Internship Report Credit facilities - A Comprehensive Overview of The City Bank

This report is prepared under the title “Credit facilities – A Comprehensive Overview” of The City Bank Ltd. Credit facilities are the main sources of income of commercial banks in every country. The City Bank is not exception of that. The main body of the report is divided in two parts for the sack of better arrangements & simplicity.
The first part is Theoretical Framework which deals with different funded & non-funded credit facilities of The City Bank, credit sanctioning procedures, approval process, risk related to funded & non-funded credit facilities, mitigation procedures of the same & Bangladesh Bank guidelines for funded & non-funded credit facilities.

While the second part i.e. Analytical Framework, which includes different types of ratios & statistical tools like, regression analysis, time series analysis etc. to identify The City Bank’s financial condition in terms of funded & non-funded credit facilities.

Theoretical part of the report shows that The City Bank offers a variety of funded & non-funded credit facilities for its customers; even it has some unique types of funded credit facilities for consumption purposes. According to the analytical part of the report, the funded along with non-funded credit facilities of The City Bank are mounting up swiftly from 2006 to 2009. The growth of funded credit facilities for consumption & SME was really outstanding in 2009 while the loans for productive purpose constitute the major part of total funded credit facilities, so does the total interest income from funded credit facilities to total interest income from funded credit facilities.

Non-funded credit facilities were also increasing but it growth was not as high as funded credit facilities. Bothe funded & non-funded credit facilities fell sharply in 2007 because of global recession but afterwards the trend of both the two were getting speed from 2008.

The interest income from loans for production constitutes near about three fourth of total interest income from total funded credit facilities. So it suggests that The City Bank’s business is based on corporate customers.

Again the interest & commission income from funded & non-funded credit facilities constitute only near to 70% on an average of total interest income & other investment income. That means The City Bank was earning huge income from other sources. This income was coming from investment in stock market.
The classified loans of The City Bank was somewhat constant at near about 6% to total loans & in 2009 it were started falling but it was above the industry average.

Banking sector in every country plays a core role to accelerate the overall growth of the country as well as helps keep up steady growth in business sector. Now in the globalization age it is totally impossible to keep up with the fast running and ever changing world without a strong & technology based banking sector.

This report is prepared on the topic titled “Credit Facilities - a Comprehensive Overview” of The City Bank Ltd, one of the strong private commercial banks in our country. The report is prepared including all related information regarding all funded & non-funded credit facilities of The City Bank from 2005 to 2009 along with the guidelines of Bangladesh Bank regarding the credit facilities of banks.

The report is divided into two part titled “Theoretical framework” & “Analytical framework.” The theoretical framework deals with different funded & non-funded credit facilities of The City Bank, credit sanctioning procedures, approval process, risk related to funded & non-funded credit facilities, mitigation procedures of the same & Bangladesh Bank guidelines for funded & non-funded credit facilities.

Secondly, the Analytical framework includes different types of ratios & statistical tools like, regression analysis, time series analysis etc. to identify The City Bank’s financial condition in terms of funded & non-funded credit facilities.

From the Theoretical framework, it is found that The City Bank is enriched with different types of funded & non-funded credit facilities with sophisticated features. Again the “Analytical framework” shows that The City Bank was doing well for past 4 years especially in 2009. The funded & non-funded credit facilities were growing, so does the return form the same. The classified loan ratios were falling down form 2008 to 2009. SME loan was growing very fast especially outstandingly in 2009.

In the part of regression analysis the funded facilities for consumption and production are positively related with total founded credit facilities of The City Bank.

In Time series analysis part funded and non-funded credit facilities show a constant uprising trend again funded credit facilities for production and consumption also will grow in the same direction.

Finally, in brief, The City Bank was really exceeding many well reputed banks in our country in every respect that’s why it was awarded with “The Strongest Bank in Bangladesh -2010” by the Asian banker.


