“CREDIT RISK MANAGEMENT OF PRIME BANK LIMITED

Abstract

Credit risk is one of the important topics in banking industry. It is the uncertainty that the borrower will default or fail to pay back the loan at the exact time and amount. Credit risk, therefore, arises from the bank’s dealings with or lending to corporate, individuals, and other banks or financial institutions. Generally, credits are the largest and most obvious source of credit risk. The traditional approach to managing credit risk, is to evaluate the risk by assessing the borrower’s ability to repay. This involves examining historical financial statements of the counterparty and projecting future ability to pay. Prime Bank Limited (PBL) is fast growing and second-generation private bank in Bangladesh. This Bank is already at the top slot in terms of quality service to the customers, and at the value addition to the shareholder. It has a mission to be an efficient, market driven, customer focused institution with good corporate governance structure and vision to be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management & profitability having strong liquidity. I have collected my necessary information from both Credit Risk Management department and branch level to successfully understand the whole process. I have also tried to focus on the performance of credit risk management in my report by conducting different tables and figures related to credit risk management. I have used both primary and secondary data to prepare this report. Primary sources are officers and manager of PBL secondary sources are books, e-book, journal, various business-related articles, internet etc. Credit planning implies efficient utilization of scarce (loanable fund) to generate earning for the bank. The goal of credit risk management is to maximize a Bank’s risk adjusted rate of return by maintaining credit risk exposure within acceptable parameters. The effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. The Board of Directors is responsible for approving and reviewing the credit risk strategies and policies of the bank periodically.