Credit risk management of Uttara Bank Limited

Abstract

This report is basis on the entire process of the credit risk assessment system of Uttara Bank Limited and identifying the positive aspects as well as the shortcomings of that credit scheme. After completing MBA program of BRAC University, I have completed my study on Uttara Bank Limited, one of the largest and reputed private commercial bank in Bangladesh. I am working with some officers and some departments sincerely to gather information regarding bank’s credit and recovery policy. The objective was to analyze the criteria of UBL’s such as loan distribution sector, interest rate of loan, the Bank’s capability to recover loan during stipulated time and the management efficiency regarding classified loan. The primary activities carried out by the credit department of UBL include evaluation of loan application, preparing necessary documents for the loan, monitoring the loan after disbursement and ensuring its repayment and finally initiate classification in case of non-recovery. Credit proposals are appraised critically by Uttara Bank Limited. The customer at the branch of the bank place credit proposals. When customers come with a credit proposal, the credit department of the Branch makes an open discussion with customer on different issues of the proposal to judge the worthiness of the proposal and the customer. If the proposal seems to be worthwhile in all respects then the proposal is placed before the credit committee of the bank. After threadbare discussion, if the committee agrees in principle the proposal is sanctioned as per the delegated business power of the branch. The execution of documents in proper from and according to the requirements of law is known as documentation. The documentation does establish a legal relationship between the lending bank and borrower. The terms and condition of loans and advances, the securities charged and the repayment scheduled is recovered in writing proper documentation for safeguard the future interest of the bank. 5 | P a g e Credit management is an integral part of banking business. The making of credit and advances has always been prominent profitable function of bank. Sanctioning credit to customer and other out of fund as its disposal is one of the principal services of modern Bank. Advances by UBL made in different forms such as overdraft, cash credit bill purchased and discounted etc. UBL deals with the money from the depositor repayable on the demand. UBL usually grant short – terms advances which are utilized to meet the working capital requirement of the borrower. The incessant fall –out of international credit market due to world economic meltdown resulting in sluggish growth has put significant pressure on financial performance of banks and financial institutions worldwide. UBL achieved continuous growth almost all arenas of its business amid this economic crisis, facing intensified competition of the industry. The bank remained financially strong by dint of its continued focus on the vision of becoming country’s finest corporate body providing excellent and need-based customer service.