Internship Report on Loan Operation Schemes on Standard Chartered Bank Ltd.

The financial service market in Bangladesh is picking up as a slow and steady position in the South Asian region. A major sector of the financial services market is controlled the banking sector of the country.
A service that is provided by the banking is a combination of front and back office. Front office provides customer services of all kind of banking aspects which has a grate backup from office where the processing really happens.
Consumer credit department is a unit where all the practice of providing a loan crops up. Credit facility may be made available to personal customer other than those belonging to the institutional Segment of the bank. Account of all small business not covered by the commercial segment of business banking unit such as school, hospital, clinic professionals, shops, supermarkets or small partnership and small trading house may be considered for retail lending.
A loan is a kind of advance made with or without security. In the case of a loan, the bank makes a lump sum payment to the borrower or credits his deposit account with the money advanced. It is given for a fixed period at an agreed rate of interest. Repayments may be made in installments or at the expiry of a certain period. The customer has to pay interest on the total amount advanced whether he withdraws the money from his account (credited with the loan) or not. A loan once repaid in full or in part cannot be withdrawn again by the borrower unless the banker sanctions a fresh loan. An unsecured loan or advance means a loan or advance, which is not secured by any security. Bank extends these facilities by considering income proof, cash flow, personal guarantee, customer profile, etc. Unsecured loans without any guarantee i.e. clean advances are guaranteed by banks to parties enjoying high reputation and having sound financial position.
Personal loan is a loan offered to individuals for some given purposes and is to be repaid by Equal Monthly Installments (EMI).

No security is taken for this loan. The bank considers the salary of the applicant as security. So, we segregate the applicants based on their salary and Benefit relationship with us. That is why those whose employers have a corporate relationship with us, they get their salary through SCB and their employer keeps their pension and other staff benefit fund with us are in one segment. We feel that we can assess their income correctly and in case of default are in a good place to collect the remaining amount.

UN agencies, ILO, ADB World Bank staffs are considered safe and reliable so they are in another segment. All others are in segment-3. Segment-3 is considered more risky since it contains businessmen and executives who do not get their salary through us or in cash.

As you will read through this module, you will learn that since we do not take any security, monthly income becomes very important in giving this loan. Segmentation is done based on their salary and pension with or without SCB and who their employer is.

The primary consideration is the bank statement. It doesn’t matter which segment the person falls into.
If the customer is a Priority Customer and he/she is using the SCB bank statement for the loan approval, then the loan is approved /declined within 24 hours and loan is disbursed with 48 hours. This is subject to the fact that the customer has furnished all valid documents.
Other SCB account holders, whose statement verification is not required, will get the loan on the 3rd working day after submitting the application. (Assuming he has perfect documentation).
If the customer provides statement of another bank then his statement is sent to that bank for verification. The process becomes dependent on the response of that bank.
After verification it takes 1 day to approve the loan and 1 day to disburse the loan. (Assuming all his other documents is in order.)
The points of delay in approval and disbursement are:
If the statement, provided by customer is from another bank, then it takes time to get confirmation of the validity of the statement from that bank. The confirmation can take up to 1 month.
Sometimes, the documents submitted with the application are not up to date. Then credit & asset ops requires up-to-date/valid documents to be submitted to them before loan can be approved and disbursed.
Upon submission of the valid documents, loan is approved on that day, if it reaches Credit before 12 noon. Loan is disbursed the next day , provided it reaches Asset Ops before 12 noon.The whole sector of Bangladesh is facing a great challenges and competition due to continuos foreign investment in this sector. Standard Chartered bank is facing sever competition from the other player like HSBC by offering similar and better services. SCB is a promising commercial bank in Bangladesh; there are lots of local and foreign banks in Bangladesh. In this competitive market SCB has to compete not only with the other commercial banks but also with the public banks.
The purpose of the study is to do an evaluation of the process and the performance of the CC unit of SCB. Customer credit and collection Unit (CC Unit) is one of the important unit of SCB. What I tried to understand the different services rendered by this part and try to describe the overall Unsecured loan part and how they can improve their service.