1. Internship Report
On
An Analysis of Credit Risk Management of Shimanto
Bank Ltd.
Submitted To :
Controller of Examination
National University
Gazipur-1704
Supervised By :
Mohammed Shakhawat Hossain
Associate Professor & Principal
Daffodil Institute of IT ( DIIT )
Submitted By :
Sabiha Akter
Reg. No : 15601000497
Session : 2015-2016
Program : MBA
Major in Finance
Date of Submission : July 15, 2019

2. CONTENTS
PART TOPICS PAGE
NO.
PART-01
Letter of Transmittal I
Letter of Authentication II
Declaration III
Acknowledgement IV
Executive Summery V
Acronyms VI
List of Tables VII
List of Graph VIII
PART-02
CHAPTER - 1 : INTRODUCTION
1.1 Origin of the Report 1
1.2 Objective of the study of CRM 1
1.3 Methodology 2
1.4 Scope of the Study 3
1.5 Limitation of the Study 3
CHAPTER - 2 : COMPANY OVERVIEW
2.1 Background of Shimanto Bank Ltd. 4
2.2 Vision of the Shimanto Bank Ltd. 4
2.3 Mission of the Shimanto Bank Ltd. 5
2.4 Core Value of Shimanto Bank Ltd. 5
2.5 Organization Structure 6
2.6 Organizational Hierarchy of Corporate Branch 7
2.7 Products Offered by Shimanto Bank Ltd. 7-8
2.8 Services Offered by Shimanto Bank Ltd. 9-10
2.9 Principle Activities of Shimanto Bank Ltd. 10
CHAPTER - 3 : CONCEPTUAL FRAMEWORK
3.1 Introduction 11
3.2 Risk Management 11
3.3 Credit Risk 12
3.4 Credit Risk Management 13
3.5 Challenges to Successful Credit Risk Management 13
3.6 Best Practices in Credit Risk Management 14
3.7 Risk Measurement, Monitoring and Control Function 15
3.8 Major Function of CRM 16
3.9 Duties and Responsibilities of CRM 17
3.10 Risk Control and Measurement taken by Shimanto Bank Ltd. 18
3.11 Methods of Credit Risk Analysis 19-28

3. PART-02
CHAPTER - 4 : ANALYSIS
4.1 Introduction 29
4.2 Financial Leverage 30
4.3 Capital Adequacy Ratio 31
4.4 Advances to deposit Ratio 32
4.5 Classified Loan to total Loan and Advances 33
4.6 Standard Loan to Total Loan 34
4.7 Trend Analysis 35
CHAPTER - 5 : FINDINGS, RECOMMENDATIONS AND
CONCLUSION
5.1 Findings 36
5.2 Recommendation 37
5.3 Conclusion 38
Bibliography 39

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LETTER OF TRANSMITTAL
July 15, 2019
To
Controller of Examination
National University
Gazipur-1704
Subject: To submit an internship report on an analysis of Credit Risk Management of
Shimanto Bank Ltd.
Dear Sir,
It is immense pleasure for me to submit this internship report as partial fulfillment of the
requirement of MBA program. I worked at Shimanto Bank Ltd. for three months. I have
prepared my internship report on ‘‘An Analysis of Credit Risk Management of Shimanto
Bank Ltd.’’ Here, I have tried my best to give an overview of Credit Risk Management of
Shimanto Bank Ltd. and I also have tried my best to make this analysis and report a
successful one. This report has given me an opportunity to apply my theoretical expertise and
ideas into analysis of the topic mentioned and hence provide me with real research
experience, which has sharpen my views, ideas and ability to do research further.
I hope you would find the report in appropriate manner. I appreciate your co-operation and
hope you will call upon me with my queries occasioned by this report. In preparing this
report, I have followed the instructions of yours. I will be glad to clarify any discrepancy that
may arise. Thanking you and looking forward to receive your cordial approval of my
submission.
Sincerely Yours
……………………….
( SABIHA AKTER )
Reg. No : 15601000497
Session : 2015-2016
Program : MBA
Major in Finance
Daffodil Institute of IT (DIIT)

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LETTER OF AUTHENTICATION
I am pleased to declare that SABIHA AKTER bearing the No Registration: 15601000497
students of 3rd
Batch MBA program was advised to perform a study on the issue ‘‘An
Analysis of Credit Risk Management of Shimanto Bank Ltd.’’ for writing an internship
report.
This student has reviewed all the relevant materials & has conducted efforts practically in
‘‘Shimanto Bank Limited’’ for three months to achieve knowledge regarding banking sector
in Bangladesh. I have supervised her study from the very beginning as well as the preparation
of the final report.
I also knowingly certify that the Internship Report is an original one and has not been
submitted elsewhere previously for publication in any form.
She is wished all the best in her effort.
…………………………………
Mohammed Shakhawat Hossain
Associate Professor and Principal
Daffodil Institute of IT ( DIIT )

