Operations of Credit Risk Management Department of Mutual Trust Bank Ltd.

Ganguly, Sudip (11-19042-2)

Introduction

• MUTUAL TRUST BANK is one of the private Commercial Banks, operating in Bangladesh. It is a top ranked organization among the oldest five Commercial Banks in the country.

• Mutual Trust Bank is the largest local commercial bank operating in Bangladesh. They have a huge customer base that is ever growing

• Mutual Trust Bank is mainly providing two types of service. 1) Corporate Financial Services 2) Consumer Financial Services

Introduction

Objectives: • General Objectives: To learn a brief idea about operations of Credit Risk management of Mutual

Trust Bank Limited.• Specific Objectives:

– To know about different type of credits offerings by Mutual Trust Ltd. such as consumer credit, house finance, car loan etc.

– To know about the terms and procedures and the legal obligations of issuing different credit loans to the clients.

– To get a practical knowledge about the process of collecting on the credit offered.

– To learn about the risk management of credit in Mutual Trust Ltd.– To learn how the organization is using its Operations Management force in

credit department.

ACTIVITIES UNDERTAKEN

• As per the human resource policy of Mutual Trust Bank Limited, I have worked more or less in all the departments by rotation there during my internship period.

• Most of the time in my internship period working in the Credit risk management department.

• The activities those I have done in the credit risk management division, generally can be divided basically into four major phases

ACTIVITIES UNDERTAKEN

Credit Analysis: to describe any process for assessing the credit quality

of the borrower or obligor

1. Sourcing 2. Initial Screening3. Proposal Development & Structuring

4. Credit Evaluation Committee5. Return to

Source.

5. Send to CRM to Risk Mitigation

No

Yes

ACTIVITIES UNDERTAKEN• Credit Risk Assessment:

ACTIVITIES UNDERTAKEN• Risk Grading:

ACTIVITIES UNDERTAKEN Credit Disbursement:• Security documents are prepared in accordance with approval terms

and legally enforceable.• Disbursements under loan facilities are made when all security

documentation is in place. Credit Monitoring:• Past due principal or interest payments, past due trades bills,

account excesses, and breach of loan covenants.• Loan terms and conditions are monitored, financial statements are

received on a basis, and any covenant breaches or exceptions are referred to CRM and RM team for timely follow- up.

• Timely corrective action is taken to address findings of any internal, external or regular inspection / audit.

ACTIVITIES UNDERTAKEN

• Loan Classification & Provisioning:

ACTIVITIES UNDERTAKEN• Early Alert Accounts: Industry concern Management / Ownership concern Balance sheet weaknesses Cash flow weaknesses Poor account conduct Expired Limit / Pending documents

ACTIVITIES UNDERTAKEN Credit Recovery:• Determine Account Action plan / Recovery Strategy.• Pursue all options to maximize recovery, including

placing customers into receivership or liquidation as appropriate.

• Ensure adequate and timely loan loss provisions are made based on actual and expected losses.

• Regular review of Grade 6 or worse accounts.

ACTIVITIES UNDERTAKEN Other Relevant Activities: • In order to make my affiliation report, I have collected the

relevant information by personally interviewing the officers and executives of Mutual Trust Bank Limited (Gulshan Branch).

• Sometimes I have made the photocopy and computer print outs of the relevant documents.

• As cash is the hurt of the banking process, the Gulshan branch requires huge amount of money every day. And they bring that money from Bangladesh Bank. As, the branch needs someone to monitor the cash carrying process, I have been sent several times to do so.

CONSTRAINTS/CHALLENGES

  Issues/ Problems Observed in the Organization:• Credit Risk Management, SME, Card division etc. which are missing

in the other local branches.• The number of employees is less in comparison to the load of

responsibilities.• Inadequate space is another big problem as the branch has to

handle so many customers.• Lack of co-ordination caused a lot of suffer of the risk managers as

well as the customers.• Risk Managers often could not found all necessary documents and

information for credit risk assessment.• Online banking is active, but it is not highly promoted and secured.

CONSTRAINTS/CHALLENGES

Academic Preparation:• In the academic sector I have only learned about how to

minimize the risk, • where as in the practical field I have also learned about

the risk recovery process, the tools and techniques they have implied against this risk recovery process.

CONSTRAINTS/CHALLENGES

Missing Knowledge and Skills that need to be learnt in the University:

• I would like to recommend the university management to start a core course on “Banking” for all the students in the undergraduate level.

• More practical lessons those can make the students well prepared for their future career, are need to be given.

• AIUB should also arrange business seminars more often so that the students can enrich their knowledge about the practical job life by listening to different successful corporate personnel.

• The Microsoft office programs should have been included in the “Computer Fundamental” course.

LESSONS LEARNT FROM THE INTERNSHIP PROGRAM

Implications from Organizational Perspective:• Learnt about how to manage quality for credit risk in an organized

way.• Learnt about how to issue the credit proposals of customers.• Learnt about how to maintain files and related registers.• Learnt in practical about building sustainable customer relationship.• Learnt about the working environment of the service industry.• Got the idea about banking and corporate culture in Bangladesh.

LESSONS LEARNT FROM THE INTERNSHIP PROGRAM

Implications to University’s Internship Program:• Learnt about how to make a formal affiliation report.• Learnt about how to imply work experience in to a report.• Learnt about how to use the study knowledge into the practical life.

Others:• In this internship period I have learned some important issues of

work life such as punctuality, time management, the art of working in a group, corporate rules and regulations etc. which are likely to help me in near future when I will work for any organization

Concluding Statements:

Recommendation for Mutual Trust Bank Limited: • Sufficient Workforce and allocate a standard Risk

Assessment time.• Development and training program can be arranged for

Credit Risk Analysis.• Follow-up and Monitoring procedures need to be

developed.• Adequate information and documentation procedures

need to be developed.• Development of their tools and techniques for Credit Risk

Management.