CHAPTER ONE

INTRODUCTION
1.1. Introduction
Only the academic education is not enough to handle the real corporate environment
therefore it is an opportunity for the students to know about the field of business
through the internship program. As internship program is a perfect blend of the
theoretical and practical knowledge.
This report is originated to fulfill the requirement of the assigned project internship
report onCredit Management of Mutual Trust Bank Ltd. In this regard an
organization attachment at hanir Akhra !ranch of "utual Trust !ank has been
given to me a period of up to three months. #uring the internship period I learned
how the host organization works with the help of the internal supervisor.
The internal supervisor assigned me on of the projects and shuffled me around the
different departments to educate me about the operation of a bank.
1.. O!"ecti#es of t$e %tud&
This objective to prepare the report is to learn and match the educational learning
and the real world e$perience because I have gathered theoretical knowledge about
!anking from !!A course and tried to match real world e$perience with the
theoretical knowledge.
O!"ecti#es'
There are also some other objectives that encouraged me for an elaborate report
about the credit management of "T!. The secondary objectives to prepare the
report are%
a& To denitrify present the credit management system of "T!'.
b& To e$plore the problems behind e$isting credit management system to "T!'.
c& To recommend some suggestions to "T!'.
1.(. Met$odolog& of t$e %tud&
The methodology of the report is given below(
a& )or the procedure of different banking operations* I had observed the operations
and worked with the officers at the same time. I had interviewed the "T! officials for
getting more information.
b& )or the analysis part* data have been collected from different statements and the
annual report of the bank.
%ources of Information'
The data collection method to study consists of both of primary and secondary
sources. !ut majority of the information was collected from secondary sources.
)rimar& sources'
a& +ractical desk work
b& )ace to face conversation with the officer
c& #irect observations
d& )ace to face conversation with the client
%econdar& sources'
a& Annual report of "T!' published by ,--.*,--/* ,--0* ,--1*,--2*,-3-.
b& )iles 4 )olders.
c& +roduct or service brochure.
d& 5isit web site of "T!.
e& "any circular published by "T!.
f& "any circular published by !angladesh !ank.
g& everal !ooklets of "utual Trust !ank 'imited.
1.*. %co+e of t$e %tud&
"utual Trust !ank 'imited is one of the new generation banks in !angladesh. The
scope of the study is limited to the hanir Akhra !ranch only. The report covers the
organizational structure6 background* functions and the performance of the bank
have mainly worked based on the credit department so my report covers all the
activities of credit department of the !ank. In preparing this report the employees of
credit department has helped me a lot and I have use both primary and secondary
data which was available to me.
1.,. Limitations of t$e %tud&
Although I got all the facilities from the branch and the employees but there lies also
some limitations otherwise of which the report could have been much better. Three
months is not enough to know about commercial banking operation though I have
received ma$imum assistance from the every individual of the "T! hanir Akhra
!ranch. !ut according to the time it is been tried to make the utmost use of time to
prepare a valuable report.The report is likely to have following limitations%
a& The Operating +rocess is a theoretical suggestion. Only a practical application of
this may justify its effectiveness that could not be done due to time limitation.
b& 'ack of comprehension of the respondents was the major problem that created
many confusions regarding verification of conceptual question.
c& 7onfidentiality of data was another important barrier that was faced during the
conduct of this study. 8very organization has their own secrecy that is not revealed
to others. 9hile collecting data on "T!'* personnel did not disclose enough
information for the sake of confidentiality of the organization.
:owever* omitting this* the report will help us understand the credit departments of
the bank.
1.-. Time %c$edule
a& #ata collection ..................................... ;- days.
b& #ata analysis ........................................ ,- days.
c& <eport writing ....................................... ,- days.
d& <evise ................................................... 3- days.
e& )inalize ................................................. 3- days.
Total ........................................ 2- days.
C./)T0R T1O
)rofile of t$e Organi2ation
.1. Origin of Banking Industr&
The history of banking is as old as the history of money. =enerally* to the necessity
for keeping the money safe* the business of banking comes in to e$istence. The
evolution if money solved the problem of >!arter ystem?. 8arlier there are two
groups of people. One group felt the need of honest and faithful person to keep their
surplus money safe and the other group owing to transaction felt the need of some
person who could provide money. As a result based on two groups a kind of
businessman came in to picture. They used to keep the money as deposit for
security and give loans to the needy people. This is how the banking sector has
developed.
The 8nglish word >!ank? is derived from the Italian word >!anco?. The 'atin word
>!ancus? and the )rench word ?!anque? which means a bench. They are of the
opinion that the medieval.
8uropean banker @i.e. moneychanger and moneylenders& transacted their banking
activities on the benches in the market place. This money changing and money
lending business is known as banking business.
!anking industry is very important financial institution in the country and the present
economic state of !angladesh demands immediate development of the financial
institution. !angladesh was born as an independent and sovereign country in the
year 3203. That time banking industry faced a tremendous crisis as the :ead office
of the most of the banks was located in 9est +akistan. After that* >!angladesh !ank?
was established according to the order of !angladesh !ank and this order effective
from 3/
th
#ecember 3203. !angladesh !ank was given the duty to act as the 7entral
!ank of !angladesh.
After that in 320, nationalization order was declared and all commercial banks were
nationalized accepts foreign banks. Thus four nationalized banks were formed. They
are onali !ank* Agrani !ank* Aanata !ank* and <upali !ank.
.. )resent %tatus of Banking Industr& in Banglades$
!anking !usiness plays a vital role in driving and manipulating the total financial
management and economy of any country. There are ., different types of !anks
operating in !angladesh including newly established privatized commercial !anks*
up to #ecember ,--2. Amongst these* there are B Cationalized commercial banks*
;, +rivate !anks* 3- )oreign !anks* B =overnment pecialized !anks* 3 7o(
Operative !anks and 3 =rameen !ank.
In the recent years* Islamic !anking has been introduced which is a notable point in
the e$isting banking system. Out of the established private banks four of them are
Islamic !anks.
!esides the banking sector* there are some non(banking financial institutes* which
contribute in financing the economy of the country. These institutions finance in
different sector like housing* industries etc. which contributes towards the
development of the country.
2.3. Company Profile
"utual Trust !ank 'td. was incorporated on eptember ,2* 3222 under the
7ompanies Act 322B as a public company limited by shares for carrying out all kinds
of banking activities with Authorized 7apital of Tk. ;1*--*---*--- divided into
;1*---*--- ordinary shares of Tk.3-- each.
The 7ompany was also issued 7ertificate for 7ommencement of !usiness on the
same day and was granted license on October -.* 3222 by !angladesh !ank under
the !anking 7ompanies Act 3223 and started its banking operation on October ,B*
3222. As envisaged in the "emorandum of Association and as licensed by
!angladesh !ank under the provisions of the !anking 7ompanies Act 3223* the
7ompany started its banking operation and entitled to carry out the following types of
banking business%
i& All types of commercial banking activities including "oney "arket operations.
@ii& Investment in "erchant !anking activities.
@iii& Investment in 7ompany activities.
@iv&)inanciers* +romoters*7apitalists etc.
@v& )inancial Intermediary ervices.
@vii& Any related )inancial ervices.
The 7ompany @!ank& operates through its :ead Office at #haka and 0/ branches.
The 7ompanyD!ank carries out international business through a =lobal Cetwork of
)oreign 7orrespondent !anks.
