To acquire the depth knowledge on credit functions. To learn the modes of financing. To learn the repayment of loan. To analyze the performance of the bank. To compare the credit policy of BASIC Bank with other

banks. To analyze the strengths, weakness etc. of the credit policy

of BASIC Bank.

Tk. in crore

Credit management of a bank is the entire procedure of credit activities -

how a bank provide loans and advances to their customers,

different types of credit facilities and their management system,

security keeping against credit facilities, how recover those type of facilities, credit risk measurement and credit granting policy etc.

Aggregate loans and advances of the Bank shall not exceed 100% of the loan-able fund of the Bank. The loan-able fund shall include 70% of deposit, 90% of borrowing and 100% of the capital and reserve of the bank.

50% of the loan-able fund shall have to be deployed in financing small and medium industries in the form of term loan and working capital.

Aggregate funded exposure for trade finance will be restricted to 25% of the Bank’s total loans and advances.

Loans to a particular industrial or commercial sub-sector shall not exceed 20% of the total loans and advances of the Bank at any one point of time.

An appraisal practice in BASIC Bank Ltd. concentrates on the

following five major aspects:

Term loan: Client is provided with a loan repayment schedule where installment amount is defined. In case of term loan, client is considered a grace period after which the repayment starts. Installments come in a monthly basis. Loan account is created and fund is disbursed at once or sometime in some steps.

Working capital: For a 90 day’s loan, clients are required to pay over the time through his/her C.C. account. For continuous loan there is a time limit for the operation of the account. Client is required to pay interest for the excess over limit at the end of three month.

Keep watch over the ledgers and the accounts.

Ensure that inputs / materials are purchased /produced as per procedures.

Keep watch over the inflow and outflow of fund.

Collect periodical reports and information about the borrower.

Ensure that security /collaterals have been obtained as per terms of sanction

and valuation has been done correctly.

Ensure that security has been properly insured.

Keep regular contact with the borrower.

Keep watch over the repayment trend.

Tk in million

Aggregate Loans and advances are 98% of the total Deposit. Approximately 57% of the loans and advances have been given to small and

cottage industries. Head Office of the bank are monitoring all kind of loans and advances. Branch managers are fully liable for the selection of the borrower. Continuous monitoring of the working capital facilities are ensured by the

inspection of the stocks. Standard Documentation Process. House building loan facility and other commercial loan facility has been

demoralized by the branch authority. Credit evaluation techniques are not enough to judge the credibility of the

borrower. Credit analysis techniques for LIM facilities are not good enough. Small range of loan portfolio are restricting further improvement. Lack of up-to-date credit manual.

Customer Services should be enhanced. Loan appraisal technique should be modernized. Documentation process should be improved. Efficiency in storing data. Marketing for selling the services should be encouraged. Detail manual should be prepared for accurate credit operation. Adequate training is required for credit officer. LIM facility should be withdrawn by the Bank Management. Adequate measure should be taken for small

industrial loan. Some discretionary power should be given to the

branch management.

The BASIC Bank Limited has been trying to operate its business successfully in Bangladesh since beginning. Basic Bank has already developed goodwill among its client by offering its excellent services through General banking, Credit division and Foreign Exchange divisions. But the success of Basic Bank can be attributed largely to its credit operation system & policy. BASIC Bank is exception in the sense that in spite of being a 100% state owned bank, it is highly profitable compare to other state owned commercial banks.