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Internship Presentation On

Credit Appraisal System and Cost of Credit Management in Prime Bank Limited.
Prepared By: S.M.Abdullah-Al-Mamun. ID# 0211001.
Bachelor of Business Administration.

Objective of the Study


To gather practical knowledge about modern banking
systems.

To learn the credit appraisal system of the bank.

To know the determination process of cost of credit


management.

Developing a generalize formula to calculate the cost


of credit management.

To identify the problem and find out the solutions.

Overview of Prime Bank Ltd.


Prime Bank Limited is one of the leading
private commercial bank has started its journey on 17th April,1995.

PBL constantly focus on understanding


and anticipating customer needs.

The bank has 49 Branches all over the


country.

Methodology
To collect the information used both

Primary Sources.
Secondary Sources.

Credit Appraisal System


Several steps for appraisal any loan and advance products:

Request for credit from the client Credit application from filled up by the customers
and collection of documents

Scrutinizing the documents

Analyzing the information.


Preparing the proposal

Presentation of the proposal

Cost of credit management


Components are:
Cost of fund. 2. Total working hour cost. 3. Other cost.
1.

Formula:

Cost of credit management= COF + CTTM +


COF= Cost of Fund. CTTM= Cost of Total Time Employed for Credit Management. = Other Cost.

Steps to determine cost of fund

NCD=
RRI=

Interest Expenses
Average Deposit NCD 1-RR

NCD= Nominal Cost of Deposit. RRI= Real Rate of Interest

Time Budget Analysis


The following departments of bank are considered to calculate time budget analysis:

1. Credit Department. 2. International Trade Finance. 3. General Banking. 4. Computer Department. 5. Top level Executives.

Calculation of Total Working Hour


If for every element e the employee P of the Credit department takes T times, the summation of the times employed for each elements will be the total time employed by employee P of the credit department.

The formula will be, Cp= Tpe


e=Element in Loan Processing in the Credit Department. Tpe= Total Time Given by an Employee for doing each element in the credit management process. Cp= Total Time Given by the Employee for performing all the elements in credit management process.

TWHc= Cp
TWHc= Total time given by all the employee for doing all the elements in credit management process.
Total Time for Credit Management:

Here; TTCM = Total time for credit Management. TWHc= Total time given by all the employee of the credit department. TWFFEX= Total working hour employed in the foreign exchange department. TWHcom= Total time given by all the employee of the computer department. TWHpoc = Total time given by the employee responsible for preparing pay order for the credit department.

TTCM= TWHc+ TWFFEX+ TWHcom+ TWHpoc+ TWHTE

TWHTE= Total time given by all top-level executive all the tasks in the credit management process.

Cost of Total Time employed for Cost of Credit


Management

CTTCM= AS*TTCM

AS= Average Salary/hour.

So the cost of credit management will be;

CCM=COF+CTTCM+
Here,CCM= Cost of Credit Management COF= Cost of Fund CTTCM =Cost of Total time employed for credit management. = Other cost

FINDINGS
Approved loan on the basis of documents. Overlooked of total overhead cost. Irregularity of submission of different
performance report. Prescribed appraisal system is overlooked several times. Credit officials rarely do site visits.