An Analysis of the Credit Management of United Commercial Bank Ltd

Abstract

Banking system of Bangladesh has gone through three phases of developmentNationalization, Privatization, and Lastly Financial Sector Reform. UCBL of Bangladesh Limited has started its journey as a private commercial bank from 1983. The objectives of the study are to learn and analyze the credit management of UCBL and the system the followed for credit assessment. Additionally, the study covered to identify the credit products of United Commercial Bank Ltd. Also the study intended to explain and analyze credit sanctioning and disbursement and recovery process of UCBL. Moreover, the study tried to identify problems related to credit management and make some suggestions to improve the credit management situation of UCBL. To reach the objectives of the study the data were collected from primary and secondary sources and analyzed in descriptive style. From the analysis the bank’s income mostly depended on the activities of foreign exchange division and credit division. For this UCBL handle both of department very strongly. The rate of interest or product cost set up by the head office. Interest rate has to be within a limit for every bank which is notified by the Bangladesh Bank. The Banks in Bangladesh has faces a lot of illegal pressure from Political persons, Directors and Management of the Bank for approval of loan. in that cases Risk managers are bound to approve the loan without any assessment and rationality. The bank needs to make its credit policy easy and understandable as the policy is very complicated. By this way all credit officers will understand the instruction and follow this instruction correctly at the time of credit management. To assess the credit proposal correctly management should recruit by manager of credit department. The management must be careful to sanctioning that loan which is recommended by powerful bodies. Because these loans sometimes become more risky. To reduce the credit risk the original documents of the client must be verified thoroughly. If manager sanction the loan without the original documents, that may involves more risk. To reduce the default risk the repayment capacity of loan of the client should be properly investigated. Otherwise, here have the chance to default. The process of sanctioning a loan is very time consuming. Management should give more effort to reduce the time of processing a loan. The main portion of profit comes from the foreign exchange and credit division, but there are not enough employees on these departments to serve the clients, for this reason number of employees should be increased in these departments. The bank is much more structured compared to other listed banks operating in Bangladesh. It is relentless in pursuit of business innovation and improvement and it has a reputation as a leader in financing manufacturing sector.