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NBL provided the highest portion of the loans in Textile industries & Commercial Lending and
lowest portion of the loans in Agriculture, Consumer credit scheme, Special program loan sectors
for over the years of analysis.


Table: 5.5 Unclassified Loans & Advances (TK. In lac)
Year 2012 2013 2014 2016 2016
Unclassified 88514 103776 121579 130339 142568
loans &
Total loans 55332 61528 74181 80449 91487
& advances
Unclassified 159.97% 168.67% 163.90% 162.01% 155.83%
loans as
of total loan
Unclassified Loans & Advances Source: Annual Report

Graphical Presentation:

Figure-5.5: Unclassified Loans & Advances

Figure-5.5: Total Loans & Advances

Figure-5.6: Unclassified loans as percentage of total loan

Trend of Bad Debt

Related data:

Amount of Bad Debt(Fig in Lac)

Year Bad Debt % Of Bad Debt
2012 25.56 5.25%
2013 34.05 5.97%
2014 8.60 1.16%
2016 6.34 1.48%
2016 6.34 1.29%
Figure: State of Bad Debt (in %)
Trend of Recovery of Bad Loan

Related Data:

Recovery of Bad Debt (Fig in Lac)

Year Classified Loans Recovery % of Recovered
2012 25.56 15.44 60.40%
2013 34.05 4.98 14.62%
2014 8.60 6.99 81.28%
2016 6.34 0 0.00%
2016 6.34 0.33 5.20%
Chapter: 6
Findings & Recommendation
Of the Report
6.1 Findings
Every bank has its own credit procedure. The National Bank Ltd possesses a standard credit
procedure. As the objective of my report is to make a comment on the credit risk
management of National Bank Ltd, I tried my best to collect data for the report and find out
the reality. Based on the data generated during my internship period I have summed up my
findings here and I think this will help me to achieve my objectives.

The credit risk of National bank limited is affected strongly by GDP growth, Inflation,
Exchange Rate, Interest Rate & Return on Asset.

Credit Risk Grading (CRG) is sometimes done based on wrong / miss-leading

financial data, which generates good score and provides false impression over
borrower. CRG is considered as a vital CRM tool by BB. But in many cases, it was
found inefficient; especially in rural branches.

Loan & advances and recovery play a great impact on the profitability of the bank.

The amount of loan recovery in every year is not satisfactory. The amount is very
small. Sometimes it is less than one Lac.

Working Capital (WC) financing requires two essential information: working capital
assessment & verified stock report. In many times appropriate WC assessment was
not found & branch did not verify actual stock. It has risk of providing misleading
information to approving authority.

Another risky field of financing is Tender Process of different organizations.

Management of National Bank Limited should be more alert & give strict guideline in
case of tender & work order / supply order financing.

NBL distributes loans without sufficient verification of the documents in some cases.
This is violation of the Bangladesh bank order.

Sometimes the document verification is done after loan sanctioning the loan.

The credit proposal evaluation process is lengthy. Therefore, sometimes valuable

clients are lost.
In many cases bank face the problem of recovery because the credit officer fails to
value collateral property. Proper valuation means collateral will exactly cover the risk
of bad loan. Officials must do it with due care.

The employees of the bank are young, energetic, co-operative and friendly. Their
dealings with the clients are co-operative and friendly which create positive
perception about the bank in the clients mind.

The loans and deposits of this bank are rising at an impressive rate.

The web-site of National Bank is not updated. Only a few amount of information are
given and products and services are written in the website.

There are no promotional activities in the bank and also there is no advertisement of
National Bank running on TV screen.
6.2 SWOT Analysis of NBL

D e p a r t m e n t o SWOT Analysis of the Organization

All organization has some advantages and weakens. NBL also has some SWOTs. These are
mentioned below.

Figure: SWOT Analysis

Strengths of the Organization

NBL is a very competitive organization. It is operated by a very efficient management group. There
is a good employee-employer relationship in its head office and also its all branches. It has a healthy
dislike of its competitors. NBL has sponsored to the top programs, seminars, writing competition
and gained valuable coverage. In Bangladesh, it has 181 branches to provide services to the people.
All these branches are located in such a place in where customers feel comfortable and safe to make
their transaction. There are 3,442 staffs who work for NBL either in back office or in front office. It
has a better financial position than others in the banking business.
Weakness of the Organization
The organization does not have a diversified range of products & services. Still the bank is not fully
computerized. Manual registers are used in some cases. However, the income of the business is still
heavily dependent upon its share on the retail market. It caters less the corporate market than the
SCB. This may leave it vulnerable if for any reason its market share erodes. The retail sector is very
price sensitive. But it pays very less interest than other banks. So, if they found higher interest rate
offering by other private banks of Bangladesh then they will lose customers. It has less promotion
campaign than the other bank, because they believe brand value is the top promoting entity for the
Opportunities of the Organization

