An Internship Report On

Credit Risk Management

A Study On: Premier Bank Ltd.

For the partial fulfillment of the BBA Program and Internship Paper With defense
By
Md. Sahin Miah
ID: 24
Reg: 243374
Batch: 43th/B (Day), Session: 2013-14
Department of Business Administration
Faculty of Business Studies
Dhaka International University

For
Department of Business Administration
Faculty of Business Studies
Dhaka International University

Under supervision of

Md. Rezaur Rahman

Lecturer
Department of Business Administration
Faculty of Business Studies
Dhaka International University

Date of Submission: 21-10-2017

Dhaka International University

 Letter of Transmittal

Date: 10th November, 2017

To

Md. Rezaur Rahman

Lecturer

Department of Business Administration

Dhaka International University

Sub: Submission of Internship Report on “Credit Risk Management of Premier Bank Ltd.

Dear Sir,

It is a great pleasure for me that, I have the opportunity to submit internship Report titled
“Credit Risk Management of Premier Bank Ltd’’ ‘As per partial fulfillment of the
requirements for the Bachelor of Business Administration degree, I have completed the
internship from Premier Bank Limited. I have gathered all the facts that I could within this short
period & have tried my level best to exert all the things as much presentable as possible. Despite
of limitations, I sincerely hope that my report will meet the requirements that you set for me.

For further query please do contact with me.

Yours faithfully
Md. Sahin Miah
Batch: 43th B (day)
Roll no: 24
Reg no: 243374
Dhaka International University

i
 Declaration of Authenticity

I hereby declare that the internship report on “Credit Risk Management of Premier Bank
Ltd’’. includes the results of my own works, pursued under the supervision of Md. Rezaur
Rahman, Lecturer, Dhaka International University. Further affirmr that the work presented in
this internship report is original and no part or whole of this report has been submitted to, in any
from, any other Unvarsity or Institution for any degree or any other purpose.

……………………
Md. Sahin Miah
Batch: 43th B (Day)
Roll no: 24
Reg no: 243374
Session: 2013-14
B.B.A. (Major Finance And Banking)
Dhaka International University

ii
 Supervisor Authentication

This is certify that Md. Sahin Miah, Roll no: 24, Registration no.: 243374 prepared the report
entitled the “Risk Management of Premier Bank Ltd’’ for partial fulfillment of requirements
of the Degree of Bachelor Of Business Administration (with specialization in Finance And
Banking Major) of Dhaka International University.
The dissertation report has been carried out under my guidance and to the best of my knowledge
is record of the genuine work undertaken by him.

……………………….
Md. Rezaur Rahman
Lecturer
Department of Business Administration
Dhaka International University

iii
 Acknowledgements

It is high time for me to express my deepest gratitude and humble submission to the Almighty Allah
but for whose support I would not be able to complete a huge task of preparing this Internship Report
within the scheduled time.
I am very much grateful to my Supervisor Md. Rezaur Rahman, Lecturer of BBA program give
me guideline to prepare this report. He helped me a lot to choose the topic and help me to think
different way to make the report. Without his proper guideline it may be very difficult to prepare
this report.
I am very much grateful to soyeb ali, Manager and emran hasan, Deputy Manager of that branch,
to assign me as an internee in this reputed Bank.
I acknowledge my indebtedness to Mr. Abu saleh and Mr nazmul sarkar for their constant guidance
and valuable suggestion from time to time. I am also indebted to all of the officers and employees
of the Tangail Branch who extended their wholehearted cooperation to Roe despite their huge
workload during my Practical Orientation.
At I must mention the wonderful working environment and group commitment of this Bank that has
enabled me a lot deal to do and observe the banking activities during my internship period of 2
months.
Finally, I convey my sincere thanks to my friends who inspire in different ways to complete the
report and the course as well.

iv
 Executive Summary

Financial services firms are in the business of accepting risk. Primary aims of any financial

services firm are collect and manage risks on behalf of their customers and make a profit for its

shareholders. The ongoing development of contemporary risk management methods and the

increased use of innovative financial products have brought about substantial changes in the

business environment faced by credit institutions today. This report is intended to assist the

reader in detailed understanding the credit risk management process. It also attempts to capture

the procedures practiced in Premier Bank Ltd (PBL) in relation to credit handling. The purpose

of this report is to have an idea about the credit risk management procedure in Premier Bank Ltd.

