framework and Recovery strategies of Eastern Bank Limited.
By: Mam!d!l "asan Matric #o: B$%&'$( '( t Batc Supervisor: Professor )amad *+edin "ead of te ,epartment ,epartment of B!siness *dministration -nternational -slamic .niversity /ittagong 0--./1 ,aka /amp!s ,epartment of B!siness *dministration -nternational -slamic .niversity /ittagong 0--./1 ,aka /amp!s I ,ate: %( t 2an!ary, %$$3 Prof. Md. )amad *+edin "ead of te ,epartment ,ept. of B!siness *dministration -nternational -slamic .niversity /ittagong 0,aka /amp!s1 ,ear )ir: Submission of Internship Report -t is a great pleas!re for me tat, - ave te opport!nity to s!+mit te internsip report on Loan classification, provisioning policies, risk management framework and recovery strategies of Eastern Bank Limited to f!lfill te partial re4!irement of BB* Program. 5ile preparing te report - fo!nd te linkage of academic knowledge 6 concepts wit practical activities. - fo!nd te application of different teory in my daily desk work. - ave tried my level +est to p!t metic!lo!s effort for te preparation of te report. *ny sortcoming or fa!lt may arise as my !nintentional mistakes. - will woleeartedly welcome any clarification and s!ggestion a+o!t any view and conception disseminated tro!g tis report. 7anking 8o!. 5it regards, Mam!d!l "asan -,9 B:$%:&:'$( ,epartment of B!siness *dministration -nternational -slamic .niversity /ittagong 0,aka /amp!s1 II PREFACE 7eory is o+vio!sly a +ig fact for practical implication. B!t wito!t practical practice teory may +ecome !seless. Partic!larly as a st!dent of B!siness *dministration, we need to practice te teories we learn tro!g every semesters for te +etter !nderstanding of +!siness 6 economic environment. /onsidering te facts, o!r co!rse instr!ction as taken te initiative to assign every st!dent to analy;e and to s!+mit a report on te +asis of my practical e<periences tat - ac4!ire in te '% weeks -nternsip on Eastern Bank Ltd.
- en=oyed te -nternsip, li+rary work and done my report in a friendly atmospere and !nder special care of my onora+le Professor )amad *+edin )ir. ACKNOWLEDGEMENT III *t te very +eginning, - e<press my gratef!lness and tanks to te immeas!ra+le grace and profo!nd kindness of te almigty *lla, te s!preme a!tority of te .niverse for completing tis report witin te sced!le time. *n individ!al can acieve no no+le acievement. - am inde+ted to a n!m+er of persons for teir kind recommendation, s!+mission, direction, co:operation and teir colla+oration. My gratef!l appreciation goes to EBL>s a!tority for rendering me teir e<pertise, knowledge and giving me te opport!nity of aving a practical e<perience tro!g tis -nternsip program. ?or fear of so!nding like a vote @ of tanks speec, - co!ld not possi+ly tank all of tose marvelo!s people wo ave contri+!ted someting of tem to tis report. 7ere are of co!rse some very special people wo cannot go wito!t mention. ?irst, - wo!ld like to give my eartiest gratit!de and sincere appreciation to Professor Samad Abedin, Head of the Department, Department of Business Administration, nternational slamic !niversity "hittagong #Dhaka "ampus$ for iss!ing a forwarding letter to Eastern Bank Ltd. were my internsip program as +een carried o!t. - wo!ld like to convey my sincerest gratit!de to Mr. Ashfaq A. Cho!hur", E<: Head of Human %esource Division, for is kind permission to allow me tree monts practical training in te +ank and also like to sow my gratit!de to Mr. D. S. #u$fi$ar %"!er& "ead of "!man Reso!rce ,ivision for e<tending my internsip program for additional A weeks in wic time - earned a lot more practical e<perience. - sow inn!mera+le esteem for Mr. Moha''a! Ra(i) %ossai*& #%elationship &anager$ and Mr. S"e! Shahe! +'a' 0Assistant %elationship &anager1 for teir val!a+le advice and cordial co:operation in vario!s aspects of my st!dy. ?inally, eartiest gratit!de to my reverend teacer and advisor, Professor Sa'a! A)e!i* of te internsip program, wo>s ent!siastic g!idance and critical comments d!ring te entire pase of te st!dy made it possi+le for me to prepare tis report. My de+t to er is warmly acknowledged. Table Content Part-A ` Executive summary 1.0 Introduction IV 1.1 Origin of the report 1.2 Objective 1.3 Scope of the report 1.4 Limitations 1.5 Sources of ata 1.! "etho#o$og% Part-B 2.0 Overvie o! t"e Ban# 2.1 &istor% an# 'ac(groun# of )astern 'an( Limite# 2.2 )'L*s Vision 2.3 )'L*s mission 2.4 +resent 'usiness +hi$osoph% 2.5 Objectives 2.! "anagement ,spect 1 2.