2.3. Objective of the Bank:
The objective of the "utual Trust !ank 'imited is specific and targeted to its vision
and to position itself in the mindset of the people as >a bank with difference?. The
objectives of the "utual Trust !ank 'imited are as follows%
a& To mobilize the savings and channeling it out as loan or advance as the company
approve.
b& To establish* maintain* carry on* transact and undertake all kinds of investment and
financial business including underwriting* managing and distributing the issue of
stocks* debentures* and other securities.
c& To finance the international trade both in import and e$port.
d& To carry on the foreign e$change business* including buying and selling of foreign
currency* traveler?s cheques issuing* international credit card issuance
etc.
e& To develop the standard of living of the limited income group by providing 7onsumer
7redit.
f& To finance the industry* trade and commerce in both the conventional way and by
offering customer friendly credit service.
g& To encourage the new entrepreneurs for investment and thus to develop the
country?s industry sector and contribute to the economic development.
.(
. Mission of t$e !ank'
The !ank aspires to be one of the most admired banks in the nation and be
recognized as an innovative and client(focused company* enabled by cutting(edge
technology* a dynamic workforce and a wide array of financial products and services.
.*. 3ision of t$e !ank'
Mutual Trust Bank's vision is based on a philosophy known as MTB3V. It envisions
MTB to be:
a) One of the Best erfor!in" Banks in Ban"ladesh.
b) The Bank of #hoi$e.
$) % Truly &orld'$lass Bank.
.,. Branc$es
"utual Trust !ank 'imited is a fast growing commercial bank in our country. It has
established a good operating network throughout the country. It has .- !ranches
throughout the country till now. It has 3- branches that are working only for providing
"8 services. The total branch condition is given below%
Came of
the#ivision
#haka 7hittagong <ajshahi ylhet <angpur !arisal
Cumber of
!ranches
;, 3. -. -. -, -3
!esides these some other branches are scattered around some different rural areas
specially providing "8 services.
.-. )roducts'
"T!' is one of the fast growing banks in our country. It got its success within a very
few time that is only in 3- years. One of the main reasons of this huge success is the
variety of products of "T!'. The product variety also made it unique and different.
The product facilities of "T!' are arranged below.
3. <etail !anking.
,. C<! banking.
;. 7orporate !anking.
B. "8 !anking.
All these facilities can also be classified into simple two categories which are deposit
facilities and credit facilities.
2.8
. A short look to the prodcts of !"B#:
$. %eposit Prodcts:
%s a very fast "rowin" bank MTB( has laun$hed a variety of produ$ts for the benefit of
the $usto!ers. It also fo$used on the type of $usto!ers based on so!e ran"es and
introdu$ed different type of produ$ts that !at$hes ea$h type of $usto!er. The different
type of deposit produ$ts offered by MTB( is "iven below:
a& !rick by !rick avings cheme.
b& "onthly !enefit +lan.
c& 8ducation +lan.
d& #ouble aver +lan.
e& Triple aver +lan.
f& "illionaire +lan.
g& "T! inspire.
h& "T! senior.
i& ave everyday +lan.

2. Credit Prodcts:
MTB( not only fo$used on the diversifi$ation on deposit produ$ts but also it has
introdu$ed a wide variety of loan produ$ts for the different type of $usto!ers a$$ordin"
to the need of different $ate"ory of $usto!ers. The ran"e of loan produ$ts "iven by
MTB( is "iven below.
$. Consmer loan prodcts:
a) MTB (ifeline.
b) %uto loan.
$) )o!e loan.
d) *o$tor+s loan.
2. : !"B &ervices:
a) #orporate bankin".
b) Institutional Bankin".
$) Ter! finan$e.
d) Invest!ent Bankin".
e) Trade finan$e.
f) Offshore bankin".
") Mer$hant Bankin".
3. &!' Bankin(:
a) MTB Bha"yoboti.
b) MTB ,rishi.
$) MTB Moushu!i.
d) MTB -evolbin" loan.
e) MTB .!all business loan
f) MTB Buniad
") MTB robaho
h) MTB *i"oon.
(. Card 4acilities'
a& 'ocal 7lassic 7redit 7ard.
b& 'ocal =old 7redit 7ard.
c& +repaid International Travel "oney 7ard.
d& +repaid 'ocal =ift 7ard.
e& 5isa 8lectron #ebit 7ard.
.5. Branc$ %+ecific anal&sis'
2.). An overvie* of &hanir Akhra branch:
In /uly of 0112 Mutual Trust bank (i!ited has opened its .hanir %khra Bran$h at
*haka. It has a total nu!ber of 3 e!ployees and 3 offi$e staffs. %lso the bank has a
supervisor and two se$urity "uards. The workfor$e is very !u$h $o'operative both to
ea$h other and to the $lients. %s other authori4ed dealers5 it is li$ensed by Ban"ladesh
Bank to transa$t all types of forei"n e6$han"e business. &hile opened it was a!on" the
first 2 authori4ed dealers of Mutual Trust Bank. 7ow it $an be $ounted a!on" the best
three operated bran$hes of Mutual Trust Bank both in ter!s of profitability and
operational effi$ien$y.
%epartments *ithin &hanir akhra Branch
This bran$h has four depart!ents as the followin".
$. 8eneral Bankin" 98B) *epart!ent
2. #redit *epart!ent
3. #learin" *epart.
:. 7-B *epart!ent.
.16. Branc$ Credit Condition'
As a new branch hanirakhra !ranch has a good performance in loan taking that is
the most important source of profit earning. The scenario of credit of the branch as of
Auly ;3* ,-3- is given below%
Loans and ad#ances /mount
7ar 'oan 1...B2
8mployee house building loan 30BB/03.;;
7onsumer finance 3.;/2;;-
"8 3/B0./12
ecured Overdraft 33B--.;3
Term loan 3;0,1/.;..
Inland document bill purchase 3;0,2;,2
CHAPTER THREE
Literature Re#ie7
T$e Credit Management definition $as !een #ie7ed -,*8 Time9s:
http%DDwww.smallbusiness.wa.gov.auDcredit(managem
7redit management is the process for controlling and collecting payments from your
customers. A good credit management system will help you reduce the amount of
capital tied up with debtors @people who owe you money& and minimise your
e$posure to bad debts.
rin$iples for the Mana"e!ent of #redit -isk ' $onsultative do$u!ent /uly ;222 #redit
!"t is !ost si!ply defined as the potential that a bank borrower or $ounterparty will
fail to !eet its obli"ations in a$$ordan$e with a"reed ter!s. The "oal of $redit risk
!ana"e!ent is to !a6i!ise a bank's risk'ad<usted rate of return by !aintainin"
$redit risk e6posure within a$$eptable para!eters.
/ccording to Damon .oro7it2 9;ul& 1-< 611: The policies and processes that
allow customers and clients to defer payment for goods and services. The
management and control of credit is a vital component in the process of controlling
cash flow and many organisations have failed because management did not
distinguish between profitability and cash flow. 8ffective credit management ensures
that the total amount of credit e$tended and the period for which it is e$tended are
consistent with the organisationEs financial policies. It means ensuring that credit is
granted on a consistent basis* the costs of credit are understood* the client payment
process is effectively administered* and a debt recovery policy is in place.
De Cen2o<D / = Ri!!ins< % 0 915>>& A credit is a legal contract where one party
receives resource or wealth from another party and promises to repay him on a
future date along with interest. In simple terms* a credit is an agreement of
postponed payments of goods bought or loan. 9ith the issuance of a credit* a debt is
formed.
www.financeglossary.net/definition/873-Credit!anage"ent Credit
Management as per )inance=lossary.net is A plan to control or improve ones credit*
often with the assistance of a professional service provider. as listing a plan to
control or improve ones credit* often with the assistance of a professional service
provider.
"r. "ohsin in 321, has presented a detailed and elaborate framework of Islamic
!anking in modern setting. :is model incrospondents the correctaristic of
commerical bank* "arcent and development banks building them in novel fashion. It
is various non banking service such trust !usiness factoring* real estate and
consultancy as through interest free banks could not survey by banking service
alone.
