3.11 Credit Monitoring and Review:

It is the last step in credit policy and procedure framework of DBL. Credit monitoring and review is very important, because it ensures proper utilities and repayment of bank fund. Credit monitoring and review feature of DBL is concerned was assessing the quality of different type of loan.
 
Periodic review and follow up should, inter-alia aims at ensuring:

 That conduct (Turnover, regularity of repayment etc) of the borrowing accounts during the period under review has been satisfactory or as expected.

 The account is not having excess over limit

 The terms and condition of the sanctioned letter are strictly followed.

 The value of the collateral security is adequate.

 There is not any unfavorable situation in market, economy and political conditions, which may endanger the reliability of the borrower account.

  The analysis of the borrowers business performance and comparison of the projected and actual to find any deviations.

 Apparent profitability from the loans

3.12 Classification of the Loan on the Basis of Security

For internal use, banks classify the loan and advance on the basis of how much the bank is secured in respective of the loan:

Table 1 Classification on the basis of security

Security

2003

2002

Debts considered good in respect of which the bank is fully secured

Tk.9,164,399,974

Tk. 8,905,717,569

Debts considered good for which bank holds no other security than the debtors personal security

Tk.1,912,967,379

Tk.1,422,195,631

Debts considered good and secured by the personal security of one or more parties in addition to the personal security of the debtor.

Tk, 1302,949,636

Tk824,412,906

3.13 Objective Basis of Classification

In classifying the loan and advance there are four classes in the loan review practiced in Dhaka Bank Limited. They are as follows:

3.13.1Unclassified:

The loan account is performing satisfactorily in the terms of its installments and no overdue is occurred. This type of loan and advances are fall into this class.

3.13.2 Substandard:

This classification contains where irregularities have been occurred but such irregularities are temporarily in nature. To fall in this class the loan and advance has to fulfill the following factor.

Category of Credit

Time overdue (irregularities)

 

 

Substandard

S-T Agri & Micro Credit

3 months & above but less than 6 months.

Continuous loan

 

Demand Loan

Un-recovered for 3 months & above but less than 6 months from the date of the loan is claimed.

 

 

Fixed Term loan

Repayable within 5years: If the overdue installment equals or exceeds the amount repayable within 6 months.

Repayable more than 5years: If the overdue installment equals or exceeds the amount repayable within 12 months.

The main criteria for a substandard advance is that despite these technicalities or irregularities no loss is expected to be arise for the bank. These accounts will require close supervision by management to ensure that the situation does not deteriorate further.

3.13.3 Doubtful:

This classification contains where doubt exists on the full recovery of the loan and advance along with a loss is anticipated but can not be quantifiable at this stage. Moreover if the state of the loan accounts fall under the following criterion can be declared as doubtful loan and advance. 

Category of Credit

Time overdue (irregularities)

 

 

Doubtful

S-T Agri & Micro Credit

6 months & above but less than 12 months.

Continuous loan

 

Demand Loan

Un-recovered for 6 months & above but less than 12 months from the date of the loan is claimed.

 

 

Fixed Term loan

Repayable within 5years: If the overdue installment equals or exceeds the amount repayable within 12 months.

Repayable more than 5years: If the overdue installment equals or exceeds the amount repayable within 18 months.


3.13.4 Bad and Loss:

A particular loan and advance fall in this class when it seems that this loan and advance is not collectable or worthless even after all the security has been exhausted. In the following table the criteria to be fulfilled to fall in this category are summarized: 

Category of Credit

Time overdue (irregularities)

 

 

Bad and Loss

S-T Agri & Micro Credit

Not recovered within more than 12 months.

Continuous loan

 

Demand Loan

Un-recovered more than 12 months from the date of the loan is claimed.

 

 

Fixed Term loan

Repayable within 5years: If the overdue installment equals or exceeds the amount repayable within 18 months.

Repayable more than 5years: If the overdue installment equals or exceeds the amount repayable within 24 months.