06 CONCLUSION AND RECOMMENDATION

A banker can not sleep well with bad debts in his portfolio. The failure of commercial banks occurs mainly due to bad loans, which occurs due to inefficient management of the loans and advances portfolio. Therefore any banks must be extremely cautious about its lending portfolio and credit policy. So far Dhaka Bank Limited has been able to manage its credit portfolio skillfully and kept the classified loan at a very lower rate ---thanks goes to the standard and stringent credit appraisal policy and practices of the bank.

But all things around us are changing at an accelerating rate. Today is not like yesterday and tomorrow will be different from today. Given the fast changing, dynamic global economy and the increasing pressure of globalization, liberalization, consolidation and disintermediation, it is essential that Dhaka bank limited has a robust credit risk management policies and procedures that are sensitive to these changes. To improve the risk management culture further, Dhaka bank limited should adopt some of the industry best practices that are not practiced currently. These are

 Dhaka Ban should have a clear written lending guideline. The lending guideline should include Industry and Business Segment Focus, Types of loan facilities, Single Borrower and group limit, Lending caps, Discouraged Business Types, Loan Facility Parameters and Cross boarder Risk.

 It should adopt a credit grading system All facilities should be assigned a risk grade. And the borrowers risk grades should be clearly stated on credit application.

 Approval authority should be delegated to individual executives rather than Executive Committee/ Board to ensure accountability. This system will not only ensure accountability of individual executives but also expedite the approval process.

 All lending functions should be segregated in the following way

* Credit Approval / Risk Management
* Relationship Management / Marketing
* Credit Administration

The segregation of duties will improve the knowledge levels and expertise in each department.

 The organization structure should have to be changed to put in place the segregation of the Marketing/ Relationship Management function from Approval / Risk Management / Administration function.

 The responsibilities of the key persons of the above function must also be clearly specified.

 An Early Alert Account system should be introduced to have adequate monitoring, supervision or  close attention by management.( An early Alert Account is one that has risk and potential weaknesses of a material nature)

 There should be a Recovery Unit to manage directly accounts with sustained deterioration. To encourage Recovery Unit incentive program may also introduced.