Analysis of credit risk management of BASIC Bank limited

Abstract

Banking sector of Bangladesh is one of the major sectors, which contributes significantly to the national economy. The sector comprises a number of banks in various categories. Considering ownership the sector can be classified in to four major categories - such as Nationalized Commercial Banks (NCBs), Specialized Banks (SPBs), Private Commercial Banks (PCBs), and Trans-National Banks (TNBs). BASIC Bank Limited is one of oldest commercial bank operating in Bangladesh. It has over the years created one of the largest networks among all the other banks in Bangladesh. Although a trendsetter in offering a various ranges of products in the market, the products offer by BASIC Bank are quickly imitated by competitors. The profitability of a bank always depends on the efficient management of fund and exploring the genuine avenues in which its resources are invested to produce the maximum income. In this report I tried to analyzethe Credit Risk Management of BASIC Bank Ltd. Credit is one of the most important section for a bank. If the credit operation system is easier to the customer then it is acceptable to the client. Now it is a time when the banking section is too much competitive. If the operation policy is not good then it cannot exist for a long time in the market. I go through the following description. What are the strategies are followed by BASIC Bank Ltd and what are their priorities? What are the values considered as their guided factors, such as-placing the interest of clients and customers first, teamwork to the smallest unit to the enterprise as a whole. BASIC Bank enrich their credit system by offering several product offers, such as- General loan scheme, lease finance, consumer credit scheme, small and medium enterprise, advance against salary, all the offers are too much attractive because of having an attractive interest rate for all the scheme. The credit Policy framework is very organized at BASIC Bank Ltd. Credit risk management policy is also very important for the bank because of having different types of risk in credit. Credit risk management needs to be a robust process that enables a Bank to proactively manage its loan portfolio in order to minimize losses and earns an acceptable level of return for stakeholders. Given the fast changing dynamic global economy and the increasing pressure of globalization, liberalization, consolidation and disintermediation, it is essential that BASIC Bank has a robust credit risk management policy and procedures that are sensitive and responsive to these changes. BASIC Bank will always comply with the prevailing banking regulation regarding Single Customer Exposure Limit set by Bangladesh Bank from time to time. The BASIC Bank Ltd. ensures that the loan or credit they lend is given to the right person. For this, BASIC follows a strict rules and regulation. Lending operation starts from selection of borrower from field level and ends with disbursing sanctioned amount after proper credit analysis and documentation.