An analysis of loan recovery challenges and strategies at Eastern Bank PLC

Abstract

This internship report is intended to analyze the loan recovery issues as well as the strategies used in Eastern Bank PLC (EBL), one of the leading commercial banks in Bangladesh. The goal of this research is to gain a better understanding of the major problems linked with NPLs (Non- performing loans), recovery strategies developed by the bank and financial implications for the banking industry. The study also reveals how EBL’s tactics such as, loan restructuring, litigation and etc. have been effective or not in recovering the default loans. The report is significant to the evaluation of EBL's capacity to improve the efficiency of its loan recovery systems. My internship experience at EBL, including job scope is discussed in Chapter 1. I assisted in numerous branch operations, including the opening of bank accounts, making survey calls, documentation and inventory management. The results of the internship, the acquired skills, and the difficulties are also described in the first chapter. Suggestions on how the internship experience could be further improved for future interns are also provided. In chapter 2, the organizational factors of EBL are discussed. It examines the organizational structure of the bank, its management practices, marketing strategies, financial performance of the bank and operations and information systems. The participative style of leadership, customer focus marketing and effective human resource management practices applied in EBL are identified in the second chapter. Further, the chapter evaluates the bank financial health in terms of liquidity and profit making and its efficient operations and aspect of competitive position within the banking industry of Bangladesh. The third chapter is dedicated to the core theme of this report, loan recovery issues and strategies at EBL. It suggests that though EBL has gone through a number of processes aimed at dealing with loan defaults by engaging loan restructuring procedures, loan recovery agencies, the bank still face challenges with rising NPLs. The chapter examines the monetary effects of these issues using ratios like NPL ratio, the provision coverage ratio, and the return on equity (ROE). However, the bank has remained profitable and efficient in its operations despite the increasing NPLs, which is a pointer that more effort is required to be directed towards recovery efforts. In conclusion, this report has highlighted to the core the processes involved in recovering the loans at EBL and the necessity to improve them. This study has helped me in bridging the gap between my academic knowledge and actual banking. For EBL, the results and suggestions can be used to shape future plans on how to improve loan recovery, reduce risks and stay competitive financially. This study shall be useful in offering a better insight into the issues banks grapple with while dealing with loan.