Internship Report on Policies and practice in credit management and comparison of Consumer credit schemes

Internship Report on Policies and practice in credit management and comparison of Consumer credit schemes of some selected private Banks: A Comprehensive study of National Bank Limited

Banking sector is expanding its hand in different financial events everyday. Banking customers have also changed in recent years. Customers are more knowledgeable, sophisticated, and assertive. They demand higher levels of customer service, are less loyal, and more inclined to switch to a competitor. Modern customers require flexibility in hours of operation, greater convenience, customization, transparency, accessibility, and control. Competition to attract new customers is fierce. Customer defection rates are higher than ever because of increased market competition. With so many different financial institutions to choose from, consumers can now demand better quality services and more customized products from their banks. In this consumer economy, attracting and crucially keeping customers for the long term is a key challenge for all businesses. At the same time, the banking process is becoming faster, easier, and the banking arena is becoming wider. As the demand for better service increases day by day, they are coming with different innovative ideas and products. In order to survive in the competitive field of the banking sector, all banking organizations are looking for better service opportunities to provide their fellow clients.

National Bank is one of the pioneers of first generation private commercial bank incorporated in 1983.Meeting the target of the customers the bank is launching new product evertime.In this report I try to make a comparative analysis of consumer credit scheme of NBL along with other commercial bank. I also try to describe the credit management policy of National Bank. The products covered by the NBL are education loan, household loan, travel loan, car loan etc.NBL can offer more attractive services to the employees. The charges are consistent with the current market situation. Here I have also found that the recovery of loan is satisfactory by the NBL.There are specific rules & regulation for credit sanctioning implemented by Bangladesh Bank. National bank is trying to follow the specific rules set by the Bangladesh Bank. In line with the organizational pattern & the guidelines of Bangladesh Bank, a risk management unit has been formed to idetify, measure & monitor to safeguard & mitigate different risks. Besides ALCO,MANCOM & Credit committee of the banks are also functioning in the same line from other perspective. In this report i have also make a SWOT analysis. I try to find out the strength, opportunities of National Bank Ltd.At last i have made some recommendation. We know promotional activities are very much important in case of any business’s I think if NBL increases its advertising expenses it will attract more customer .There are some other specific factors which should be taken into consideration By National Bank. Despite some shortcomings NBL achieved strong growth in terms of capital. I hope the bank will prosper in future with its decent activities.

As a partial fulfillment of the BBA program University of Dhaka, I got placement as an internee at the Elephant Road Branch of National Bank Limited on a 6 week internship program. This report is the outcome of my experience at the bank during the internship period. One semester internship program is an attempt to provide business students an orientation to a real life business situation in which we can observe and evaluate the use and applicability of the theoretical concepts, which were taught in the classroom. As a student of business administration, I preferred to complete my internship program in a Financial Institution like Bank. Then I got a chance to complete the program in a leading private commercial bank; “The National Bank Limited.” My internship topic is “Policies, practice in credit management and comparison of CCS on National Bank Limited & other Private Commercial Banks.”

To introduce skilled Banker, only theoretical knowledge in the field of banking studies is not sufficient. An academic course of the study has a great value when it has practical application in real life situation. Bank lending is important for the economy in the sense that it can simultaneously finance all of the sub-sectors of financial arena, which comprises agricultural, commercial and industrial activities of a nation. Through deposit mobilization and providing credit facilities for different business organizations, the banking sectors are playing a vital role in the economy of the country. The success of a bank depends up to how effectively the credit management recovers the funds.


1.1. Origin of the Report
This internship report was assigned as a part of the academic requirement in order to complete my ‘Bachelor of Business Administration’ program under the ‘Department of Banking’ at Dhaka University. To support my internship report, I worked as an intern in ‘National Bank Limited’ (Elephant Road Branch) with tenure of three months. And I consigned to help the officers of the Loan Department of National Bank Ltd, Elephant Road Branch as part of the fulfillment of Internship requirement.

1.2. Purpose
The purposes of this report cognates the internship purpose. The internship objective was to gather practical knowledge and experiencing the corporate working environment with the close approximation to the business firm and the experts who are leading and making strategic decisions to enhance the growth of a financial institution. To this regard, this report is contemplating the knowledge and experience accumulated from internship program. With the kind advice of both the Organization and Internship Supervisor this report comprises of an organization part and a project part.
1.3The objectives of the report:
The objective of the report is to provide a general description of the traditional banking and an exposure of the banking environment of Bangladesh. It also provides an exposure of practices of different banking activities of NBL, LOCAL OFFICE. The main objective is to make a comparison between the products of Consumer Credit Scheme offered by National Bank Limited and the products of Consumer Credit Scheme offered by other Banks. The specific objectives are stated in the below:
To determine the origin of Consumer Credit Scheme program in Bangladesh and in National Bank Limited.
To find out the goods and services offered in the industry under CCS program.
To identify the important criteria required for the attainment of CCS loan.
To know the details about the CCS program of National Bank Limited.
To identify the judgment process of National Bank to execute Consumer Credit Scheme loan.
To analyze the CCS loan of National Bank and other Banks with respect to loan limit, interest rate, down payment, application fee and other charges.
To identify the innovative products offered by different Banks under consumer loan.


1.4 Methodology
Techniques of analysis:
To conduct the Analysis part I have chosen the most widely used techniques of analysis. These are Least Squares method for Time Series Analysis and Regression Analysis.

Least square Method:
Here I have used Least squares method for measuring a straight line trend by using time series data. This method is most widely used in practice. When this method is applied, a trend line is fitted to data in such a manner that the following two conditions are satisfied-
1. ∑(Y-Yc) = 0; it means the sum of deviations of the actual values of Y and the computed value of Y is zero.
2. ∑(Y-Yc)2 is least; it means the sum of the squares of the deviations of the actual and computed values is last from the line. That is why this method is called the method of least square. The line obtained by this method is known as the line of ‘Best Fit”.

The straight line trend is represented by the equation-
Yc = a +bX;

Where-
Yc = The trend (computed) values to distinguish them from the actual Y values,
a= The Y intercept on the value of the Y variable when X=0,
b= Slope of the line or the amount of change in Y variable.

By using the straight line trend, I have calculated the amount of consumer credit Scheme Ltd of National Bank for year2010. The time series data for this analysis are given below with a round figure-
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