report on mercantile bank limited | assignment on bangladeshi commercial bank

8/7/2019 Report on Mercantile Bank Limited | Assignment on Bangladeshi commercial Bank

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INTERNSHIP REPORTON

LENDING PROCEDURES OF COMMERCIAL BANK (A Case study of Mercantile Bank Limited)

Main BranchPlease indicate the address

Dhaka

NORTHERN UNIVERSITYNORTHERN UNIVERSITYB A N G L A D E S HB A N G L A D E S H


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INTERNSHIP REPORTON

LENDING PROCEDURES OF COMMERCIAL BANK

(A Case study of Mercantile Bank Limited)

Main Branch

DhakaUnder the Supervisor of :

Prepared By:

Submission Date :

NORTHERN UNIVERSITYNORTHERN UNIVERSITYB A N G L A D E S HB A N G L A D E S H


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STUDENT DECLARATION

I, ., here by declare that the presented report of internship titled Lending

procedures of Commercial Bank- A case Study of Mercantile Bank Limited is uniquelyprepared by me after the completion of three months work in Main Branch of Mercantile

Bank Ltd.

I also confirm that, the report is only prepared for my academic requirement not for any other

purpose. It might not be used with the interest of opposite party of the corporation.

I further undertake to indemnify the development against any loss or damage arising

from breach of the foregoing obligations.

Signature

SUPERVISORS CERTIFICATE


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This is to certify that the internship report on Lending Procedures of

Commercial Bank -A case of Mercantile Bank Limited in the bona fide

record at the report is done by Emran Hossain (ID: BBA070102019 ) as a part

fulfillment of the requirement of BBA (Regular) Program from Northern

University Bangladesh.

The report has been prepared under my guidance and is a record of the bona fide

work carried out successfully.

Supervisor

...Chairman

.


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L E T T E R O F T R A N S M I T TA L

Date:

Md.Abdullahel KafiAssistant Professor,Department of Business Administration,

Northern University Bangladesh

.

Subject: Submission of the Internship Report on Lending procedures of commercial Bank

(a case study of Mercantile Bank Limited)

Dear Sir,

Here I present my Internship report titled Lending Procedures of CommercialBank a case of Mercantile Bank Limited with due gratitude and appreciation.As per partial fulfillment of the requirements for the B.B.A. Program, I have completed theInternship from Mercantile Bank Limited.

The internship program has given the opportunity to learn about different aspects of a reputedorganization. Before facing the real Business world, I have gathered a pre idea about theorganization culture.

To prepare this report both the Primary and secondary data have been used. A survey wasconducted for getting real information from the customers who have already taken the Consumer Credit Scheme.

However, I have gathered all the facts that I could within this short period & have tried my levelbest to exert all the thinks as much presentable as possible. Despite of limitations, I sincerelyhope that my report will meet the requirements that you set for me.

Yours faithfully,

..

A C K N O W L E D G E M E N T


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At the very beginning I would like to express my deepest gratitude to almighty ALLAH

for giving me the strength and the composure to finish the assigned task within the

scheduled time.

I am deeply indebt to my supervisor Md.Abdullahel Kafi , Assistant Professor,Department of Business Administration, Northern University Bangladesh for giving me the opportunity to discover the kind of kinship that ensues when we work inclose proximity to compile this report. I am also grateful to him for his whole-heartedguidance and supervision, during the preparation of the report.Gratitude is due to Mr. Azad Shamsi (SVP-HR Division), Mr. Md. Rafiquzzaman (SVP-

It Division) and Mr. Md. Shamim (Officer-Credit Division) and to all the personnel of

Mercantile Bank Ltd. Main Branch, who have co-operated and helped me in collecting

information for the improvement of my report.

I gratefully acknowledge the time and effort that the above-mentioned persons have

voluntarily shared. Their suggestions and comments to make the report a good one, was

really a great source of spirit for me

My love and thanks to all my friends who have helped and supported me all the way,

while doing the report.

..

EXECUTIVE SUMMARY


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The Buying house Company is the most important part of the export-oriented business. It

increases the opportunity for entrepreneurship development in garment sector. Thus it

helps the unemployed people as well as the government to remove unemploymentproblem and also play an important role in the economic development of the country.

I have worked there three months as requirement of the internship phase of BBA program

under the Department of Business Administration of NUB. I have selected my topic:

Merchandising Activity of Multiline Buying Bangladesh Ltd. This report is originated

as a partial requirement of BBA program. The overall approach of the report is to focus

on the merchandising activity of MBBL and the way by which it attracts the foreign

customers to sale products abroad.

Multiline Buying Bangladesh Ltd is a 100% export oriented buying house. It depends on

independent merchandising department. Multiline Buying Bangladesh Ltd. ensures the

buyer about product quality and price. It gives emphasize in merchandising division to

increase the reputation of the company. If Multiline Buying Bangladesh Ltd can initiate

long term and short-term plan for execute business the business would be benefited.

The Multiline Buying Bangladesh Ltd believes that performance evaluation is a

systematic appraisal of an employee by him supervising officer who is conversant with

the employees job performance. POD evaluates the employees performance based on

work factors such as job knowledge, performance of work disciplinary action, attendance

records etc.

