Credit Management Practices of Trust Bank Ltd

Hossain, Md. Mamun

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Credit Management Practices of Trust Bank Ltd

Hossain, Md. Mamun

URI: http://dspace.daffodilvarsity.edu.bd:8080/handle/123456789/4553

Date: 2019-12-28

Abstract:

This report is mainly focused on credit policy of Trust Bank Limited (TBL). Analyzing the loan lending procedures maintained by Trust Bank is the main objective of this report. Besides that, understanding the project evaluating techniques of TBL was another objective. Both primary and secondary sources have been used to prepare this report. Data were collected from last 6 years’ annual report of trust bank. To analyze the data, quantitative technique has been used. The Bank’s central revenue producing activities include all kinds of commercial banking products and services to the customers including project finance, working capital finance and trade finance for corporate customers, SME loans to small traders and business; house building loan, car loan as well as wide range of life style and need based loans for retail customers. The Bank has been able to develop state-of-the-art IT plat form and online banking systems facilitating any branch banking, phone banking, SMS banking, internet banking, any time banking for 24 hours a day and 7 days a week through ATM. Trust Bank provides various types of Loan. Time loan, Term loan, OD, SOD,L/C etc. Are classified as secured credit where as Marriage loan, Education loan, Car loan, Advances against salary etc. Interest rate for unsecured loans is 9%-14% depending on the category of loan. TBL follows lending procedure that helps them to understand the credit worthiness of the applicant. Disbursement of loan is increasing day by day, which indicates a growth of the bank. By talking with the bank employees it is known that rate of NPL is less for the bank comparatively which shows that loan default rate is less for TBL. TBL manages risk related to credit in an efficient and effective way with a good credit management system. TBL has analyzed that Credit risk originates from the Market Risk, Supplier’s Risk, Financial Risk, Business Risk, Management Risk, Structural Risk, Security Risk, Infrastructural Risk, Data Risk, Technological Risk, Interest Rate Risk and Security Risk etc. Trust bank is in a good financial condition that can be assumed by looking into the analysis of liquidity ratios, profitability margins and receivable turnover ratio. Various ratios discussed in the report states that TBL’s asset is increasing and liability is going downwards. However, some of the analysis showed exactly the opposite of the previous statement.

Description:

Bangladesh is a third world country with an under developed banking system, particularly in terms of the services and customer care provided by the government run banks. Recently the private banks are trying to imitate the banking structure of them or developed countries, but this attempt is often foiled by inexpert or politically motivated government policies executed by the central bank of Bangladesh, Bangladesh Bank. The outcome is a banking system fostering corruption and illegal monetary activities/laundering etc. by the politically powerful and criminals, while at the same time making the attainment of services or the performance of international transactions difficult for the ordinary citizens, students studying abroad or through distance learning, general customers etc. The first modern bank in Bengal was Bank of Hindustan, established in 1770 in Calcutta. It was an off shoot of trading company Messrs. Alexander and Co., and operated until 1832 when the trading company failed. A number of Calcutta-based banks were established, none which survived beyond the middle of the 19th century. The Bank of Calcutta, established in 1806 which renamed Bank of Bengal in 1809, was merged into the Imperial Bank of India in 1921, and became the State Bank of India in 1955. The first modern bank headquartered in Dhaka was Dacca Bank, established in 1846. Trust Bank Ltd is a private commercial scheduled Bank, which obtained license from Bangladesh Bank on July 15,1999. Army welfare fund is the major shareholder of TBL.The authorized capital of the bank is Taka two thousands million and paid up capital is Taka five hundred million. Public shares are expected to be floated in the near future. The bank was formally inaugurated and listed as a scheduled bank on November 1999. Trust Bank Ltd having a spread network of 109 Branches across Bangladesh.

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