1.1 Objectives of the Report.
The aim to this report is to know about the overall condition of funded & non-funded facilities of the selected bank. The aim to this report includes identifying the following dimensions
Present condition of funded & non-funded facilities.
Trend analysis of the two as a whole & separately.
Interest income against funded & commission & income from non-funded credit facilities.
Percentage of funded & non-funded facilities of total gross income i.e. interest plus all investment income.
Funded & non-funded credit facilities for import & export, thus for international trade with interest income.
Trend of loans for consumption, production & other purpose with interest income from the three.
Loans for SME with interest income.
Impact of global crisis on funded & non-funded facilities for every purpose.
Trend of classified loans.
Comparison among loans for consumption, production & other purpose in terms of total amount, interest income & contribution of the three separately to total interest income from the three.
Relationship among interest income from funded credit facilities, non-funded credit facilities & total gross income i.e. Total interest income plus other income (Multiple Regression Analysis).
Future potentials of total funned credit facilities, interest income from funded credit facilities, funded credit facilities for consumption, production & SME. (Time Series Analysis.)

1.2 Methodology.
This report is both descriptive and analytical in nature. At first all required data have been collected & then all collected data have been used to complete this report with the help of some analytical tools. So the entire process of completing this report can be categorized in two heads. Theses are-

I. Data gathering procedure
II. Analysis procedure
All require data to prepare this report has been collected form both primary and secondary sources.
· Primary sources of data: Interviews, Informal discussion, Observation, & Questionnaires.
· Secondary sources of data: Annual Reports of The City Bank, Internet, Publications & journals.
The analytical part of this report is most important and depicts clear picture of all about funded & non-funded facilities of “The City Bank Ltd.” The analytical part of this report has been completed by using different statistical measures. This are-
· Trend analysis.
· All relevant ratio analysis
· Multiple Regression Analysis.
· Time Series Analysis.
1.3 Rationale of the Report.
Banking sector in our country is blooming day by day & thus contributing to the steady growth of our economy. About 80% of local investments come from banking sector in our country. Funded & non-funded facilities under the broad category of banking services- loans & advances- are the two major areas bringing much profit to the Banks. Funded facilities under trade loan, like Packing Credit help take place export & different types of Cash Credit (CC loan) & Overdrafts (OD) help improving local trade. Funded facilities also include variety of consumer loans that help improving living standard of people. Non-funded facilities like assorted types of foreign L/C contribute the flourishing of international trade and local L/C and letter of guarantees contribute to enrichment of local trade. With the extension of trade and commerce globally these facilities are also being popular to business men. And recently some new rules & regulations regarding funded & non-funded facilities have been enacted by Bangladesh Bank for risk mitigation purpose following the great global recession to strengthen the banks in the face of sudden financial shock. As a student of business especially of banking I would face these terms shortly when I will enter into my career. So it will help me build my career in banking sector & add much value to my future days.

1.4 Scope and Limitation.
The banking sector in our country is emerging much swiftly day by day keeping up with the sophistication of providing banking services. The banking sector in our country is the base of economic infrastructure. The banking sector contributes more than 80% of local investment. As a student department of banking, there is a great opportunity to be immensely benefited from this report because this report contains much crucial information as regards the practice of The City Banks & banking sector. While entering in job market, this practical knowledge will benefit much.

This report is not totally free from lacking; rather it has some limitations or demerits. The whole report is prepared with the information of The City Bank from 2005 to 2009, but much information in 2005 was not available, so the report will not clearly divulge the actual picture of The City Bank in terms of funded & non-funded credit facilities from 2005 to 2009. Another limitation of this report is that all numeric information is rounding in figure, so the exact information is not present in the report; rather it expresses near about exact information.

2.0 The City Bank Limited – At a Glance
City Bank is one of the oldest private Commercial Banks operating in Bangladesh. It is a top bank among the oldest five private Commercial Banks in the country which started their operations in 1983. The City Bank Ltd. is one of the Largest Corporate Banks in the country with a current business model that heavily encourages and supports the growth of the bank in Retail and SME Banking. Some crucial information as regards The City Bank Ltd. is as follows.
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