(Credit Risk Management of Sonali Bank PLC)

Abstract

This thesis report is based on my thesis program and financial statements of 2020- 2023 of Sonali Bank PLC. In my thesis period, I worked in Industrial project & financing division, Sonali Bank PLC, Head Office Dhaka. It was a great opportunity to experience and gather knowledge about different types of banking operations. My faculty supervisor helped me to choose the topic- “Credit Risk Management of Sonali Bank PLC”. Sonali Bank PLC is a Largest Commercial Bank in Bangladesh having the aim of serving the community. Sonali Bank focuses on a wide range of financial products and services comprising commercial banking through conventional and Islamic mode, brokerage services, SME agriculture, consumer banking, credit card and offshore banking. The bank has established leadership in corporate banking with growing focus on SME and consumer business. It also plays a leading role in syndicated and structured financing. Sonali Bank has almost all banking products in its stock from student banking to Business banking. The study not only focuses on the activities of Sonali Bank but also highlights the credit management system of the bank. It also contains information about all credit proceedings. In the introduction chapter background, rationales, scope, objective of the study, the methods used for collecting information, limitations has been discussed. Moreover, I have focused on the overview of banking industry in Bangladesh as well as overview of Sonali Bank and its performance. The mission, vision, objectives, products and services have also been reflected in this report. Then, I emphasized on my thesis topics, that covering credit risk analysis, how credit risk is measured and the models and tools available to evaluate it. I have discussed about loans and advances of Sonali Bank Then, I focused on credit sanctioning system, norms of credit sanction, supervision and monitoring of credit and the present changes in credit approval system. I have conducted in depth interview with various officials of the banks to collect necessary information. The findings show that to reduce the non-performing loans, the bank should select borrowers in respect of their credit worthiness, capability to repay the loans; credit rating report of the borrower has a vital role in selection of borrower. In the context of Bangladesh, most of the banks use CRG with few supplementary tools and their personal judgment to evaluate risk. The study was conducted to know the credit sanctioning system of Sonali Bank. The banking sector of Bangladesh is passing through a tremendous reform under the economic deregulation and opening up economy. Currently, this sector is extremely competitive with the arrival of multinational banks, technological infrastructure, effective credit management, higher performance level and utmost customer satisfaction. Sonali Bank followed the credit policy and practices set by the management and the guideline set by the Bangladesh Bank. As a result, they are performing well in reducing the high classification rate and achieving the profit target of the bank. As a part of my EMBA program, I have spent Industrial project & financing division, Sonali Bank PLC, Head Office, Dhaka and learning the activities of HR Division. I have analyzed the financial statements of Financial Performance Analysis of Sonali Bank PLC to find out its ratios by using its past and current records. After preparing this report I came to know that analysis of financial statements through ratios helps to overcome the past flaws and make the future decisions and strategies. Therefore, it is very necessary for every organization whether the company’s size is to make financial statement and to analyze it by ratios