Al( Aahari in 321; went so far as to favor the imposition of a 3--F reserve
requirement of commercial !anks #r. Gmmar 7hapras was also much concern about
the concentration of economic power private banks might enjoy in a system based
on equity financing.
:arvey @,--B&% in H8ast Asian "8 capacity !uilding* competitiveness and "arket
opportunities in a =lobal 8conomyI postulates that developing economics are
especially seeing small business as potential instruments for the alleviation of
poverty.
Ar. Aournal of Asian 8conomy* ,--/&% "8s need low capital investment per unit of
output and give rise to greater opportunities of direct or indirect employment* in a
positive environment "8 offer sustainable business solutions that simultaneously
fight poverty and accelerate economic growth.
CHAPTER #O$R
/nal&sis /nd 4indings
(.1. Conce+t of Credit
The word credit is derived from the 'atin word HcredoI which means HI believeI and is
usually defined as the ability to buy with a promise to pay. It consists of actual
transfer and delivery of goods and services in e$change for a promise to pay in
future. It is simply the opposite of debt. #iversification of banking service has
accelerated the use of credit in the e$pansion of business operation. It is a
fundamental precept of banking everywhere that advances are made to customers in
reliance on his promise to pay rather than the security held by the banker.
(.. Descri+tion of Credit +roducts of MTB'
9hatever credit facility anybody is looking for* heDshe will surely find it at "T!'. It
has a comprehensive selection of facilities to offer* from a simple personal loan*
credit cards* auto loan and overdraft facilities to home loan. It has a wide variety of
credit facility that makes it different from the other banks to the consumers.
A very brief description of the different credit products are described below%
(.8 Consumer loan +roducts'
1. MTB Life line'
9hether anybody is getting married* going for holidays* renovating his home* or
considering any other major purchase* "T! 'ifeline is the best option to achieve the
goals.
4eatures and Benefits'
Any purpose personal loan for salaried e$ecutives* business person 4 self employed
individuals
'oan up to Tk. / 'acs
3, ( /- months installment option
7ompetitive interest rates
4orms of Loans of Life line'
1.1 .ealt$ Line%
This product is launched with a view to consider the needs of individuals to be
healthy. As the bank thinks about the every financial need of each customer so it
introduced this product which is quite rare to other banks. The features of the
product are given below.
a& :ospitalization or other emergency medical needs.
b& To purchase body fitness equipments.
1.. 0ducation Line'
8ducation is one of the basic needs of a person. It is now a days related to money
and e$pences. +arents always cannot afford the higher education e$pences of their
children. o the bank introduced the special loan to those parents who want to get
their children higher education. The features of the product are given below.
a& )or higher education purpose.
b& To purchase of computer* tuition fees or other education e$penses.
1.8. )rofessionals line'
+rofessional line is completely a different product than the other products. It is
neither a working capital product* nor a consumer product loan. The bank provides
loan individuals to purchase equipment to run their profession. The features of the
product are given below.
a& +urchase of professional equipments.
b& )or office renovationD decoration.
1.(. Marriage line'
"arriage line is the product for those who does not have the ability to afford the
cosolidated e$pence of marriage and do not have much savings to e$pend. The
bank thinks of the individual customer needs. o introduced the product. The
features of the product are given below.
a& To meet marriage e$penses for himselfD herself
1.*. Tra#el line'
This loan is for the people who love to travel. Traveling needs a bundle of money that
is not always possible to arrange instantly. "T! provides loan to those travel
seekers who do not have instant ability to go for a travel but have regular income
flow to recover it. The features of the product are given below.
a& )or honeymoon trip.
b& )or family trip* abroad or in the country.
1.,. 4esti#al line'
The common phenomenon related to festival is shopping and some formalities that
are legated to e$penses and money. To e$pend money in special festive the bank
provides loan to the people. The features of the product are given below.
a& To enjoy festive period.
b& =ift for the familyD in lawsD relatives.
$.+. %reams Come "re line:
It is a type of $onsu!er loan. This loan is provided to !ake the individual drea!s $o!e
true. It is !ainly a loan that is provided to pur$hase the ho!e e=uip!ents. The features of
the produ$t are "iven below.
a) To pur$hase TV5 >rid"e5 >urniture5 )o!e Theatre5 Motor #y$le5 %# et$.
b) To de$orate?renovate own )o!e?#ar.
$.8. Care #ine
It is a spe$ial loan for hi"her drea!s. This is !ainly a loan for lu6urty e6pendetures. The
features of the loan are "iven below.
a) (oan for fulfill!ent of parents drea!.
b) To pur$hase e$ono!y $ar 9se$ond hand $ar) for the fa!ily.
1.. /uto Loan'
9ith the unparalleled ownership e$perience coupled with convenient availability*
comfortable repayment periods and attractive interest rates "T!' provides easy and
simple processing car loan. Tt has never been easier to own a car.
4eatures and Benefits'
a& 'oan amount ranging from Tk. ;--*--- to Tk. ,-*--*---.
b& 7ar financing up to 0-F of reconditioned or new vehicle price.
c& 'oan tenor 3, to /- months.
d& 7ompetitive interest rate.
1.8. .ome Loan
An apartment or just the right piece of land to build a dream houseJ "T! brings
"T! home loans to the doorstep.
4e
atures and Benefits'
a: 'oan amount ranging from Tk. ;--*--- to Tk. .-*--*---.
b& 'oan tenor up to ,- years.
c& 7ompetitive interest rate.
(.( Cor+orate Loans'
(.1. Term 4inance'
It provides loans that have specified repayment schedule and a floating interest rate
with tenure more than one year but less than ten years. The bank also offers term
loans for the following broader purposes.
a& +roject )inance.
b& )inance for Importing 7apital "achinery.
c& 'ease )inance.
d& :ouse !uilding )inance.
(.. 1orking Ca+ital 4inance %
"T!' has special care in financing to meet the customersE running capital
requirements by offering the following products%
a& ecured Over #raft @O#&
b& 7ash 7redit @:ypo.&
c& 7ash Against #ocument
d& hort Term 'oan
e& Inland !ill +urchase @I!+&
f& )oreign !ill +urchase @)!+&
(.8. Trade 4inance'
"T!' offers e$port and import finance facilities for the customers depending on their
requirements. This trade finance service is a unity of funded and non(funded
facilities.
(.8.1. T$e e?+ort finance facilities include'

a& !ack to !ack 'D7 opening
b& 8$port !ill #iscounting @)#!+ and I#!+&
c& ecured Over #raft @O#(generalDe$port bill&
(.8.. Our im+ort finance facilities include'
a& 'oan Against Trust <eceipt @'T<&
b& Term 'oan @T<&
(.8.8. Non@funded trade finance facilities'

a& 'D7 Opening @ight 4 #eferred&
b& 'D7 Advising
c& 'D7 Transfer
!ank =uarantee
d& ecured Over #raft @O#& in the form of O# @generalDe$port bill& and O# @Others(
work order* )#<* land* etc.&
e& !ank =uarantee in the form of +erformance guarantee* Advance +ayment
guarantee* and Inland !ill +urchase @I!+& includes mainly government security bills
and bonds.
f& )oreign !ill +urchase @)!+& includes foreign drafts.
(.(. MTB Offs$ore Banking'
"T! Offshore !anking services specially tailored for 3--F foreign owned company*
joint venture and locally owned company in 8$port +rocessing Kones @8+K&. It offers
term finance* working capital finance and trade finance services in different modes. It
also provides term finance facility to locally owned industrial units outside 8+K under
some special conditions.
