Letter of Transmittal

24th November, 2016

Md. Azmir Hossain

Assistant professor
Department of Business Administration
Dhaka International University
66, Green Road, Dhaka
Subject: Submission of an Internship Report Titled “Credit risk Management Practices of
National Bank Limited: A Case Study on Pabna Branch, Pabna”

Dear Sir,
I am very pleased to submit my internship report on Titled Credit Management Practices of
National Bank Limited: A Case Study on Pabna Branch, Pabna. I have tried to the best of
my sincerity and effort to prepare the report covering the aspects of the topic as per your
instructions and suggestions.

I have tried my best to gain practical experience and tried to reflect the same in this report with
limited scope and knowledge. I wish your kind hearty consideration, if there is any deviation in
my report.

I want to thank for your friendly coordination to make the program success.

Yours truly,

--------------------------
Emon Hossen
Roll No: 31
Reg. No: 242801
Session: 2012-2013
Batch: 40thB
Major: Finance & Banking
Department of Business Administration
Dhaka International University

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 Certificate of the Supervisor

This is to certify that Emon Hossen, Roll No: 31, Reg. No: 242801, Batch: 40th B, Major:
Finance and Banking is a student of BBA program of Dhaka International University has done
an Internship program in National bank Ltd. and submitted the report titled Credit Risk
Management Practices of National Bank Limited: A Case Study on Pabna Branch, Pabna
under my supervision and guidance.

I wish him every success in life.

---------------------------
Md. Azmir Hossain
Assistant professor
Department of Business Administration
Dhaka International University

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 Acknowledgement

First I would like to thank almighty Allah for giving me the ability to complete this report. Then
I would like to take opportunity to express my gratitude to my honorable supervisor Md. Azmir
Hossain, Assistant professor, Department of Business Administration, Dhaka International
University for giving guidelines and suggestions to complete the report.

I would like express my gratitude to all officials of, Pabna Bank Ltd. for giving me the
opportunity as an intern at the bank. I also express thanks to the manager , and all staff of the
Pabna Branch. They influenced and suggested me to know and make understand the banking
activities for my future career opportunity.

His suggestions were really a great source of spirit to make the report good one. At last, I shall
be grateful to those persons who will read this report and who shall get benefit from this report at
present and in future. Practical experience and situation can give the proper knowledge of total
environment. My report will be the greater example of that.

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 Executive Summary
National bank is one of the largest and oldest private-sector commercial bank in Bangladesh with
years of experience. Adaptation of modern technology both in terms of equipment and banking
practice ensures efficient service to clients. National bank limited had been a nationalized bank
in the name of National Bank under the Bangladesh Bank. Commercial banks lend money to
different categories of borrowers for various purposes with a view to generate revenue.
Accordingly, while processing and appraising a loan proposal, banks essentially analyze the
information relating to borrowers, assess the purposes of loan and determine the viability of the
loan proposal. If the proposal is sound and safe for lending, loan is sanctioned and disbursed
Thispaper analyses the impact of Credit Risk Management of Pabna bank including various
types of credit disbursed by NBL, the process of credit management practice of NBL and credit
disbursement process of NBL on company‟s performance. To analyze the effectiveness of their
credit risk management practices and process data sources gathered from primary data sources
including practical banking work, personal discussion with the officers and executives of NBL
and personal interview with customer and from secondary data sources including annual report,
published booklet, various published document, website, text book, circular etc. This report has
several chapters and different aspects regarding the topic have been discussed in each chapter.
I conduct hypothesis testing in the important criteria of credit risk management and justify those
subjective judgments on the basis of quantitative analysis to analyze the effectiveness of their
credit risk management practices and policies. I also examine some important ratio of credit risk
and analyze their current situation based on profitability, profit margin and market share and
ROI. Quantitative analysis reveals that NBL go through rigid credit risk management to manage
their credit risk though they still need to improve on some areas such as relying more on debt
may affect their liquidity and solvency and eventually affect credit risk. Bank must have
sophisticated information system and analytical techniques that enable management to measure
the credit risk and Bank should take into consideration potential future changes in economic
conditions when assessing individual credits and their credit portfolios, and should assess their
credit risk exposures under stressful conditions.

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 Table of Contents
Name of Topics Page No:
Letter of Transmittal i
Certificate of the Supervisor ii
Acknowledgement ii
Executive Summary iv
Chapter-1: Introduction 01-04
1.1 Introduction 02
1.2 Background of study 02
1.3 Scope of the Study 03
1.4 Objectives of the Study 03
1.5 Methodology of the Study 03-04
1.6 Limitations of the Study 04
Chapter- 2 Literature Review 05-10
2.1 Credit risk 06
2.2 Credit Risk Management 06-07
2.3 Principles of Credit Risk Management 07
2. 5 Credit Risk Management Frame work 07-08
2.6 Credit Administration Division. 09
2.7 Measuring Credit Risk 10
2.8 Credit Risk Monitoring 10
2.9 Credit Risk Control 10
Chapter-3: Organizational Profile of National Bank Ltd. 11-18
3.1 Historical background of National Bank Ltd 12
3.2 Objectives of the Organization 13
3.3 Mission of NBL 13
3.4 Vision NBL 13-14
3.5 Goal 14
3.6 National Bank at a glance 14
3.7 Products and Services of the Organization 15
3.8 Different Wings 16
3.9 Organogram of National Bank Limited 17
3.10 Corporate Information 18

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 Chapter- 4: Analysis and Results 19-36
4.1 Management of Loans in Commercial Banks 20
4.2 Risk 20
4.2.1 Sources of Risks of NBL 21
4.2.2 Credit Risk 21
4.2.3 Market Risk 21-22
4.2.4 Operational Risk 22
4.2.5 Business Risk 22-23
4.2.6 Financial Risk 23
4.2.7 Management Risk 23
4.2.8 Security Risk 23
4.3 Risk Profile of NBL 24
4.4 Credit Risk Management 25
4.4.1 Bank Credit 25
4.4.2 Definition of Credit Risk Management 25-26
4.4.3 Importance of Credit Risk Management 26-27
4.4.4 Credit Risk Management Process of NBL 28
4.5 Pre-Credit Application Activities 29
4.5.1 Identification of Sector- wise Credit Limit 29
4.5.2 Sector-wise Loan 30
4.6 Post-Credit Application Activities 30
4.6.1 Evaluation of 6C’s 30-31
5.6.2 Loan Sanction and Disbursement 32
4.7 After Credit/Loan Disbursement 33
4.8 Some important ratios of credit risk 33-36
Chapter- 5: Findings, Recommendations & Conclusion 37-43
5.1 SWOT Analysis 38-39
5.2 Findings 40
5.3 Recommendations 41
5.4 Conclusion 42
Bibliography 43

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Credit Risk Management Practices of National Bank Limited: A
Case Study on Pabna Branch, Pabna

By
Emon Hossen

A Project Report
Submitted to the
Department of Business Administration

In partial fulfillment of the requirements for the award of the degree

of

Bachelor of Business Administration

Dhaka International University

Date of submission: 24 November, 2016

vii
Credit Risk Management Practices of National Bank Limited: A
Case Study on Pabna Branch, Pabna

By
Emon Hossen
Roll No: 31
Reg. No: 242801
Session: 2012-2013
Batch: 40thB
Major: Finance & Banking
Department of Business Administration
Dhaka International University

Supervisor
Md. Azmir Hossain
Assistant professor

Dhaka International University

Date of submission: 24 November, 2016

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