Multiline Buying Bangladesh Ltd is managed by qualified and skilled management. The

management term members are well organized and highly professional. Management

term of Multiline Buying Bangladesh Ltd determined long-term decision

Table of Contents


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CHAPTER-1

INTRODUCTION (1-5)

1. INTRODUCTION 11.1 ORIGIN OF THE TOPIC 11.2 BACKGROUND OF THE REPORT 21.3 OBJECTIVES OF THE STUDY 31.4 METHODOLOGY OF THE STUDY 41.5 SCOPE OF THE STUDY 41.6 LIMITATION TO THE STUDY 5

CHAPTER-2

AN OVERVIEW OF MERCANTILE BANK LIMITED (6-09)

2. MERCANTILE BANK LIMITYED- AS A NEW PRIVATE BANK 06

2.1 Vision 072..2 Mission 072..3 Objectives 072..4 Core Values 082..5 Sponsors 082..6 Corporate structure 082..7 Management Hierarchy of Mercantile Bank Limited 082..8 Management and Manpower 082.9 PRODUCTS AND SERVICES OF MERCANTILE BANK LIMITED 082.11 Different Credits Offered by the MBL 09

CHAPTER-3CREDIT ANALYSIS (10-29)

3.1 ABOUT THE CREDIT3.1.1 Definition of credit3.2 TYPE OF CREDIT3.2.1 Types of credit facilities extended by MBL 16

Source 17End-use 17Team 17Cost 17

3.3 IMPORTANCE OF THE BANK LENDING 183.4 IMPORTANCE OF BANK CREDIT 193.5 METHODOLOGY OF PREPARTING BUDGET AT BANK LIMITED 203.5.1 At branch Level 203.5.2 At the Regional Leve 203.5.3 At Head Office Level 203.6 CREDIT MANAGEMENT AND BANK 203.6.1 Bank Rate 223.6.2 Open Market Operation 223.6.3 Variable Reserve Requirements 223.6.4 Maintenance of Value of Taka 23


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3.7 TOOLS FOR CREDIT MANAGEMENT 233.7.1 .Security 233.7.2 Margin 243.7.3 Creation of Charge 273.8 REPORTING TO CIB OF BB 273.9 DOCUMENTATION 28

3.10 CREDIT DISBURSEMENT 333.11 LOAN CLASSIFICATION 333.11.1 Recent Development 343.11.2 Procedure of Loan Classification: 353.12 CREDIT MONITORING, FOLLOW-UP & SUPERVISION 39

Chapter-4

Overall Credit Policy of MBL (41-50)

4.1 4.1MODERN CONCEPT OF LENDING PURPOSE OF MBL 41

4.1.1 Judicious Selection of Customer: 414.1.2 Purpose: 42

4.1.3 Safety 434.1.4 Liquidity 434.1.5 Security 444.1.6 Profitability 444.1.7 Spread/Dispersal/Diversification 444.1.8 National interest/social benefit 444.1.9 Customer Segmentation 444.1.10 Discouraged Business 444.2 CREDIT GUIDELINES OF BB 464.3 TECHNIQUES OF PROJECT APPRAISAL 464.3.1 Management appraisal 464.3.2 Market appraisal 464.3.3 Technical appraisal 474.3.4 Financial appraisal 474.3.5 Economic appraisal 484.4 THE INITIAL LOAN INTERVIEW 484.5 CREDIT INVESTIGATION 494.6 PURPOSE OF CREDIT INVESTIGATION 494.7 LENDING STRATEGY OF MERCANTILE BANK LIMITED 494.8 FEATURE OF LENDING 494.8.1 Types of Facilities 494.8.2 Amount 504.8.3 Repayment 504.8.4 Pricing 504.8.5 Security 504.8.6 Insurance 504.8.7 Covenant and Conditions 50

CHAPTER-5

CREDIT RISK AND MANGEMENT (67-80)


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6 CREDIT RISK AND MANAGEMENT 516.1.1 Credit Approval Process of MBL 516.1.2 How to Calculate Credit Risk 516.2 Risk Management of MBL 52

Credit Risk Management 52Liquidity Risk Management 54

Market Risk Management 54Foreign Exchange Risk Management 54Interest Rate Risk Management 55Reputation Risk Arising from Money Laundering Incident and itsManagement

55

Operation Risk Management 55Information Systems audit Management 56

6.2.2 Risk Management Realities 566.2.3 Risk Management Approach 576.2.4 Risk Management Oversight 576.2.5 Risk Management Process of MBL 606.3 Credit Risk Management 616.3.1 Creating Credit Risk Awareness Culture 616.3.2 Approved Credit Policy by the Board of Directors 616.3.3 Separation of Credit Risk Management I (CRMD) from Credit

Administration Division61

6.3.4 Formation of Law and Recovery Team 626.3.5 Independent Internal Audit and Direct Access to Board (Audit

Committee)62

6.3.6 Large Loan limit and Credit Facility on business Consideration 626.3.7 Credit Quality and Portfolio Diversification 626.3.8 Early Warning system 636.3.9 Provision & Suspension of Interest 636.3.10 Lending Process in MBL 636.3.11 Credit Management Initiatives 64

FINDINGS OF MBL, CONCLUSION AND RECOMMENDATION(81-86)

Findings 81Recommendation 82Conclusion 84Bibliography 85Appendix 86Acronyms 97

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