(.*. %tructured 4inance'
"T! is active in the yndication market with professional team having finest
e$pertise and wide market network for enabling its corporate clients to access large
loans through cost efficient structures. It offers tailor made solutions to fit a business
requirement. It also facilitates its peer group in closing their syndicated deals by co(
arranging or by taking large e$posures in both =reenfield and !rownfield projects
including
a& Infrastructure )inancing e.g. +ower* Telecom* :otel.
b& Aircraft )inancing.
c& "anufacturing +roject )inancing e.g. teel* 7ement* =lass* +etrochemical.
d& Agro(based +roject )inancing.
e& "icro )inancing.
The product basket of "T!' contains 'ong Term )inancing along with full range of
product mi$ for hort Term )inancing of day to day operations and non fund based
facilities. It seeks to understand unique needs of any business and incessantly strive
to meet and to e$ceed the e$pectations of a business person.
(.*
. %M0 Banking'
MTB B$ag&o!ati'
"T! !hagyobati loan is only for the "8s owned by the women entrepreneurs.
4eatures and Benefits%
a& 'oan amount range !#T 3.-- lac to !#T .-.-- lac.
b& 'oan tenure up to ; years.
c& <ate of interest 3-F p.a @only in case of re(finance from !!&.
d& Gp to !#T ..-- lac is collateral free.
e& 8asy repayment schedule.
f& Co service charge or hidden charge.
g& 8asy processing.
h& At least one year of business e$perience.
MTB Aris$i'
"T! Lrishi is designed for direct lending in the agriculture sector. Only eligible
farmers and agri "8s may apply for the loan. 7rops cultivation* fisheries* livestock
4 poultry are the priority sector of lending.
a& )eatures and !enefits%
'oan amount up to !#T ;.-- core.
b& 'oan tenure up to . years.
c& <ate of interest 3-F p.a @only in case of re(finance from !!&.
d& Gp to !#T ..-- lac is collateral free.
e& 8asy repayment schedule.
f& Co service charge or hidden charge.
g& 8asy processing.
h& Timely disbursement.
MTB Mousumi'
"8 customers needs additional fund in some occasions* festivals and seasons.
"T! "ousumi enables those "8s which has seasonal type of business.
4eatures and Benefits%
'oan amount up to !#T 3-.-- lac
'oan period range -3 to 3, months
Attractive <ate of interest
Gp to !#T ..-- lac is collateral free
8asy repayment schedule
3F service charge and no other hidden charge
"inimum -, years of business e$perience
8asy processing
MTB Re#ol#ing Loan'
Any "8* manufacturing* service* trading or farming* requires working capital for
smooth operation of the business. This loan product enables those "8s to meet
their working capital requirements to support their operations and future growth.
4eatures and Benefits%
It is 77 @:& and revolving type loan.
'oan amount up to !#T .-.-- lac.
'oan period -3 year and annually renewable.
Attractive rate of interest.
"inimum -, years of business e$perience.
At least -, years of bank account transactions.
Account turnover to be -; times of the loan amount.
8asy processing.
Co service charge or hidden charge.
<equires collateral support.
MTB %mall Business Loan'
8nables the "8s to e$pand their business.
4eatures and Benefits'
'oan amount up to !#T .-.-- lac.
'oan period up to . years.
Attractive rate of interest.
8asy repayment schedule.
"inimum -, years of business e$perience.
3.--F service charge.
Gp to !#T ..-- lac is collateral free.
8asy processing.
MTB Digoon'
8nables the "8s to get loan double amount of their deposit.
4eatures and Benefits'
'oan amount range !#T ..-- lac to !#T ,-.-- lac.
'oan tenure up to -. years.
Attractive rate of interest.
"onthly repayment.
ecurity .-F )i$ed #eposit @)#<& of loan amount.
8asy processing.
!"B ,nterest -ates on #endin(
Cate(ories -ates
; %"ri$ulture ;0.@1AB 9)i"hest)
0 Ter! loan to lar"e C !ediu! s$ale industries ;3.11A 9)i"hest)
3 &orkin" #apital ;3.11A 9)i"hest)
: D6port >inan$e 9#5 D##) 3.11A 9)i"hest)BB
@ #o!!er$ial (endin" ;3.11A 9)i"hest)
E. I!port finan$e ;3.11A BBB
9Mid -ate)
3. )ousin" (oan: 9;) #o!!er$ial ;3.11A 9)i"hest)
90) -esidential
a./eneral
b. 0a(e 'arners
;0.3@A9)i"hest)
;0.@1A9)i"hest)
F. Ter! (oan to s!all C #otta"e Industries ;:.@1A 9 Mid -ate)
2. #onsu!er #redit ;:.@1A 9Mid -ate)
;1. (ease >inan$e ;:.@1A 9Mid -ate)
;;. (oan to 7on'Bankin" >inan$ial Institutions ;3.11A 9)i"hest)
;0. (oan?.O* a"ainst >*- of the Bank G 3A above >*-
rate if the rate is
;1A or below
G :A above >*-
rate if the rate is
above ;1A
;3. (oan?.O* a"ainst Millionaire lan5 Bri$k by
Bri$k5 *ouble .aver?Triple .aver deposit
s$he!e C other spe$ial deposit produ$ts of the
Bank
G 3A above deposit
produ$t rate
if the rate is ;1A or
below
G :A above deposit
produ$t rate
if the rate is above
;1A
;:. .O* a"ainst >*- of other Banks ;3.11A 9Mid -ate)
;@. %uto (oan ;:.@1A 9Mid -ate)
;E. .!all Business (oan under .MD ;3.11A 9Mid -ate)
;3. Others ;3.11A 9Mid -ate)
B The interest rate on finan$in" a"ainst pulse5 oil seeds5 spi$es 9onion5
"arli$5 "in"er5 $hili5 tur!eri$ and
$u!in) and !ai4e will be 0A 9as per %#.* #ir$ular 7o. 3 dated
;1.;1.011E).
B B %s per B-* #ir$ular 7o. 1; dated ;1.1;.011:.
B B B The rate of interest on i!port finan$in" of ri$e5 wheat5 su"ar5 edible
oil 9$rude and refined)5 $hi$kpeas5
beans5 lentils5 onions5 spi$es5 dates and powder !ilk will re!ain to a
!a6i!u! of ;0A9 as per B-*
$ir$ular 7o. 12 dated ;:.1F.01135 1: dated ;3.13.011F5 1E dated
1@.1@.0112 and 13 dated ;1.1@.0112).
(.,
. Credit )rinci+les
8very bank has follows some credit principles in giving a loan. It provides some
specific benchmarks as well as guidelines about where to give loan and where it can
be risky. 7redit principles include the general guidelines of providing credit by branch
manager or credit officer. In "utual Trust !ank 'imited they follow the following
guideline while giving loan and advance to the client.
a& 7redit advancement shall focus on the development and enhancement
of customer relationship.
b& All credit e$tension must comply with the requirements of !ank?s "emorandum
and Article of Association* !anking 7ompany?s Act* !angladesh !ank?s instructions*
other rules and regulation as amended from time to time.
c& 'oans and advances shall normally be financed from customer?s deposit and not
out of temporary funds or borrowing from other banks.
d& The bank shall provide suitable credit services for the markets in which it operates.
e& It should be provided to those customers who can make best use of them.
f& The conduct and administration of the loan portfolio should contribute with in
defined risk limitation for achievement of profitable growth and superior return on
bank capital.
g& Interest rate of various lending categories will depend on the level of risk and
types of security offered.
(.-. Credit e#aluation )rinci+les
ome principles or standards of lending are maintained in approving loans in order
to keep credit risk to a minimum level as well as for successful banking business.
The main principles of lending are given below%
LiBuidit&'
'iquidity means the availability of bank funds on short notice. The liquidity of an
advance means it repayment on demand on due date or after a short notice.
