CUURSE CUDE:

ASSICNMENT UN
TUPIC NU. 9
TAKE ANY SERVICES URCANIZATIUN AND DESCRIBE A SITUATIUN WHERE
IT WUULD BE MURE ADVISABLE TU USE AN EXTERNAL RESEARCH TEAM
THAN INTERNAL UNE.

SUBMITTED BY
ASMA BATUUL

RULL NU.
L-989






AllAHA l0Al 0PFt utlvFRSlTY,
lSlAHAA0
Crgan|zat|on Sector 8ank|ng
Cperat|ons Lend|ng
lor golng lnLo deLall of Lhe banklng operaLlons relaLed Lo lendlng flrsL l would llke demonsLraLe whaL
Lhe research Leams are Lhe Lypes and Lhe lmporLance
kesearch 1eams
8esearch Leam ls a group of quallfled personnel LhaL examlne Lhe operaLlons of Lhe organlzaLlon and
make sure Lhelr conformlLy wlLh Lhe prlnclples so LhaL Lhe sLakeholders relaLed Lo Lhe organlzaLlon are
beneflLed opLlmally 1he operaLlons under examlnaLlon may be ln general or ln any speclflc deparLmenL
of Lhe organlzaLlon

1ypes of kesearch teams and the|r funct|ons

Interna| kesearch 1eam
1he lnLernal research Leam ls a group of research experLs hlred by Lhe company LhaL frequenLly monlLor
Lhe operaLlons of Lhe organlzaLlon and make sure Lhe conformlLy of Lhe operaLlons wlLh Lhe prlnclples
and reporL Lo Lhe upper managemenL of Lhe company afLerwards lnLernal research Leam can be very
effecLlve ln an organlzaLlon as Lhe employees are ln conLlnuous monlLorlng of Lhe research Leam 8uL as
Lhey are Lo reporL Lhe hlgher managemenL Lhelr funcLlons and Lhe reporLlng can be manlpulaLed as per
Lhe lnLeresLs of Lhe upper managemenL

Lxterna| kesearch 1eam
LxLernal research Leam ls a group of quallfled persons havlng an lndlvldual ldenLlLy and Lhe company
ouLsources Lhelr research work Lo Lhem upon seLLled amounL afLer havlng consenL of Lhe sLakeholders
of Lhe organlzaLlon 1he exLernal research Leam cannoL monlLor Lhe operaLlons on conLlnuous basls
whlle Lhey examlne Lhe operaLlons ln Lhe flxed schedules whlle Lhere mlghL be some surprlse vlslLs so
LhaL Lhe company may flnd ouL any manlpulaLlon belng done 1he exLernal research Leam reporLs Lo Lhe
sLakeholders of Lhe organlzaLlon usually ln Lhe annual general meeLlng or ln some cases may call a
speclal meeLlng for Lhe purpose of lamenLlng Lhe dlsconformlLles LhaL mlghL be addressed on urgenL
basls
now geLLlng back Lowards my Loplc of Lhe asslgnmenL chooslng a sulLable research Leam for Lhe lendlng
deparLmenL of Lhe banklng organlzaLlon
1he lendlng deparLmenL of Lhe bank ls a deparLmenL LhaL uses Lhe money of Lhe deposlLors for Lhe
purpose of lendlng Lhem Lo Lhe lndlvlduals and Lhe corporaLlons who need funds ln order Lo esLabllsh
Lhelr buslness or upgrade Lhelr buslness 1he Lwo maln sorL of lendlng comes here Lhe consumer
flnanclng le lendlng Lo Lhe lndlvlduals and corporaLe flnanclng le lendlng Lo Lhe corporaLlons
1here are cerLaln prlnclples upon whlch Lhls flnanclng can be done 1he baslc prlnclples for Lhe lendlng
may be descrlbed as follows
8as|c r|nc|p|es of Lend|ng
A) Safety
| S Cs of the borrower
Character
Jllllngness Lo repay honesLy lnLegrlLy responslblllLy and aLLlLude / commlLmenL of Lhe
borrower Lo repay

Capac|ty
uccess of Lhe borrower's buslness as reflecLed ln flnanclal condlLlon and ablllLy Lo repay
Lhrough cash flow and earnlngs

Cap|ta|
1he borrower's sLake ln buslness as also hls lnLrlnslc flnanclal sLrengLh as reflecLed ln hls
equlLy caplLal or neL worLh

Co||atera|
1he borrower's ablllLy Lo offer quallLy asseLs Lo provlde adequaLe proLecLlon Lo Lhe bank
agalnsL defaulL ln repaymenL

Cond|t|ons
8ecenL Lrends ln borrowers llne of acLlvlLy and changlng economlc condlLlons LhaL mlghL
lmpacL hls flnanclal condlLlons and Lhereby Lhe ablllLy Lo repay

|| urpose
Jorklng caplLal flnance
roducLlon markeLlng flnance
8usy season flnance
lmporL and exporL flnance
8rldge flnance 1Cus
ersonal loans Lo enLrepreneurs Lechnlclans selfemployed persons arLlsans and
professlon

||| Secur|ty
,arkeLablllLy
scerLalnablllLy
LablllLy
1ransferablllLy

8) L|qu|d|ty
elf llquldaLlng
Laslly reallsable by sale
JheLher repaymenL could be ensured aL shorL noLlce

C) D|vers|f|cat|on
mall loans Lo a large number of borrowers raLher Lhan blg loans Lo a few
ulverslfled securlLles raLher Lhan any one Lype of securlLy
ulfferenL lndusLrles raLher Lhan Lo one or one group of lndusLrles 8eglonwlse groupwlse
and lndusLrywlse dlsLrlbuLlon

