Credit risk management of BRAC Bank Limited

Abstract

BRAC Bank Limited is a scheduled commercial bank in Bangladesh. This is one of the leading private commercial banks which is established under the banking companies Act 1991, the bank began its operation on 4th July,2001 with a primary objective of offering all types of commercial banking services mostly emphasizing on promoting small and medium entrepreneurs all over the country. At present BRAC Bank Limited has 151 branches, over 300 ATM Booths, 405 SME Unit Offices, 1,800 remittance delivery points and 8,306 human resources. This report is the fulfillment of the requirement for the evaluation process of the internship program. The main purpose of the report is to have an overall idea about function and process of credit risk management, analyzing tools and techniques used to evaluate credit proposal, analyzing steps taken to recover Bank’s bad portfolio of BRAC Bank Limited. Lending is one of the main functions of a bank. The objective of Credit Risk management of BRAC Bank Limited is to minimize the risk and maximize banks risk adjusted rate of return by assuming and maintaining credit exposure within the acceptable parameters. The Credit Risk Management department is responsible for upholding the integrity of the Bank’s risk/return profile. Credit Risk Management Department of BRAC Bank Limited conducted their functions by six wings. Wholesale Credit, Retail Underwriting and SME underwriting- these three wings of Credit Risk Management assess and approve the loan for the respective customers. Central Collection Unit collects the credit. Special Asset Management wings help the bank to recover Bank’s bad portfolio. For credit approval, the Bank has a team who approve the credit. Different tools and techniques are being used to evaluate a credit proposal. Retail Credit, Cards Credit, Authorization and Fraud Control, Central Verification Unit (CVU) are related with retail underwriting. Credit Collection Unit of BRAC Bank Limited collects credit based on the level of delinquencies of credit. Special Asset Management wings help the Bank to recover bad portfolio by taking different types of steps. Although BRAC Bank Limited is successfully operating credit risk management, the Bank should improve in some areas which will take help the Bank to become the leader of banking sector.