Therefore* the banks must have to maintain sufficient liquidity to repay its depositors
and trade off between the liquidity and profitability is must.
%afet&'
afety means the assurance of repayment of distributed loans. !ank is in business
to make money but safety should never be sacrificed for profitability* To ensure the
safety of loan. The borrower should be chosen carefully. :e should be a person of
good character 4 capacity as well as bank must have to maintain eligible number of
security from borrower.
)rofita!ilit&'
!anking is a business aiming at earning a good profit. The difference between the
interest received on advances and the interest paid on deposit constitutes a major
portion of the bank income* !esides* foreign e$change business is also highly
remunerative. The bank will not enter into a transaction unless a fair return from it is
assured.
)ur+ose of t$e loan'
!anks sanction loans for productive purpose. Co advances will be made by bank for
unproductive purposes though the borrower may be free from all risks.
%ecurit&'
The security offered for an advance is an insurance to fall bank upon incases of
need. ecurity serves as a safety value for an une$pected emergency. ince risk
factors are involved* security coverage has to be taken before a lending.
National interest'
!anking industry has significant roll to play in the economic development of a
country. The bank would lend if the purpose of the advances can contribute more to
the overall economic development of the country.
)or any credit decision the credit appraisal plays a vital role for sector wise
justification. There is no fi$ed or standardized approach to project appraisal.
Cumerous and deverse elements enter into the process of appraisal. It is difficult to
have cuy and dried formula with the help of which a proposal for financial assistance
can be adjusted straightway as acceptable or unacceptable. 9hile broadly the same
set of factors are taken into consideration in the scrutiny of individual proposals* the
weight given to the factors varies from project to project. :owever "utual Trust !ank
'td considers five aspects of a credit proposal while appraisal.
(.>.1. Tec$nical /++raisal'
Technical appraisal report is prepared by an engineer of the appraisal sector to see
whether the project is sound with regard to every engineering and technological
consideration* including product specification* product process* size* internal
balance* suitability and availability of physical facilities* designs and layoutsof
equipment and building etc.
T$e !asic as+ects of tec$nical a++raisal are'
a& 7ost of project.
b& Annual production capacity 4 manufacturing process.
c& 'ocation* infrastructural facilities feature and estimated costv of the land.
d& 7ivil drawings and the cost of civil works.
e& 'ayout plan for building and machinery.
f& 8stimated cost of machinery with installation.
g& election of product process involving the choice of alternatives* wastage* by
product* disposal of wastes and effluents etc.
h& Annual requirement of raw materials with source of availability.
i& All input output data of the project.
(.>.. Marketing /++raisal'
An industrial projects to bring in some goods or services for a community. !ut the
community does not need them infinitely. Their demand is of course finite and at
given prices. "arketing plan* as in the case of production and financial plan* should
have objective in the back drop* and the objective is what is wanted to be achieved.
9hile appraising industrial projects "T! analyses three factors and brings out the
objectives in quantitative terms.
a& "acro aspects.
b& "icro demand.
c& upply situation for specific products in the market.
(.>.8 4inancial a++raisal'
The ne$t step is to prepare a detail report on the financial viaability of the project.
The main purpose of such appraisal is to assess the viability of the project in terms
of its operation in the future years and its financial soundness. It is concerned with
assessing the feasibility of a project from the point of view of its financial result. The
project?s direct costs and benefits are calculated in pecuniary terms at the prevailing
market prices. "utual Trust !ank 'td. atisfies itself not only about the current
solvency but also about its continued solvency to ensure timely payment of the
principal and the regular payment of interest. The revenant information collected on
technical economic and management aspects of the project have got direct bearing
upon the financial appraisal. uch appraisal is directed to e$amine mainly the
following aspects%
T$e !asic as+ects of financial a++raisal are'
a& <atio analysis.
b& !reak(8ven Analysis.
c& 8arning )orecast.
d& )und flow tatement.
e& Internal <ate of <eturn @I<<&.
f& +ay !ack +eriod "ethod.
g& Cet present value @C+5& "ethod.
(.>.( 0conomic /++raisal'
"T! does economic analysis of a project to determine whether the project is
consitent with overall national objectives and whether the investment proposed is the
best means of achieving the intended objectives. It involves a systematic evaluation
of a range of options for achieving the intended objectives.
8conomic appraisal of the project by "T! covers both quantifiable and non
quantifiable benefits.
a& Muantifiable !enefits.
b& Muantifiable benefits of the economic appraisal.
c& 8conomic rate of return @8<<&.
d& !runo <atioD#omestic resource cost.
e& 7ontribution of =ross #omestic +roduct and
f& 8mployment generation and cost per employment.
(.>.*. Management a++raisai'
"T! emphasizes on the appraisal of management as a very important part of project
appraisal. The successful implementation and running of the project depends on the
resourcefulness* competence and integrity. The bank does it through direct and
indrect investigation.
(.5. )olic& Cuidelines for CRM !& Banglades$ Bank'
This section details fundamental credit risk management policies that are
recommended for adoption by all banks in !angladesh. The guidelines contained
herein outline general principles that are designed to govern the implementation of
more detailed lending procedures and risk grading systems within individual banks.
#endin( /idelines
All banks should have established 7redit +olicies @H'ending =uidelinesI& that clearly
outline the senior management?s view of business development priorities and the
terms and conditions that should be adhered to in order for loans to be approved.
The 'ending =uidelines should be updated at least annually to reflect changes in the
economic outlook and the evolution of the bank?s loan portfolio* and be distributed to
all lendingDmarketing officers. The 'ending =uidelines should be approved by the
"anaging #irectorD78O 4 !oard of #irectors of the bank based on the endorsement
of the bank?s :ead of 7redit <isk "anagement and the :ead of
7orporateD7ommercial !anking. Any departure or deviation from the 'ending
=uidelines should be e$plicitly identified in credit applications and a justification for
approval provided. Approval of loans that do not comply with 'ending =uidelines
should be restricted to the bank?s :ead of 7redit or "anaging #irectorD78O 4 !oard
of #irectors. The 'ending =uidelines should provide the key foundations for account
officersDrelationship managers @<"& to formulate their recommendations for
approval* and should include the following%
,ndstry and Bsiness &e(ment 1ocs.
The 'ending =uidelines should clearly identify the businessDindustry sectors that
should constitute the majority of the bank?s loan portfolio. )or each sector* a clear
indication of the bank?s appetite for growth should be indicated @as an e$ample*
Te$tiles% =row* 7ement% "aintain* 7onstruction% hrink&. This will provide necessary
direction to the bank?s marketing staff.
"ypes of #oan 1acilities
The type of loans that are permitted should be clearly indicated* such as 9orking
7apital* Trade )inance* Term 'oan* etc.
&in(le Borro*er2/rop #imits2&yndication
#etails of the bank?s ingle !orrowerD=roup limits should be included as per
!angladesh !ank guidelines. !anks may wish to establish more conservative criteria
in this regard. Appendi$(;.B.; provides brief description of financing under
syndicated arrangement.
#endin( Caps
!anks should establish a specific industry sector e$posure cap to avoid over
concentration in any one industry sector. #iscouraged !usiness Types !anks should
outline industries or lending activities that are discouraged. As a minimum* the
following should be discouraged%
( "ilitary 8quipmentD9eapons )inance
( :ighly 'everaged Transactions
( )inance of peculative Investments
( 'ogging* "ineral 8$tractionD"ining* or other activity that is
8thically or 8nvironmentally ensitive
( 'ending to companies listed on 7I! black list or known defaulters
( 7ounterparties in countries subject to GC sanctions
( hare 'ending
( Taking an 8quity take in !orrowers
( 'ending to :olding 7ompanies
( !ridge 'oans relying on equityDdebt issuance as a source of repayment.