6. III | P a g e
DECLARATION
I declare that Internship Report on ‘‘An Analysis of Credit Risk Management of Shimanto
Bank Ltd.’’ represent the result of my own research works, pursued under the supervision of
Mohammed Shakhawat Hossain, Associate Professor and Principal, Daffodil Institute of IT
(DIIT).
I further affirm that the work reported in this report is original and no part or whole of this
report has been submitted to, in any form, any other university or institution for any degree or
any other purpose.
……………………….
( SABIHA AKTER )
Reg. No : 15601000497
Session : 2015-2016
Program : MBA
Major in Finance
Daffodil Institute of IT (DIIT)

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ACKNOWLEDGEMENT
At the beginning, I would like to express my deepest gratitude to the Almighty for giving me
the strength and the ability to finish the task within the scheduled time. I am deeply thankful
to my internship supervisor Mohammed Shakhawat Hossain, Associate Professor &
Principal, Daffodil Institute of IT ( DIIT ), for his whole-hearted supervision to me during the
internship period. His valuable suggestions and guidance help me a lot to prepare the report
in a well-organized manner. Finally, during my internship program, I am especially grateful
to all the employees of Shimanto Bank Ltd. for their help, sincere co-operation and
coordination to prepare this report. Finally, my sincere apology goes to the readers for my
conceptual and printing mistake, if there is any.

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EXECUTIVE SUMMERY
No economy can grow and improve the living standards of its population in the absence of
well-functioning and efficient financial sector. Since banking business is the dominate aspect
of the financial sector, this paper details with that.
In the age of modern civilization bank is playing its spending role to boost up the economy.
The co-operation of the bank in the development of economy is indispensable in every
economic activity. Bank provides means & mechanisms of transferring command over
resources from those who have an excess of income over expenditure to those who can make
use of the same for adding to the volume of productive capital. There are a large number of
small savers with small amount of savings who are generally reluctant to invest their surplus
income because of their lack of adequate knowledge about complicated investment affairs.
The bank provides them with the profitability, safety and liquidity by means of different
savings media offering varying degrees of mix of liquidity return and safety of savings. The
saving banks use as their key of business. They invest the savings in higher degree of return
and maximize their profit in business.
This report is mainly based on the Credit Risk Management system of the bank. Loan
management is a very important subject for every bank. At present, the loan sanction is not
the main problem but management the sanctioned loan is the more important for the every
bank managers. If they can’t control or manage the disbursement loan properly then they can
face different types of problems. As a fresh bachelor degree student, we also need to know
the full loan management procedures.
To evaluate the performance of Shimanto Bank Ltd. Credit Risk Management of several
ratios and trend analysis related to credit risk has been calculated.
An analysis of credit risk grading has been consisting of five chapter’s starts with the
introduction chapter to describe the objectives and limitation of the report. The second
chapter includes company overview of Shimanto Bank Ltd. The third chapter belongs
conceptual framework regarding the Shimanto Bank Ltd. and its Credit Risk Management
policy. In chapter four contains analysis and chapter five contains findings, recommendations
and conclusion of this report.

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ACRONYMS
BB Bangladesh Bank
CAD Credit Administration Division
CAR Credit Adequacy Ratio
CC Cash Credit
CD Corporate Division
CRG Credit Risk Grading
CRM Credit Risk Management
CRAB Credit Rating Agency in Bangladesh
CSR Corporate Social Responsibility
EFT Electronic Fund Transfer
ECC Export Cash Credit
EOL Excess Over Limit Share
EPS Earning Per Share
FSS Financial Spread Sheet
FDR Fixed Deposit Receipt
G Growth
HOCC Head Office Credit Committee
IT Information Technology
ICD Industrial Credit Division
ICT Information and Communication Technology
SMBL Shimanto Bank Limited
KYC Know Your Customer
LRA Lending Risk Analysis
MAMCOM Management Committee
MIS Management Information System
PAU Project Appraisal Unit
RM Relationship Manager
SOP Standards Operating Procedure
IRR Internal Rate of Return

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LIST OF TABLES
TABLE NO. DETAILS PAGE NO
1 Credit Risk of Any Bank 12
2 Number & Short Name of Grades Used in the CRG 22
3 CRG Risk Weight 28
4 Debit Ratio 30
5 Capital Adequacy Ratio 31
6 Advances to Deposit Ratio 32
7 Classified Loan to total Loan and Advances 33
8 Standard Loan to Total Loan 34
9 Total Loan to Advance Trend 35

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LIST OF FIGURES
FIGURE NO. DETAILS PAGE NO
1 Hierarchy of Shimanto Bank Ltd. Management 6
2 Risk Management Process 12
3 Methods of Credit Risk Analysis 19
4 IRR Decision Rule 23
5 Financial Leverage 30
6 Capital Adequacy Ratio 31
7 Advances to Deposit Ratio 32
8 Classified Loan to total Loan and Advances 33
9 Standard Loan to Total Loan 34
10 Total Loan to Advance Trend 35

