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.
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.
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