#oan 1acility Parameters
)acility parameters @e.g.* ma$imum size* ma$imum tenor* and covenant and security
requirements& should be clearly stated. As a minimum* the following parameters
should be adopted%
( !anks should not grant facilities where the bank?s security position is inferior to that
of any other financial institution.
( Assets pledged as security should be properly insured.
( 5aluations of property taken as security should be performed prior to loans being
granted. A recognized ;rd party professional valuation firm should be appointed to
conduct valuations.
Cross Border -isk
<isk associated with cross border lending. !orrowers of a particular country may be
unable or unwilling to fulfill principle andDor interest obligations. #istinguished from
ordinary credit risk because the difficulty arises from a political event* such as
suspension of e$ternal payments
( ynonymous with political 4 sovereign risk
( Third world debt crisis
)or e$ample* e$port documents negotiated for countries like Cigeria.
3. 7redit Assessment 4 <isk =rading
s
Credit /ssessment
A thorough credit and risk assessment should be conducted prior to the granting of
loans* and at least annually thereafter for all facilities. The results of this assessment
should be presented in a 7redit Application that originates from the relationship
managerDaccount officer @H<"I&* and is approved by 7redit <isk "anagement
@7<"&. The <" should be the owner of the customer relationship* and must be held
responsible to ensure the accuracy of the entire credit application submitted for
approval. <"s must be familiar with the bank?s 'ending =uidelines and should
conduct due diligence on new borrowers* principals* and guarantors. It is essential
that <"s know their customers and conduct due diligence on new borrowers*
principals* and guarantors to ensure such parties are in fact who they represent
themselves to be. All banks should have established Lnow Nour 7ustomer @LN7&
and "oney 'aundering guidelines which should be adhered to at all times. 7redit
Applications should summaries the results of the <"s risk assessment and include*
as a minimum* the following details%
( Amount and type of loan@s& proposed.
( +urpose of loans.
( 'oan tructure @Tenor* 7ovenants* <epayment chedule* Interest&
( ecurity Arrangements In addition* the following risk areas should be addressed%
( !orrower Analysis. The majority shareholders* management team and group or
affiliate companies should be assessed. Any issues regarding lack of management
depth* complicated ownership structures or intergroup transactions should be
addressed* and risks mitigated.
( Industry Analysis. The key risk factors of the borrower?s industry should be
assessed. Any issues regarding the borrower?s position in the industry* overall
industry concerns or competitive forces should be addressed and the strengths and
weaknesses of the borrower relative to its competition should be identified.
( upplierD!uyer Analysis. Any customer or supplier concentration should be
addressed* as these could have a significant impact on the future viability of the
borrower.
( :istorical )inancial Analysis. An analysis of a minimum of ; years historical
financial statements of the borrower should be presented. 9here reliance is placed
on a corporate guarantor* guarantor financial statements should also be analyzrd.
The analysis should address the quality and sustainability of earnings* cash flow and
the strength of the borrower?s balance sheet. pecifically* cash flow* leverage and
profitability must be analyzed.
( +rojected )inancial +erformance. 9here term facilities @tenor O 3 year& are being
proposed* a projection of the borrower?s future financial performance should be
provided* indicating an analysis of the sufficiency of cash flow to service debt
repayments. 'oans should not be granted if projected cash flow is insufficient to
repay debts.
( Account 7onduct. )or e$isting borrowers* the historic performance in meeting
repayment obligations @trade payments* cheques* interest and principal payments*
etc& should be assessed.
( Adherence to 'ending =uidelines. 7redit Applications should clearly state whether
or not the proposed application is in compliance with the bank?s 'ending =uidelines.
The !ank?s :ead of 7redit or "anaging #irectorD78O should approve 7redit
Applications that do not adhere to the bank?s 'ending =uidelines.
( "itigating )actors. "itigating factors for risks identified in the credit assessment
should be identified. +ossible risks include* but are not limited to% margin
sustainability andDor volatility* high debt load @leverageDgearing&* overstocking or
debtor issues6 rapid growth* acquisition or e$pansion6 new business lineDproduct
e$pansion6 management changes or succession issues6 customer or supplier
concentrations6 and lack of transparency or industry issues.
( 'oan tructure. The amounts and tenors of financing proposed should be justified
based on the projected repayment ability and loan purpose. 8$cessive tenor or
amount relative to business needs increases the risk of fund diversion and may
adversely impact the borrower?s repayment ability.
( ecurity. A current valuation of collateral should be obtained and the quality and
priority of security being proposed should be assessed. 'oans should not be granted
based solely on security. Adequacy and the e$tent of the insurance coverage should
be assessed.
( Came 'ending. 7redit proposals should not be unduly influenced by an over
reliance on the sponsoring principal?s reputation* reported independent means* or
their perceived willingness to inject funds into various business enterprises in case of
need. These situations should be discouraged and treated with great caution.
<ather* credit proposals and the granting of loans should be based on sound
fundamentals* supported by a thorough financial and risk analysis. <isk =rading All
!anks should adopt a credit risk grading system. The system should define the risk
profile of borrower?s to ensure that account management* structure and pricing are
commensurate with the risk involved. <isk grading is a key measurement of a !ank?s
asset quality* and as such* it is essential that grading is a robust process. All facilities
should be assigned a risk grade. 9here deterioration in risk is noted* the<isk =rade
assigned to a borrower and its facilities should be immediately changed. !orrower
<isk =rades should be clearly stated on 7redit Applications.
)re dis!ursement reBuirements'
9hen the credit proposal are approved the credit officer must have to be ensured
that the disbursement of the credit facilities must comply with the directions written in
the credit policy and circular made by time to time along with checking all the
following terms and conditions.
The officer of 'oan Administration must collect the acceptance of the
customer?s of the terms and conditions on the duplicate copy of the sanctioned
advice.
They will thoroughly e$amine and ensure that the subject credit facility
does not contradict to any law* rules and regulation of the country* !angladesh !ank
and
#eed of the "ortgage and power of the Attorney to be drafted
and e$ecuted under the upervision of the !ank?s 'egal Advisor.
'awyers certificate to the effect that all the legal formalities @8quitableD
<egistered "ortgaged& has been properly created on the land and building in favor
of the bank 4 bank has acquired the effective title of the property.
<egistered power of attorney has been collected form theborrower
@contractor& assigning the work order favoring the #!' and the power of attorney has
been registered with the work order given agency and they have agreed that they will
issue all the cheques favoring "T!.
The legal documents of the vehicle have been obtained.
7ollection of the satisfaction certificate in respect of all the documents both legal
and banking from the lawyer.
8ntry has been made in the afe (in and afe(out register and the documents are
preserved.
After being satisfied all the above terms and conditions the credit in(charge will
disburse the loan amount to the client.
(.11. Credit +rocessing ste+s of MTB'
7redit processing maintained by "T! is given detail below%
/++lication for loan'
Applicant applies for the loan in the prescribed form of bank. The purpose of this
forms is to eliminate the unwanted borrowers at the first sight and select those who
have the potential to utilize the credit and pay it back in due time.
Cetting Credit information'
Then the bank collects credit information about the borrower from the following
sources%
3. +ersonal Investigation.
,. 7onfidential report from other bankD :ead officeD!ranch.
;. 7I! report from central bank.
)ro"ect Ins+ection'
!ank officially inspects the project for which the loan is applied. +roject?s e$istence*
distance from bank office* viability* monitoring cost and possibilities are e$amined.
Credit Risk Crading'
Any loan proposal needs to be evaluated on the basis of financial information
provided by the applicant. 8$perienced personnel of 7redit department in "T! do an
analysis through 7redit <isk =rading core. If the 7<= score is satisfactory then the
bank goes for the ne$t step.
