the loan proposal. The loan
officer evaluates the information given by the customer. An element of risk is always present in
every advance. Security is taken against loan and advance to reduce the risk of recovery of loan.
Here the bank official considered:
i. Protection of interest
20
ii. Ensuring the recovery of credit.
iii. Provision against unexpected change
iv. Commitment of the borrower.
The credit report is forwarded to the original office for approval. In the regional office two
dealing officer under the direct supervision of AGM made some other recommendations by
considering the credit report and direct investigation. Then they will justify the net worth of
concern and its economic position. Here if the amount is with the ability of the regional head
(AGM) he can sanction the loan. Otherwise the proposal file will be forwarded to the principal
office. If the dealing officers found something dissatisfied they can reject the proposal.
If the credit committee is satisfied with the loan application, and its financial information then
bank will approval the credit for the customer. The loan officer study the document which given
by the customer. Proper and correct documentation is essential not only for the safety of
advances but also necessary foe taking legal action against the debtors is case of non-repayment
of dues. Different types of document are required for different types of loan. For individuals
business loan the customer may have submitted TIN number, Trade License Copy. The customer
may have submitted financials document such as Shanchaypatra, FDR, etc. as a security.
After study the documents if it found alright the loan officer is responsible for distributing the
loan among the customer’s account. After disbursement, the loan needs to be organizing and
maintaining to ensure whether the terms and conditions of the loan fulfilled by the bank or client
or not.
Supervision and follow up indicates that the client may have use the loan amount with actual
purpose or not. It includes a reporting system and communication arrangement between the
borrower and the lending institution and within department, appraisal, recoveries, follow-up etc.
Sonali Bank Limited officer checks on the following points-
21
ii. The information regarding the profitability, liquidity, cash follow situation and trend in
sales in maintaining various ratios.
iii. The review and classification of credit facilities starts at credit department of the branch
with the branch manager and finally the head office of credit division.
Credit Risk Grading is tool which is used for risk management. According to Bangladesh Bank
guidelines, all Banks should adopt a credit risk grading system. Credit Risk Grading (CRG) is a
system that helps to take decision for sanctioning loan. At first Principal Officer SBL, Sadarghat
Corporate Branch collects their client’s recent three year financial statement. Through this
information the principal officer analysis the data about the client and determinant the score of a
client and make decision whether the loan may superior, good, or bad.
SBL applies the following credit risk grading matrix as provided by Bangladesh Bank
guidelines:
22
financial statements are not received. Borrowers
should have adequate liquidity, cash flow and
earnings. An Aggregate Score of 75-94 based on the
Risk Grade Scorecard.
Marginal –(Watch list) 4 Grade 4 assets warrant greater attention due to
conditions affecting the borrower, the industry or the
economic environment. These borrowers have an
above average risk due to strained liquidity, higher
than normal leverage, thin cash flow and/or
inconsistent earnings. Facilities should be
downgraded to 4 if the borrower incurs a loss, loan
payments routinely fall past due, account conduct is
poor, or other untoward factors are present. An
Aggregate Score of 65-74 based on the Risk Grade
Scorecard.
Special Mention 5 Grade 5 assets have potential weaknesses that
deserve management’s close attention. Facilities
should be downgraded to 5 if sustained deterioration
in financial condition is noted. An Aggregate Score
of 55-64 based on the Risk Grade Scorecard
Substandard 6 Financial condition is weak and capacity or
inclination to repay is in doubt. An Aggregate Score
of 45-54 based on the Risk Grade Scorecard
Doubtful and Bad 7 Full repayment of principal and interest is unlikely
(non- performing and the possibility of loss is extremely high.
However, due to specifically identifiable pending
factors, such as litigation, liquidation procedures or
capital injection, the asset is not yet classified as
Loss. An Aggregate Score of 35-44 based on the Risk
Grade Scorecard.
Loss (non- performing 8 Assets graded 8 are long outstanding with no
progress in obtaining repayment (in excess of 180
23
days past due) or in the late stages of wind
up/liquidation. The prospect of recovery is poor and
legal options have been pursued. Bangladesh Bank
guidelines for timely write off of bad loans must be
adhered to. An Aggregate Score of 35 or less based
on the Risk Grade Scorecard
In the implied credit rules by SBL it is the manager’s responsibility to monitor the profile and
risk aspect of the credit portfolio. Such monitoring will be evidenced from the comments of the
manager in monthly call or time to time call and visit reports of the assigned officers and be kept
in the credit file with a copy to Head Office. All extensions of credit have to be reviewed and
graded at intervals prescribed by the Head Office. The purpose of this procedure is to monitor
lending performance and to identify potential delinquent credits. The basis of review and
classification are risk of the transaction, repayment record of borrower, collateral conditions,
supporting information and documentations and the degree of conformity to bank facilities. The
responsibilities for review and classification of credit facilities start at branch level and finally
end at the Head Office. Regardless of any formalized times for facility to be reviewed and
formally classified by the branch manager or the concerned credit officer.
24
Recovery procedure is a lengthy one that requires efforts of the bank, society and legal
institutions. It also takes time and money. Sonali Bank follows four steps to recover the
outstanding amount. These four steps are described in detail below:
Legal action
Reminder to the client is given through a formal communication channel. A letter is written and
properly signed on the bank's papers. This letter is issued several times to remind the honorable
lender to repay his/her outstanding portion.
If the loan amount is not yet repaid after sending a series of letters then persons create social
pressure on the client referred while opening account in the bank.
Legal notice is prepared and sent by National Bank when above two steps fail to recover the
amount. It is a threat to the borrower.
Legal action
25
The last and final step of the recovery procedure is the help from the court. National Bank
sincerely tries to avoid this kind of situation for its honorable clients but cannot help doing for its
own sustainability.