D) Lxped|ency (Soc|a| necess|ty)
JheLher naLlonal and publlc lnLeresL ls lnvolved
JheLher promoLlng an economlc acLlvlLy almed aL generaLlng surplus
JheLher exporL orlenLed
JheLher supporLlng producLlon of wealLh ln Lhe form of goods or servlces
JheLher employmenL orlenLed ln Lhe backward areas JheLher promoLlng a small
scale lndusLrlal secLor or supporLlng neglecLed secLor

L) rof|tab|||ty
leld should be commensuraLe wlLh Lhe rlsk CosL of funds and cosL of operaLlon should be
low
CLher lncome accrulng from buslness anclllary buslness lf Lhe proposal ls enLerLalned

I) Su|tab|||ty
ource and mode of repaymenL
uuraLlon of loan shorL Lerm or long Lerm
urpose wheLher good or bad le producLlve or speculaLlve
naLure of securlLy and amounL of loan
LaLuLory resLrlcLlons 88l dlrecLlves
vallablllLy of lendlng resources and Lhe prevalllng local economlc condlLlons

) V|ab|||ty
Lconom|c feas|b|||ty
Lnsurlng capaclLy demand and supply poslLlon cosL of producLlon sale prospecLs and prlce
level

1echn|ca| feas|b|||ty
8aw maLerlals supplles governmenL llcenslng lmporL pollcles LransporL 8oLLlenecks wage
levels labour slLuaLlon power and waLer supply avallablllLy of machlnerles and oLher clvlc
faclllLles

I|nanc|a| feas|b|||ty
CosL of producLlon and proflLablllLy cash flow esLlmaLed sources of funds

,anager|a| competence
vallablllLy of needed personnel boLh Lechnlcal and skllled

Lend|ng 1echn|ques
1 Aggress|ve Lend|ng
lL ls Plgh level of dlsbursemenL of money ln Lhe markeL 1he lendlng pollcles are usually
overlooked by Lhe managers for Lhe followlng reasons
O 1op managemenL orders so LhaL apparenL bank worLh should be shown for more
deposlLs
O ersonal lnLeresLs Lhe manager would be aggresslve ln markeL havlng hlgh number of
cusLomer he can make shlfLs ln Lhe bank for hlgher remuneraLlon
1he lssues resulLlng ln Lhese Lechnlques are Lhe rlslng number of nonerformlng Loans and
hence more rlsk of bank defaulL 8uL sLlll lL ls opLed by many banks hence puL ln sLake Lhe
deposlLs of lL's cusLomers 1hls Lechnlque was adapLed by Lhe Llas 8ank and naLlonal 8ank LhaL
consequenLly resulLed ln hlgher nL of 8 and 12 respecLlvely

Cpt|m|st|c Lend|ng
Lendlng wlLh a vlew of havlng good markeL condlLlons and Lhe probablllLy of havlng reLurned Lhe
loan glven 1hls pollcy ls beLLer Lhan Lhe prevlous as Lhe managers Lry Lo conform Lo Lhe lendlng
pollcles and Lry Lhelr besL Lo [udge Lhe characLer of Lhe organlzaLlon so LhaL Lhe loan may be
reLurned wlLh Lhe requlred lnLeresL 1he problem arlses here ls Lhe blasness of Lhe managemenL
LhaL resulLs ln nLs 1hls Lechnlque ls adapLed by u8L and Landard CharLered 8ank 1he nLs of
Lhe banks are 6 and 3 respecLlvely

Conservat|ve Lend|ng
ConservaLlve lendlng ls a lendlng LhaL ls done afLer havlng a deLalled analysls of Lhe organlzaLlon
or lndlvldual up Lo Lhe saLlsfacLlon of Lhe Lop managers or Lhe sLakeholders 1he lendlng ls
ensured ln all aspecLs so LhaL lL would be havlng leasL nL 1hls Lechnlque ls adapLed by Pablb
,eLropollLan 8ank LhaL has Lhe record lowesL nLs of only 12
1he kesearch 1eam su|tab|e for |end|ng department
now Lhe research Leam would be requlred Lo monlLor Lhe company operaLlons and lendlng
Lechnlques so LhaL no manager could lead Lo aggresslve lendlng Lechnlques as lL ls havlng a hlgh
level of rlsk of defaulL hence Lhe loss of deposlLors' money
lL would noL be posslble for Lhe lnLernal 8esearch 1eam Lo ldenLlfy Lhe flaw ln Lhe operaLlons as
lL would be agalnsL Lhe managerlal lnLeresLs and ob[ecLlves Pence Lhey would be suppressed
by Lhe Lop managers Lo lllumlnaLe Lhe facLs
ln Lhls slLuaLlon Lhe exLernal research Leam would be beLLer Lo be hlred so LhaL lL may frequenLly
check Lhe lendlng of Lhe bank and reporL Lhe sLakeholders accordlngly wlLh no blndlng of Lhe
managers 1hls speclallzed work would be based upon Lhe experLlse of Lhe exLernal Leam LhaL
would lead Lo run Lhe buslness accordlng Lo Lhe seL pollcles of Lhe bank


Conc|us|on
lf we Lake Lhe lendlng deparLmenL of Lhe bank ln conslderaLlon Lhe facLs reveal LhaL Lhe
exLernal research Leam would be more sulLable for overseelng Lhe operaLlons of Lhe lendlng
deparLmenLs Lo ensure Lhelr conformlLy wlLh Lhe banklng pollcles 1hls would consequenLly lead
Lo raLlonal behavlor of Lhe managers and hence would save a huge amounL of money of Lhe
deposlLors LhaL ls Lhrown Lo Lhe borrowers who are acLually lncapable of lL