O+inion Of Collateral'
Obtain legal opinion on the collateral provided by the applicant* whether those are
properly submitted* regular and up to date or else those documents will be asked to
regularize by the client.
)rocessing %tage'
Then comes the processing stage of loan. In this stage* the !ank will prepare a
+roposal. The proposal contains following relevant information.
Came of the !orrowerDborrowers
Cature of 'imit
+urpose of 'imit
8$tent of 'imit
7ollateral
"argin
<ate of Interest
<epayment
5alidity
.ead office a++ro#al'
It is then sent to head office for final sanction with detailed information regarding
clients* business or purpose of the loan* security papers. :ead office processes the
credit proposal and afterwards puts up a memorandum to credit committee. The
credit committee reviews the credit proposal and accepts or rejects the proposal.
/++ro#al !& t$e .ead Office'
After approval by the 7redit 7ommittee* head office gives an approval letter to the
branch and branch gives a sanction letter. The client should accept sanction advice
with seal* which will prove his agreement with the terms and condition offered by the
bank.
C$arge Documents'
After the sanction advice* !ank will collect necessary charge documents. 7harge
documents vary on the basis of types of facility* types of collateral. !ut normally the
following documents are required%
a& #emand +romissory Cote.
b& 'etter of arrangement.
a& 'etter of Authority.
b& 'etter of 7ontinuation.
c& 'etter of #isbursement.
d& 'etter of etoff.
e& 'etter of <evival.
f& 'etter of :ypothecation.
g& tanding order.
h& 'etter of =uarantee.
i& 'etter of Indemnity.
j& Trust <eceipt.
k& 'etter of 'ien.
l& "emorandum of #eposit of 7heques.
Loan Dis!ursement'
)inally loan is disbursed and monitoring of the disbursed loan starts as well.
(.1. ReBuirements for loan Documentation'
The minimum requirements for loan or other facility documentation of a !ank are%
a& 7opies of the relative sanction letter indicating that the transaction has been
approved by properly authorized officers of the !ank.
b& A copy of the letter of sanction addressed to the customer and his acceptance
thereof.
c& All necessary documentation required to meet the terms and conditions of the facility
in the manner in which it was approved.
d& !efore disbursement* it should be satisfied that all legal formalities have been
completed.
e& #isbursement of all facilities shall be made on an Offering heet basis to ensure
that all additional requests are duly approved by two authorized Officers one of
which must be the "anager or ub("anager.
f& ecurities offered should also be thoroughly verified D inspected once in a month and
stock report prepared.
g& 9here the loan agreement calls for restrictive covenants and ongoing conditions*
the "anager must not only satisfy himself that these are adhered to at the outset of
the transaction @i.e. date of initial takedown& but assure himself* at regular intervals*
that these are not being violated.
h& ince the "anager together with the 7redit Officer is fully responsible for
documentation* they will formally sign a check list. Gnder no circumstances may
anyone permit drawings under any facilities* until they have signed off the check list.
i& The "anagerDub("anager should ensure that appropriate steps are being taken to
keep loan documentation current for all assets of the !ank. The loan documentation
check(list* should therefore* be reviewed at regular intervals.
j& 'ines of credit should* as a rule* be confirmed in writing to the borrower. A pecific
e$piration date for the line should be included. "oreover every letter of sanction
must contain the !ankEs standard clauses.
k& The borrower must e$plicitly undertake that all information supplied by him to !ank
in connection with the approved lines of credit is correct.
Any material or adverse change in business conditions will cause the amount due to
!ank from the client immediately repayable. The !ank reserves the right to call back
the facilities e$tended at any time without assigning any reason whatsoever.
%ecurit& against loans and ad#ances'
The different types of securities that may be offered to a banker are as follows%
@a& Immovable property @ 'and* !uilding* "achinery etc&
@b& "ovable property @ +roducts* Inventories* =old etc&
(.1. C$aracteristics of good collateral
The following five items determine the suitability of items for use as collateral. The
suitability depends on standardization* durability* identification* marketability and
stability of value.
%tandardi2ation'
The standardization leaves no ambiguity between the borrower and the lender as to
the nature of the asset that I being used as collateral.
Dura!ilit&'
#urability refers to the ability of the assets to withstand wear. Or it can refer to its
useful life. #urable goods make better collateral than non durable. tated otherwise
crushed rocks make better collateral than fresh flowers.
Identification'
7ertain types of assets are readily identified because they have definite
characteristics or serial numbers that can not be removed. Two e$amples are a large
office building and an automobile that can be identified to make model and serial
number.
Marketa!ilit&'
In order for collateral to be of value to the bank* the collateral must be marketable.
That is the borrower must be able to sell it. pecialized equipment is not as good as
collateral as are dump trucks* which has multiple use.
%ta!ilit& of #alue'
!anks prefer collateral whose market values are not likely to decline dramatically
during the period of the loan such as common stock.
(.18. Different kinds of Collateral
ecured loans have pledge of some of the borrower?s property behind them as
collateral
that may have to be sold if the borrowers have no other way to repay the bank.
ome of the most popular collaterals are%
In credit policy and procedure framework of "T! it is the last step. 7redit monitoring
and review is very important* because it ensures proper utilization and repayment of
bank fund. +eriodic review and follow up should* ensured the following%
a& That conduct @Turnover* regularity of repayment etc& of the borrowing accounts
during the period under review has been satisfactory or as e$pected
b& The account is not having e$cess over limit.
c& The terms and condition of the sanctioned letter are strictly followed.
d& The value of the collateral security is adequate.
e& There is not any unfavorable situation in market* economy and political conditions*
which may endanger the reliability of the borrower account.
(.1*. Criteria for loan classification and )ro#ision Maintenance
!& MTB'
Loan classification
Num!er Classification Criteria
3. Gnclassified <epayment is regular.
,. ubstandard
<epayment is irregular but has reasonable prospect of
improvement.
;. #oubtful debt
Gnlikely to be repaid but special collection efforts may result
in partial recovery.
B. !adD'oss
Co or very little chance of recovery.
Maintenance of )ro#ision'
Classification Criteria Rate of )ro#ision
=eneral provision on unclassified 'oans and advance -3F
mall enterprise financing for good loan -,F
pecial "ention Account -.F
+rovision for substandard loans and Advances ,-F
+rovision for doubtful loans and Advances .-F
+rovision on !adDloss loans and advances 3--F
(.1,.T$e scenario of )ro#ision for loans and ad#ances of MTB'
Near ,--/ ,--0 ,--1 ,--2 ,-3-
Amount 3B.------ ,;221,-01 .B1B,22,; 33,02B-00, 3-.3/1012;
)ro#ision for term loan in 665 and 616'
Dear 665 616
Total Credit ,1.,2;B./32 ;;11;2,;0-.
)ro#ision for loans and
ad#ances
33,02B-00, 3-.3/1012;
)ro#ision for loans and ad#ances in 665'
)ro#ision for loans and ad#ances in 616'
ource% )rom Annual <eport in ,-3-
(.1-. %cenario of last * &ears'
Cro7t$ of Credit'
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
Credi
t
3B;0;,./.;; 31.23.,-/;3 ,,/1;,,0/.0 ,1.,2;B./32 ;;11;2,;0-.
ource% )rom Annual <eport in ,-3-
Inter+retation'
:ere from the above chart we can see that the credit of "T!' is been increasing for
last five years. )rom ,--/ to ,-3- the scenario shows that it is maintaining a very
sharp increasing in credit amount. It is a good sign for the improvement of the
performance of "T!' because credit is the main source of income.