26
Sector Wise Loan Percentage
Personal loan
1%4%
2% Small Business Loan Scheme
8%
27%
House building loan (General)
Figure 4.10.1 Sector wise Loan disbursement at SBL, Sadarghat Corporate Branch
Comments: From the Pie Chart we can see that, SBL, Corporate Branch provide much loan on
House building Loan (General) sector. It is estimated that 34% of their total loan in 2019.
2015 150,25,68,930
2016 176,15,22,510
2017 188,45,12,557
2018 194,78,19,342
2019 205,15,42,512
27
Above information show through a bar chart:
16% 2015
22%
2016
2017
19% 2018
2019
21%
21%
Figure 4.9.2.1 Total Amount of Loan in Recent 5 years at SBL, Sadarghat Corporate Branch
Comments: From the Pie Chart we can understand that SBL, Sadarghat Corporate Branch has
provided highest amount on loan in 2019. It is estimated that
2015 131,75,62,423
2016 147,15,79,190
2017 165,13,69,570
2018 175,10,90,258
2019 185,79,12,910
28
Loan recovery of Recent 5 years SBL at sadarghat Branch
2000000000 1857912910
1751090258
1800000000 1651369570
1600000000 1471579190
1400000000 1317562423
1200000000
1000000000
800000000
600000000
400000000
200000000
0
2015 2016 2017 2018 2019
Comments: From the Bar Chart we can easily realize that the SBL, Sadarghat Corporate Branch
has collected largest portion of loan in 2019.
29
Comaparison between total loan and loan recovery of SBL at sadarghat corporate branch
2500000000
2000000000
1500000000
1000000000
500000000
0 Total
2015 Disbursement
2016 Total
2017recovery 2018 Series 3 2019
Comments: This bar Chart helps us to know about the total loan and total recovery information
of last 5 years. In 2019 the bank has provided more loans as well as more recovery than other
years.
30
Loan Recovery Ratio
92.00%
90.56%
89.90%
90.00%
86.00%
84.00% 83.54%
82.00%
80.00%
2015 2016 2017 2018 2019
Comments: From the Bar Chart we can easily said that SBL, Sadarghat Corporate, Branch
recover highest portion of loan among the last 5 years. It is approximately 90.56% of their total
loan in 2019.
The financial information of SBL, Sadarghat Corporate Branch are showing through various
chart and graphs. These information are analyzed effectively through ratio basis. From this
analysis I can conclude that the loan department of SBL, Sadarghat Corporate Branch perform
better in 2019 rather than other years. So, I can said that loan section of SBL, Sadarghat
Corporate Branch, Dhaka exists in a good position considering all other factors remaining
constant.
31
CHAPTER FIVE
32
5.1 Findings of the Report
Every bank has its own credit procedure. The Sonali Bank Ltd possesses a standard credit
procedure. As the objective of my report is to make a comment on the credit risk management of
Sonali Bank Ltd, I tried my best to collect data for the report and find out the reality. Based on
the data generated during my internship period I have summed up my findings here and I think
this will help me to achieve my objectives:
1. The bank follows the overall credit assessment and risk grading process according to the
rules of Bangladesh Banking a somewhat manner.
2. With a view to implementing government policies, SBL has been maintaining its position
in extending credit to government bodies, sector corporations and private enterprises..
3. .Sonali Bank Limited has a suitable location for banking.
4. Sometime the document verification is done after loan sanctioning the loan.
5. Customers are satisfied with the service.
6. The website of SBL does not contain all required information about loan and advance.
But the officials provide annual report to learn about loan & advanced.
7. The physical decoration of SBL, Sadarghat Corporate Branch not so good.
8. SBL is not efficient in processing and executing legal actions against defaulters for their
nonpayment of loans and advances.
9. Marketing strategies is not as good as other commercial banks.
33
5.3 Conclusion
It goes without saying that credit policy cannot be isolated from the broader monitory policy of
the country. Like any other segment of the economic policy, credit is very important for any
financial institution as it generates profit and gear up economic activities of the country. In other
words, credit is business and it is input in the production process of the country. Since credit has
inherent risk, therefore proper utilization of the loans are essential to meet the requirements of
the borrower. Thelon applied for by the borrower must not be employed for unproductive
purpose. In this regard, the Sonali Bank Limited must closely follow the progress of the loan and
the way the borrower is utilizing the funds. In this way the Sonali Bank Limited will deter any
fake activities on the part of the borrower Credit evaluation system of Sonali Bank Limited is
very lengthy process. It has been revised time to time in response to the respective circular of
Bangladesh Bank. The overall credit activity of Sonali Bank Limited is composed of corporate
credit division and credit administration. The credit management system of Sonali Bank Limited
is more or less effective as recovery position of classified loan is high and classified loan has
been decreasing gradually during the year. They always trying to improve their credit policy for
minimizing loss and maximizing profit and various measures are undertaken to develop the
credit management system.
34
5.2 Recommendations
To improve the risk management culture further, Sonali Bank Limited should adopt some of the
industry’s best practices that are not practiced currently. These are:
35
REFERENCES
1. https://www.sonalibank.com.bd/mission.php
2. https://www.sonalibank.com.bd/profile.php
3. https://en.wikipedia.org/wiki/Sonali_Bank
4. https://www.sonalibank.com.bd/overview.php
5. Credit Risk Grading Manual of Bangladesh Bank, p.15
6. Annual Report (2016-2017), Sonali Bank Limited, pp.22-31
7. Annual Report (2018-2019), Sonali Bank Limited, pp.14-26
8. Alam, M. Z., & Musukujjaman, M. (2011). Risk management practices: A critical
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