Internship Report On Credit Risk Management: A Study on Al-Arafah Islami Bank PLC.

Abstract

The Internship Report is a vital requirement for the completion of the BBA program. Classroom discussions alone cannot fully prepare students for handling real-world business situations; therefore, the internship provides an opportunity to gain practical experience and understand the dynamics of real-life business operations. This report is created to fulfill both the university and organizational requirements and is centered on the topic of Credit Risk Management in Al-Arafah Islami Bank Limited (AIBL). Al-Arafah Islami Bank Limited is dedicated to providing high-quality services to its clients through a variety of financial products and the profitable utilization of funds by undertaking various lending operations, including financing trade, commerce, and industry. In carrying out these lending operations, AIBL places great emphasis on proper risk identification and effective management. Recognizing that failure to identify and manage risks adequately can result in a significant portion of the bank's advances becoming non-performing assets, AIBL prioritizes the management of credit risks. Given the diverse and complex nature of lending risks, it is clear that no single approach can address all potential risks. The evolving nature of these risks necessitates the adoption of modern techniques to manage them effectively. To minimize losses and ensure an acceptable level of return for shareholders, it is crucial for AIBL to implement robust credit risk management policies. These policies must be responsive to changes in the financial landscape and tailored to the bank’s specific needs. In this context, AIBL has developed comprehensive policy guidelines for Credit Risk Management, emphasizing the importance of a proactive and systematic approach. The policy is reviewed annually by the Board of Directors and is distributed to all concerned officials, divisional heads, branches, regional offices, and top management. It is essential that these policies are strictly adhered to, and any deviations must be clearly identified, with justification provided for approval.