Cro7t$ of Interest Income'
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
Interest 3/11101-,2 ,;B-20--,3 ,1B/2,;32B ;.,2031/2, B,02B221;2
ource% )rom Annual <eport in ,-3-
Inter+retation'
)rom the chart of interest income it is been seen that the scenario is in increasing.
As from the previous chart it is seen that credit is increasing the interest income from
credit is also increasing. It is also a positive sign because it indicates lower
maintenance e$pense.
Cro7t$ of )rofit' 9/mount in million:
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
)rofit ;;/.30 B01.,1 ,3-.1- ;-..-; 1,-./3
ource% )rom Annual <eport in ,-3-
Inter+retation'
The chart of profit position shows that the condition is fluctuating. In ,--0 it
increased than in ,--/ but again in ,--1 it decreased again. Although in ,--1 it
increased slightly but this increasing was less than that of ,--/. In ,-3- it increased
again and recorded the highest.
%cenario of classified Loan'
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
Classified
Loans
P 323/,B--- .B3/B;--- 3B-,1B0--- 2.,0/,---
ource% )rom Annual <eport in ,-3-
Inter+retation'
)rom the chart we can see that the bank is e$periencing increasing classified loans
although this increasing rate is not sharp. The situation is quite fluctuating. In ,--/
the bank had no classified but from ,--0 it is e$periencing an increasing amount of
classified loans. !ut in ,-3- it decreased slightly. It is higher than that of ,--0 4
,--1.
(.1>. %tatistical /nal&sis'
tatistical analysis shows the variable scenario in graphs and as it appears
numerically it is very easy to define the position. In the statistical part the following
facts are shown%
3. Trend 7hain Analysis.
,. Time eries Analysis.
;. <egression Analysis.
(.15. Trend C$ain /nal&sis'
Trend chain analysis is the way to find out the change in growth in percentage in
comparison to the previous year.
Trend C$ain /nal&sis of Credit'
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
Credit ,,.2,F ,2.;BF ,,F ,..00F 31.00F
Inter+retation'
+rom the trend chain analysis of 7redit it is seen that the percentage of increasing
credit is not sharply increasing. The trend chain graph shows the condition is
fluctuating. 9e have already seen that the credit of "T!' is increasing year to year.
!ut the trend shows that it is not increasing distinctly each year.
Trend C$ain /nal&sis of Interest income'
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
Interest
Income
3--F ;1./3F ,3./3F ,;.21F ,3.,BF
Inter+retation'
)rom the chart of interest income we can see that the trend chain is in decreasing
trend. +reviously we saw that the interest income of "T!' is increasing year to year.
!ut the trend chain graph shows the completely different scenario. The interest
income is in a decreasing trend.
Trend c$ain anal&sis of classified loan'
Dear ,--/ ,--0 ,--1 ,--2 ,-3-
Classified
Loans
( 3--F 31,.//F 3.1.22F @2;.,-F&
Inter+retation'
)rom the trend chain analysis of classified loan we can see that the condition is
7ompletely uncertain and fluctuating. The bank did not have any classified loans in
,--/.
!ut after that it e$perienced classified loans with an increasing trend. !ut in ,-3-
shows
the negative trend of classified loans. That means a decreasing of classified loans
and
advances in comparison to the previous year.
(.6. Regression /nal&sis'
Ta!le of Calculation'
"odel
Gnstandardized 7oefficients
tandardized
7oefficients
t ig. ! td. 8rror !eta
3
@7onstant& 3,-21..2-..;.- 1-2/02.00.;33 3.B2B .,0B
deposit .-12 .311 .330 .B0, ./1B
interestincom
e
/.011 3.23/ .11, ;..B; .-03




T$e eBuation is'
QRaSb3$3Sb,$,
R 3,-21..2-..;.-S.-12T3S/.011T,
Inter+retation'
In this multiple regression equation* I show the relationship between 7redit
@dependent variable* N& and #eposit @independent variable T3*& 4 Interest Income
@independent variable. T,&.
If #eposit 4 Interest income is zero then aRQ
QR 3,-21..2-..;.- which is Q intercept. It shows that 7redit is positive. !ecause if the
bank has no deposit and no interest still it has some income like different type of
service charges. As well as bank has its capital like the shareholders equity from
which it can give loan. o credit can be positive.
Cow* if the value the slope of T3is -.-12. It means if the volume of deposited fund
increase by TL.3 crore then the credit of the company increases for TL -.-12 crore
assuming all other variable held constant.
Again the value the slope of T, is /.011. It means if the interest income increases
for taka 3 crore then the credit fund of the company will increase for taka /.011
crore assuming all other things remaining the same.
C./)T0R 4I30
Conclusion = Recommendations
*.
1 Conclusion
"utual Trust !ank 'imited is a fast growing bank that provides significant modern
echnological facilities to the clients like AT"* #bit card* 7redit card * 8(banking *
"obile banking etc . In !angladesh it has a strong position in the today? competitive
market . It has some features which makes the bank quite different in the private
ector. The bank has a tremendous management side that is still trying to make the
bank more successful. "utual Trust !ank 'imited has incorporated just before 33
years but within this short period of time it has achieved a good position and is
continuosly upgrading itself with a view to be competitive and to attain the leading
position of the banking industry. The bank renders service accurcy * friendliness *
new ways of meeting customer needs and good quality of services . The image
created by the bank is very good and the total condition is almost within their
control . It can easily be hoped that "utual Trust !ank 'imited will be one of the
topmost banks and be capable of taking challenges of the present competitive area .
Their ovrall perfomance is quite satisfactory and it is continuously upgrading its
position through hard working and clear missions.
*. Recommendations'
After roaming the whole credit procedure and analyzing the credit condition it can be
said that "T! has still many measures to take in managing the credit division more
effectively and efficiently. After the whole discussion the following suggestions can be
given that will be helpful to the bank to manage its credit operation better.
a& The credit policy of the bank is very restrictive and defensive. As a result its loan
sanction procedure is somewhat comple$. The loan policy and loan sanction
procedure should be made more fle$ible and easy.
b& "T!* usually* does not provide overdraft without full coverage of security. The bank
only provides secured overdraft. As a result its overdraft facility has not been
e$panding.
c& The bank has little concern about the publicity and advertisement. As a result most
of the customers are unaware about the variety of loan products of the bank.
d& The bank analyses the commercial loan feasibility by H7redit <isk =rading core
heetI. This manual technique lacks some important factors such as audit risk*
foreign e$change risk and inherent risk of client. o the factors should be included in
credit risk grading score sheet.
Bi!liogra+$&

3.Annual reports of "T! )<O" ,--/ U ,-3-.
;. !ooklets of the bank.
B. #ifferent circulars of "T!.
.. +ersonal interaction with the employees of "T!.
/. 9ebsite of the bank. www.mutualtrustbank.com.
0. According to #amon :orowitz @Auly 30* ,-33&* +ublic health notification6 +57
devices containing the plasticizer #8:+. <etrieved Covember /* ,--.
1. www.financeglosssry.netDdefinitionD10;(7redit"P"anagement.
2. According to A'( Aahri* @321;&* The 7ommercial !anking +rocess*.
3-. "r. "ohsin* @321,&* The )ramework of Islami !anking.
33. 7#7* CIO: +ocket =uide to 7hemical :azards. Arsenic CIO: +ublication
,--.(3.3.
3,. #ansereau* 7.* <ice* !.* chreder* 8.* 5aleriano* '. @,---& 5isualizing zero6
eliminating presistent pollution in 9ashiongton tate. A 9ashington to$ics coalition
report.
3;. #avies* L @,--.&. 8conomic costs of diseases and disabilities attributable to
environmental 7ontaminants in 9ashington tate. 7ollaborative for :ealth and the
8nviornment.