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Credit risk management of national bank ltd. essay

Established as the first private sector bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the passage of time after facing many stress and strain. The members of the board of directors are creative businessmen and leading industrialists of the country.

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To keep pace with time and in harmony with national and international economic activities and for rendering all modern services, NBL, as a financial institution, automated all its branches with computer networks in accordance with the competitive commercial demand of time. Moreover, considering its forth-coming future, the infrastructure of the Bank has been rearranging. The expectation of all class businessmen, entrepreneurs and general public is much more to NBL. At present we have 145 branches under our branch network.

Credit risk management of national bank ltd. essay

In addition, our effective and diversified approach to seize the market opportunities is going on as continuous process to accommodate new customers by developing and expanding rural, SME financing and offshore banking facilities. When the nation was in the grip of severe recession, Govt. Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize the economy of the country.

NBL was born as the first hundred percent Bangladeshi owned Bank in the private sector. From the very inception it is the firm determination of NBL to play a vital role in the national economy. We are determined to bring back the long forgotten taste of banking services and flavors.

We want to serve each one promptly and with a sense of dedication and dignity. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong. Since the very beginning, the bank has exerted much emphasis on overseas operations and handled a sizable quantum of home bound foreign remittance.

It has drawing arrangements with 415 correspondents in 75 countries of the world, as well as with 37 overseas Exchange Companies located in 13 countries. NBL was the first domestic bank to establish agency arrangements with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals.

This has meant that the expatriates can remit their hard-earned money to the country with much ease, confidence, safety and speed. NBL has been continuing its small credit programmes for disbursement of collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving their livelihood.

NBL focused on all key areas covering capital adequacy, maintaining good asset quality, sound management, satisfactory earning and liquidity. As a consequence, it was possible to a record growth of 175. The net profit after tax and provision stood at Tk. The total deposits increased to Tk. Loans and advances stood at Tk.

Foreign trade stood at Tk. During 2010, the bank handled inward remittance of Tk. Return on Equity ROE registered a 77. NBL stepped into a new arena of business and opened its Off Shore Banking Unit at Mohakhali to serve the wage earners and the foreign investors better than before. National Bank, since its inception, was aware of complying with Corporate Social Responsibility.

In this direction, we remain associated with the development of education, healthcare and sponsored sports, and culture and during the times of natural disasters like floods, cyclones, landslides we have extended our hand to mitigate the sufferings of victims.

The credit risk management of national bank ltd. essay established the National Bank Foundation in 1989 to remain involved with social welfare activities. Besides awarding scholarship to the meritorious children of the employees, the bank has also extended financial support for their education.

2.1.1 Law of banking:

It provided financial support to Asiatic Society of Bangladesh at the time of their publication of Banglapedia and observance of 400 years of Dhaka City. A team of highly qualified and experienced professionals headed by the Managing Director of the Bank who has vast banking experience operates bank and at the top there is an efficient Board of Directors for making policies. In keeping with the vision and mission statement of the bank, the strategic direction has been clearly identified and laid down in the corporate plan.

It detailed out SWOT analysis of the corporate banking, personal banking, treasury, information technology, human resources management and Bangladesh operations of credit risk management of national bank ltd.

essay bank. Besides, it spells out goals and objectives of these main segments along with detailed action plans with specific time frames to achieve them. The corporate plan and the budget incorporate highly ambitious targets for the planned period.

Undoubtedly, the corporate plan and the budget have immensely contributed in guiding the organization to its present level. Further, it has contributed to building up the target driven culture across the organization and leading to record superlative performance and to maintain the preeminent position in the banking industry. NBL protects and safeguards all customer information, treats everyone in an equitable and consistent manner, and creates an environment which earns and maintains customer trust.

NBL builds customer relationships based on integrity and respect, offers a full line of products and excellent service, and is committed to the prosperity of the customers and shareholders. In National Bank Limited, customers and employees are judged in terms of their performance. Continuous learning, self-challenge and strive make ways for self improvement of workforce at National Bank Limited. National Bank Limited offers hassle free better service timely, and builds-up quality assets in the portfolio.

National Bank Limited provide a comprehensive range of financial services; personal and commercialbanking, trade service, cash management, treasury, security and custody services. Offshore Bank is a Bank located outside the country of residence of depositors, typically in the low tax jurisdiction or tax haven thatprovides financial and legal advantage. The Bank obtained the Offshore Banking permission vide letter No. The unit commenced its operation from September, 2008 and itsoffice is located at 9, Mohakhali, Dhaka.

