1.1 Origin of the Report

Masters of Business Administration (MBA) Course requires a three months attachment with an organization followed by a report assigned by the supervisor in the organization and endorsed by the faculty advisor. As I am already working for Dhaka Bank Limited (DBL), I took the opportunity to do my internship in my own organization. My organizational supervisor Mr. Syed Abdul Quader, Senior Assistant Vice President and Manager of Islampur Branch asked me to conduct a study on Comparative Analysis between Bangladesh Bank’s Best practices guidelines and Dhaka Bank Limited existing credit policy.  My faculty supervisor Mr. Shama-e-zaheer, lecturer of Institute of Business Administration, University of Dhaka, also approved the topic and authorized me to prepare this report as part of the fulfillment of internship requirement.

1.2 Background of the Report

Last year Bangladesh Bank undertook a project to review the global best practices in the banking sector and examines in the possibility of introducing these in the banking industry of Bangladesh. Four 'Focus Groups' were formed with participation from Nationalized Commercial Banks, Private Commercial Banks & Foreign Banks with representatives from the Bangladesh Bank as team coordinators to look into the practices of the best performing banks both at home and abroad. These focus groups identified and selected five core risk areas and produce a document that would be a basic risk management model for each of the five 'core' risk areas of banking. The five core risk areas are as follows-

a) Credit Risks;
b) Asset and Liability/Balance Sheet Risks;
c) Foreign Exchange Risks;
d) Internal Control and Compliance Risks; and
e) Money Laundering Risks.

Bangladesh Bank in one of it’s circular (BRPD Circular no.17) advised the commercial banks of Bangladesh to put in place an effective risk management system by December, 2003 based on the guidelines sent to them.

I am working in the Credit Department of Dhaka Bank Limited, Islampur Branch. In this report, I will try to make a comparative analysis between Bangladesh Bank’s suggested best practices guideline for managing credit risk and Dhaka Bank Limited existing credit policy .

1.3 Objective of the Report

The study has been undertaken with the following objectives:
 To analysis the pros and cons of the conventional ideas about credit operation of a Bank.
 To have better orientation on credit management activities specially credit policy and practices, credit appraisal, credit-processing steps, credit management, financing in various sector and recovery, loan classification method and practices of DHAKA Bank Limited (DBL).
 To compare the existing credit policy of Dhaka bank limited with that of best practices guideline given by Bangladesh Bank, the central bank of Bangladesh.
 To identify and suggest scopes of improvement in credit management of DBL.
 To get an overall idea about the performance of DHAKA Bank Ltd.
 To fulfill the requirement of the internship program under MBA program

1.4 Scope of the Report

The study would focus on the following areas of DHAKA Bank Limited.
 Credit appraisal system of DHAKA Bank Limited.
 Procedure for different credit facilities.
 Portfolio (of Loan or advances) management of DHAKA Bank Limited.
 Organization structures and responsibilities of management.
Each of the above areas would be critically analyzed in order to determine the efficiency of DBL’s Credit appraisal and Management system.

1.5 Sources of Information

Information collected to furnish this report is both from primary and secondary in nature. The secondary information was collected from the different publication, and books. For collecting books and periodicals I have used the following library:

IBA Library
BIBM Library
Bangladesh Bank Library

1.6 Methodology of the Report

The following methodology will be followed for the study:
Both primary and secondary data sources will be used to generate this report. Primary data sources are scheduled survey, informal discussion with professionals and observation while working in different desks. The secondary data sources are annual reports, manuals, and brochures of Dhaka Bank limited and different publications of Bangladesh Bank.
To identify the implementation, supervision, monitoring and repayment practice- interview with the employee and extensive study of the existing file was and practical case observation were done.

1.7 Limitation of the Report

This report will only consider credit risks of Dhaka Bank limited. It will not cover

 Asset and liability/ balance sheet risk.
 Foreign Exchange Risk
 Internal control And compliance risk
 Money laundering Risk.

1.8 Report Organization

This report is divided in five sections. The following section is the organization part i.e. this section will give an overview of Dhaka Bank Limited. In section iii, Credit management policy and practice of DBL is critically analysed followed by Bangladesh Bank’s Best practice guideline for credit management in section iv. Section v deals with findings and recommendations.