- ivision of )'L 2.. /orporate 'an(ing ivision 2.0 /re#it 1is( "anagement an# ,#ministration 2.12 /onsumer 'an(ing ivision 2.12.1 S") 'an(ing 2.12.13a4 )mall )egment 2.12.13b4 "e#ium Segment 2.11 'ran# "anagement ivision 2.12 5ra#e service #ivision 2.13 Internationa$ #ivision 2.14 &uman 1esources ivision 2.15 Information 5echno$og% ivision 2.1! ,u#it an# /omp$iance ivision 2.1- 6inance an# accounts #ivision 2.1. Specia$ ,sset "anagement ivision 2.10 ,#ministration 2.22 Strengths of the 'an( V 2.21 7ea(ness of the 'an( 2.22 5hreats of the 'an( 2.23 Opportunities of the 'an( 2.24 6inancia$ 1atio ,na$%sis of )astern 'an( Limite# 2.24.1 1eturn on ,ssets 2.24.2 1eturn on )8uit% 2.24.3 9et Interest "argin 2.24.4 9et 9on interest margin 2.24.5 9et operating margin 2.24.! ,sset :ti$i;ation 1atio 2.24.- )8uit% mu$tip$ier 2.24.. )arning sprea# 2.24.0 Li8ui#it% ris( 2 2.25 "ain )vents of )astern 'an( Limite# 2.2! 'usiness eve$opment ,ctivities of 2225 Part-C $.0 Products and %ervices o! EB& 3.1 1etai$ 'an(ing 3.2 Institutiona$ 'an(ing 3.3 /orporate 'an(ing 3.4 /ommercia$ 'an(ing 3.5 /orrespon#ent 'an( 3.! Services offere# b% the 'an( 3.- /re#it +ro#uct 3.-.1 Secure# Over#rafts 3.-.2 "ash "redit #""$ 3.-.23a4 /ash /re#it 3&%po4 3.-.23b4 /ash /re#it 3+$e#ge4 3.-.3 P!rcases 6 ,isco!nt of Bills 3.-.4 <:,1,95))= 3.. Loan +rograms>Schemes VI 3.0 Loans 3.12 'asic Information of Loan 3.11 "o#e of 1epa%ment 3.12 Loan processing cost 3.13 Loan processing 5ime 3.14 +apers> ocuments 1e8uire# 3.15 +roce#ures for <iving ,#vances 3.1! /harging Securit% 3.1!3a4 Lien 3.1!3b4 "ypotecation 3.1!3c4 Pledge 3.1!3#4 Mortgage 3.1!3e4 *ssignment 3.1!3f4 )et:off Part-' (.0 &oan Classi!ication) Provisionin* Policies) +is# ,ana*ement -rameor# . +ecovery %trate*ies o! Eastern Ban# 3 A.' Loan classification A.% Policy on loan classification of EBL A.& Basis for Loan /lassification of EBL A.&.' B+=ective /riteria A.&.% C!alitative 2!dgment A.A *cco!nting of te interest of classified loans of EBL A.( /lassified Loans and advances of EBL A.D Ratio of /lassified loans of EBL Par,-E ../ Ris$ 'a*a0e'e*, fra'eor$ of E1L (.' -ntrod!ction to Risk Management ?ramework 5.2 1is( <overnance VII 5.3 /re#it 1is( "anagement 5.4 ,sset an# Liabi$it% 1is( "anagement 5.5 Operationa$ 1is( "anagement 5.! "anagement of +rogramme# Len#ing 5.. +rovisioning +o$icies 5.0 9on +erforming Loans Status Part-- /.0 +ECO0E+1 %T+ATE21 !.1. Signs for /$assification !.2 Steps to fo$$o? for /$assification !.3 /$assification +rocess !.4 :p@o?n <ra#ing /$assification !.5 Specia$ ,sset "anagement epartment !.! 1ecover% +robabi$it% /ategories to be assigne# 5o ,$$ /$assifie# Loans !.- 7hat are the main reasons behin# c$assification 4 !.. 7hat*s ?rong ?ith +rovision !.0 )'L is #ifferent in 1ecover% !.12 7h% 1ecover% ta(es so much time Part-2 3.1 +ecommendation 3.2 CO4C&5%IO4 6.0 Biblio*ra7"y 6.1 Acronyms E2e3u,ive Su''ar": )mall and Medi!m Enterprises 0)ME1 in Banglades contri+!ted %(E of gross domestic prod!ct 0F,P1 and G$E of te ind!strial =o+s of te co!ntry in %$$A. *ccording to *,B, te co!ntryHs estimated D million )MEs and micro enterprises firms of less tan '$$ employees ave a significant role in generating growt and =o+s. 7is is a sector tat as its own distinct needs and re4!ires speciali;ed foc!s. Eastern Bank Ltd. 0EBL1 as la!nced )ME Banking in early %$$( wit tis view in mind. VIII *t EBL: Provide )MEs wit easy access to financing. I ,eliver prod!cts tat ens!re s!perior ret!rns to o!r c!stomers. I Brient c!stomers wit ind!stry trends, reg!latory iss!es etc, for teir s!ccess. I Jal!e long term relationsip +anking. 7e report entitled Loan classification, provisioning policies, risk management framework and recovery strategies of Eastern Bank Limited. foc!s on +asis and policies of loan classification, risk governance, credit, asset, lia+ility and operational risk management of te +ank. *t te same times, tis report also empasi;es on te provisioning conditions and recovery strategies of tose +anks. -dentifications of te reasons for wic te loans are act!ally +ecoming classified are a ard =o+. -t re4!ires e<pertise in +anking field. 7e most common reasons are +asically divided into tree types. ?irst of all, te fa!lt is wit te +ankers. Most of te times tey fail to identify te motivation of te clients. 7en tey rely on te data provided +y te clients, wic are not cent percent valid. *t te same time tey don>t analy;e te data properly. )econdly, client>s over confidence a+o!t te pro=ect. ?inally, e<isting r!les are enco!raging tonic for te intentional defa!lters +eca!se, for recovery +anks ave to go for a time cons!ming proced!re and most of te time +ank fail to recover. 7e final step of loan classification is to recover te loan amo!nt from te respective client. "ere te proced!re is almost same for every +ank. *t +eginning tey give reminder letter. 7en tey send letter informing tat +ank is going to s!e against te client. -f client dose not give satisfactory response after tis letter ten +ank s!e against te client. Mainly +anks s!e in te *rta Rin *dalat located at %ai 'ha(ar Ba)ar. 7ere is a separate act for +anks called Bank *ct 'KK&. IA