The offshore banking unit a separate business unit of National Bank Limited, governed under the rules and guidelines of Bangladesh Bank. The unit commenced its operation from September 2008 and its office is located at 9, Mohakhali, Dhaka. Reserve and surplus was enhanced by 142.

NBL always maintain a prudent balance between Tier- 1 and Tier-2 capital. Total capital as on Credit risk management of national bank ltd. essay 31, 2010 was Tk. Without a constant flow of new ideas- not only for new products and services, but also for new ways of doing things- an organization is doomed to obsolescence or even worse, failure.

Automation is a technological change that replaces certain tasks done by people with machines.

Probably the most visible technological changes in recent years are computerization. Most organizations of developed countries now have sophisticated information systems.

E-business is a comprehensive term describing the way an organization does its work by using electronic linkages with its key constituencies employees, managers, customers, and partners in order to efficiently and effectively achieve its goals. Managing in an e-world, organization requires new insights and perspectives.

National Bank is the private sector bank to realize the importance of technology for Bangladesh market and introduced on-line banking. Due to various obstacles the IT development process slowed down in the past few years. However, to meet the customers demand in this competitive market, NBL management, once again, turned their focuses on the IT sector. Under the guidance of the management, the IT Division of the bank designed a plan and engaged the resources in the implementation of the IT projects at various segments of the banking business.

  • In the time of valuing the security the Banker should be more conservative;
  • NBL follows the following principles in its lending activity;
  • It provided financial support to Asiatic Society of Bangladesh at the time of their publication of Banglapedia and observance of 400 years of Dhaka City;
  • At present we have 145 branches under our branch network;
  • Credit risk management of national bank ltd;
  • Bank Guarantee related all works.

Following is the list that details the work of ongoing IT projects: At first, the management has decided to build communication infrastructure for the institution and advised the IT division to bring all its branches under one communication network. Without communication network, centralization of information is virtually impossible. Today, we are proud to disclose that 61 of our 106 branches are connected under one network. Twenty-four hours banking service is increasingly getting popular among the customers of all ages.

Detail information of the service is discussed below. Customers, nowadays, demand to access their account information and transact from any branch regardless of its location.

  • If the estimated value is less than or equal to loan amount, the loan should be given against such securities;
  • Further, it has contributed to building up the target driven culture across the organization and leading to record superlative performance and to maintain the preeminent position in the banking industry;
  • The secondary data sources are annual reports, manuals, and brochures of National Bank limited and different publications of Bangladesh Bank;
  • Reputational effects of operational risk events for financial credit risk management is more consolidated national due to credit;
  • Acl solution for risk management make better decisions across the organization with risk in mind.

To implement the concept, proper communication network, centralized customer accounts, and modern banking software is a must. In addition to any branch banking, the new software will allow many other services including phone or Internet banking.

All the above ongoing projects will have an instant and positive impact on the ways our customers currently do banking with us. In addition to that there are many other computer-based services that are being implemented in all the departments of the organization to increase the work efficiency. Thus, IT division of the bank is effortlessly working toward improving the customer service quality and training of the NBL staffs and executives.

Out of this income they pay interest depositors and meet other expenditures. A banker has to be very cautious while lending money because he lends depositors money which does not belong to the bank and which must be returned on demand. The banker has to keep in mind that lending is for the best interest of the community and lending should be directed to productive sectors only.

The principal of lending is a collection of certain accepted time tested standards, which ensure the proper use of loan fund in a profitable way and its timely recovery. Different authors describe different principals for sound lending. NBL follows the following principles in its lending activity: Safety Safety should get the prior importance in the time of sanctioning the loan. At the time of maturity the borrower may not or may unable to pay the loan amount. So in the credit risk management of national bank ltd.

essay of sanctioning the loan adequate securities should be taken from the borrowers to recover the loan. Banker should not sacrifice safety for profitability. Liquidity Banker should consider the liquidity of the loan in time of sanctioning it. Liquidity is necessary to meet the consumer need. Security Banker should be careful in the selection of security to maintain the safety of the loan.

Banker should properly evaluate the proper value of the security. If the estimated value is less than or equal to loan amount, the loan should be given against such securities. The more the cash near item the good the security.

In the time of valuing the security the Banker should be more conservative. Adequate Yield As a commercial origination Banker should consider the profitability.

So banker should consider the interest rate when go for lending. Always Banker should fix such an interest rate for its lending which should be higher than its savings deposits interest rate.

To ensure this profitability banker should consider the prospect of the project. Diversity Banker should minimize the fort-polio risk by putting its fund in the different fields. If Bank put its entire loan able fund in one sector it will increase the risk.