Loan performance and micro-credit analysis of Bangladesh Development Bank Ltd.

Abstract

This report is the outcome of two and half month long internship program that I had successfully completed in Bangladesh Development Bank Ltd under several departments in Fall 2015 semester from October, 2015 to December, 2015. My participation allowed me to bring comprehensive and practical exposure to the field of Loan Performance and Microcredit Activities under Loan Operation Department of BDBL. During my internship period, I was engaged in different responsibilities in the various departments of Bangladesh Development Bank Ltd. The bank commences its operation form Loan operation department where they scrutinize the loan proposal and appraise the proposed investment sectors or their borrowers from various aspects, organization and management, technological, marketing, economic and profitability indicators. Financial soundness of all banks depends on the performance of its disbursed loan on various sectors. Loan performance means how the loans were scheduled to act and how they are actually acting. It is closely associated with timely and steady repayment of interest and principal of a loan. A loan is said to be well performed when its repayment is duly made. Performance bank's loan is usually measured through the percentage of classified and unclassified loan of total outstanding. If the amount of classified loan is high, overall loan performance of a bank is poor and low amount of classified loan indicates an effective and efficient loan performance. Bangladesh Development Bank Ltd (BDBL) is the prime concern of development financing institution of country that extends financial assistance both in local and foreign currencies for setting up new industries to boost up the industrial policy and financial reforms program of government towards market economy. The bank has kept on sanctioning term loans during FY 2013-2014 also. This is long term local currency loan of taka 7285 million has been sanctioned to 55 projects and short term loan of taka 105 million to 15 projects. Of the total sanctioned long term loan, taka 4928 million is for 37 new projects and an additional loan of taka 2385 million for 13 existing projects. In the financial year 2013-14, food and allied sectors got 4% concentration of its total loan outstanding amounting to a total of taka 613 million.