NBL has a goodwill that it provides different banking services to the people with a minimum cost
and cut a very little charge on its transactions. Although it already has 181 branches to provide
services to its customers, it also has the opportunity to build up more branches to make more
convenient for the customers. The banking business of NBL and its other social activities have
increased day by day. Products & services development offers NBL many opportunities. There is
the opportunity to develop products and services such as insurance business & huge investment in
capital market etc. Such high value items will tend to have associated with them, high profits.
There are also global marketing events that can be utilized to support the brand such as the sports
& other cultural activities.

Threats of the Organization

NBL is exposed to the international nature of trade. It has to deals in different currencies and so
costs and margins are not stable over long periods of time. Such an exposure could mean that NBL
may be doing banking business at a loss. The new technology emerges to protecting the currency
value & use options for better credit rate earnings. The market for banking sector is very
competitive. Competitors are developing alternative brands to take away the market share of NBL.

Converting Threats into Opportunities

NBL has to expose its international nature of trade more efficiently. It has to recover costs and
maintains margins over long periods of time. The new technology has to use to protecting the
currency value & use options for better credit rate earnings.
Converting Weakness into Strength

NBL has to focus equally to both ranges of customers either retail or corporate. It has to build up a

proper strategy thats why the corporate custom account in NBL. NBL also has to give higher
interest rate for various products & services to gain more

market share in banking business. They have to advertise their brand name more .They can sponsor
their name for various social activities which will bring up NBL value more to the local customers.
They can also make social awareness to the local customer

6.3 Recommendation
There are some problems on NBL. It is really tough to recommend a bank specially such a
bank which is one of the most well reputed banks of the country only in a short three months
internship period. Nevertheless I am making some recommendation based on my

National Bank Limited should introduce Relationship Manager (RM) concept to

enhance relationship with customers and to increase efficiency in credit operation

Role of Corporate Banking Division (CBD) should be more active & effective.

All sorts of communication/forwarding of proposal should be done through electronic

communication to decrease wastage of time & increase efficiency.

As the amount of loan recovery in every year is not satisfactory more importance
should be given on this matter.

An Inspection Unit should be formed like RMG Monitoring Unit to inspect instantly
any premise of customer/factory to have visual perception.

After financing to a tender Process/Work Order, the total process should be

monitored closely.

National Bank Limited can instruct branches to send soft copy/scanned copy of
important documents to Head Office during processing of any credit proposal.

Bank may employ an outside company for recovery of its dues because it takes a great amount of
time for the banks employees to r

The bank should emphasis more on loan diversification like loans on different
promising sectors and newly invented thrust sectors in the economy.

Political intervention should be avoided while approving and sanctioning loan.

All the loan documentations have to done honestly. The bank should concentrate
more on proper documentation of all types of loans to make the department
trustworthy & healthy. The cost of funds should to be minimized.
More information should be added in the website of the bank and the description
about products and services should be written in Bangla also.

To attract more clients National Bank Ltd. should sought new marketing strategy.

To increase the knowledge and work with confidence, there is no alternative of

training. Training programs increase the working capability of employees. The bank
should arrange adequate Training programs for employees.

The bank has to increase their advertisements and also increase their social activities.
6.4 Conclusion
The banking industry of Bangladesh has been becoming competitive day-by-day. As a result,
tendency of risky lending is increasing with a motive to enhance profit. Certainly, in the long run,
it will push the Bank/FIs to a risky position. Credit operation is the major source of income
generation of Bank. It is the main source of utilization of deposited money. Certainly, risk
associated with credit needs to be recognized, quantified & mitigated with utmost care. Bangladesh
Bank also emphasizes on credit risk mitigation process. As per instruction of Bangladesh Bank
credit operation of commercial Banks had been segregated. Credit approval, administration,
monitoring, recovery, SME, consumer financing have been segregated to various divisions to
operate relevant tasks more efficiently & pragmatically.

This study has taken National Bank Limited as case study to observe its credit related operation
specially approval process & risk mitigation process. In most of the cases, relevant operations have
been found structured except in some few cases. But, National Bank Limited requires implementing
its existing Credit Policy & Manuals in full phase to make the approval & risk mitigation process
more effective with less risk margin. This study takes few data on activities on SME; Consumer
Credit & Credit Card financing so further study is required on this specialized credit operation to
determine associated credit risk & mitigation steps.
6.5 Reference