and then to assess its effectiveness in connection with. The report has been segregated into seven

separate chapters for the convenience of the reader. Chapter one is the introductory part. It gives

an idea about the objective, scope and methodology of the report. Chapter two provides the

theoretical framework of the credit risk management process. It is arranged in a manner that will

give the reader a sequential idea of credit handling process. Chapter three deals with the

organization part of the Premier Bank Ltd. It incorporates the discussion on different

departments of the bank and the products and services offered by the PBL. Chapter 4 includes

the findings and recommendations of the study. Concludes the report .Chapter five Appendices

are enclosed at the end to help the reader to gain a detailed idea.
 Table of Contents

Chapter Contents Pages

Preparatory Letter of Transmittal I.

Pages Declaration of Authenticity II.
Supervisor Authentication
III.
Acknowledgement IV.
V.
Executive Summary
Chapter 1: 1.1 Introduction 1-2
Introduction 1.2 Objectives of the study 3
1.3 Methodology of the study 3
1.3.1 Sample selection 4
1.3.2 Sources of data 4
1.3.2.2 Secondary data 4
1.3.3 Data analysis 4
1.4 Scope of the study 4
1.5 Just premier of the study 5
1.5.1 Limitation of the study 5
Chapter 2: Credit risk 2.0 Credit risk management: A Theoretical 6-7
management: A frame work: Part: A
Theoretical frame 2.1 What is credit? 7
work 2.2 What is credit risk? 7-8
2.3 What is credit risk management? 9
2.3.1 Indent nationalization 9
2.3.2 Measurement 9
2.3.2.2 Calculation of credit risk 9
2.3.3 Aggregation 10
2.3.4 Planning and management 10
2.3.5 monitoring 10
2.4 Prism model of credit risk management 11
2.5 Prerequisites for efficient risk 12
management 12
2.5.1 Methods 12
2.5.2 Process and organizational structure 13
2.5.3 IT System and IT infrastructure 13
2.6 Why manage credit risk 13
2.7 Risk strategy 14
2.8 Limits 14
2.8.1 Methods of defining limits 15
2.8.2 Limit structure 15
2.8.2.1 Product, business area, country and
industry limits 15
2.8.2.2 Risk class limits 15
2.8.2.3 Limits on unsecured portions 16
2.8.2.4 Individual customer limits 16
2.8.3 Rigidity of limits 16
2.8.4 Limits monitoring and procedures used
when limits area exceeded 17
Part: B 18-19
2.9.1 Credit processing 20-21
2.9.2 Credit approval 22
2.9.3 Credit documentation 23-25
2.9.4 Credit administration 26
2.9.5 Disbursement 26
2.9.6 Monitoring and control of individual 27
credits 28
2.9.7 Monitoring the overall credit portfolio 29
2.9.8 Credit class nationalities 30
2.9.9 Managing problem credits/recovery 31-32
2.9.9.1 Collection objectives
 2.9.9.2 Indent nationalities and allocation of 32
accounts
2.9.9.3 Collection steps

Chapter 3: 3.0 premier bank limited: Organization 33-34

0rganizational profile
3.1 Role of banks in the modern economy 34
of premier bank
3.2 Function of bank 34-35
3.3 Company profile of premier bank limited 36
3.3.1 Corporate vision and mission 36
3.3.2 Product and service 37-39
3.3.3 Resources and facilities 40
3.4 Deposit and advance 41
3.4.1 Deposit schemes 41
3.4.2 Cash and balance with banks and 42
financial institutions
3.4.3 Investment 42
3.4.4 Loans and advance 42
3.4.5 Consumer banking 42
3.4.6 Foreign exchange and foreign trade 43
3.4.7 Treasury 43
3.5 Merchant banking 43
3.6 Branch network 44
3.7 Divisional operations in premier bank 44
limited 44
3.7.1 General banking 45
3.7.2 Cash 46
3.7.3 Accounts 46-47
3.7.4 Trade finance 48-49
3.7.5 Credit
Chapter 4: Findings, 4.1 Findings 51
recommendations and 4.2 Recommendations 52
conclusion. 4.3 conclusion

Reference 53