12. CHAPTER-1
INTRODUCTION

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1.1 ORIGIN OF THE STUDY :
Financial institutions play an important role to develop economic conditions of any country.
Banking sector is one of the largest sectored among them. Bangladesh is a developing country.
There are two types of banks like private and public banks. These banks specially work in the
field of promotion of capital encouragement of entrepreneurship, employment opportunist etc.
Due to globalization, money transfer and other important task is easily done by banks. In the
garment sector most of the institution stake loan from bank and they also give the payment of
buyers through bank, for opening LC bank is also needed. For our agriculture sector farmers
take loan from agricultural bank, not only the giving loan but also in other task like mortgage,
deposit, social task and many other sector bank has involved. Open market of free economy
concept is used all over the world.
This report is based on the internship program. Shimanto Bank Ltd. arranges internship
program provide practical knowledge about banking activities for university students as
universities conducted with different organization after the completion of theoretical courses
of program of MBA. A group of interns must carry out a specific project, which is assigned by
Shimanto Bank Ltd. In this particular report, I am an internee of the previously mentioned
1.2 OBJECTIVE OF THE STUDY OF CRM :
The main objective of this report is to study of the credit risk Management of Shimanto Bank
Ltd. There are some others objectives as below.
1.2.1 Specific Objective :
I. To study how credit risk arise
II. To identify the process of credit risk management (CRM) of Shimanto Bank Ltd.
III. To study how credit risk analyzed by CRM team of Shimanto Bank Ltd.
IV. To see the steps taken by CRM team mitigate the credit risk.
1.2.1 General Objective :
I. To study the overview of the credit risk system of Shimanto Bank Ltd.

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1.3 METHODOLOGY :
Empirical analysis has been made on the basis of the objectives of this paper and in the context
of the case study of Shimanto Bank Ltd. The data collected for this study is mostly secondary
data. This data includes qualitative data. The Process Guidelines of CRM of SMBL different
circulars from Bangladesh Bank on credit Risk Management. The qualitative data has been
collected mostly from annual reports.
1.3.1 Data collection procedure :
In this study both primary & secondary data were collected.
Primary source:
I. Personal observation
II. Desk work in different section, of the bank.
III. Conversation with bank’s employees.
Secondary Source:
I. Annual report of Shimanto Bank Ltd.
II. Various types of books, articles & journal related to banking.
III. Information from the internet.
1.3.2 Data Processing & Analysis:
Collected information have processed & compiled with the aid of MS Word, Excel & other
related computer software. Necessary tables have been prepared on the basis of collected data
and various statistical techniques have been applied to analyses on the basis of classified
information. Detail explanation and analysis have also been incorporated in the report.

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1.4 SCOPE OF THE STUDY :
There are three types of schedule commercial banks are in operation in our economy. They are
Nationalized Commercial Banks, Local Private Commercial Banks and Foreign Private
Commercial Banks. SMBL has discovered a new horizon in the field of banking area, which
offers different General Banking, Investment and Foreign Exchange Banking system. So, I
have decided to study on the topic ‘‘An Analysis of Credit Risk Management of Shimanto
Bank Ltd.’’ Because the Internship program of the university is an integral part of the MBA
program. So, it is obligatory to undertake such task by the students who desirous to complete
and successfully end-up their MBA degree. This also provides an opportunity to the students
to minimize the gap between theoretical and practical knowledge. Students are required to work
on a specific topic based on their theoretical and practical knowledge acquired during the
period of the internship program and then submit it to the teacher. That is why I have prepared
this report.
This Internship report covers the overall activities performed by “Shimanto Bank Limited”,
such as General banking, Loans and Advances, Foreign exchange and Trades. This report has
been prepared through extensive discussion with bank employees and with the customers.
While preparing this report, I had a great opportunity to have an in depth knowledge of all the
activities practiced by the “Shimanto Bank Limited”. It also helped me to acquire a firsthand
perspective of a leading private bank in Bangladesh.
1.5 LIMITATION OF THE STUDY :
 The time period for this study was short.
 The staffs of the branch were sometimes so busy that they could not help us all time.
 Preparing internship report is really troublesome.
 This type of report preparation is expensive.
 Collection of data was not smooth.
 Analyzing with financial data is much more confusing and complicated than any other
data.
 Secrecy of management.
 Lack of knowledge and experience among the officials.
 Budget Limitation.

16. CHAPTER-2
COMPANY OVERVIEW

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2.1 BACKGROUND OF SHIMANTO BANK :
As the slogan goes ‘Shimanhin Astha’, Shimanto Bank Limited aims to be the leading
financial institution to serve with utmost trust.
Shimanto Bank Ltd. is fully owned by Border Guard Bangladesh Welfare Trust – a solid
welfare initiative for the employees of Border Guard Bangladesh (BGB). Bangladesh Bank
has accorded banking license to Shimanto Bank Ltd. on July 21, 2016 as a full-fledged
scheduled commercial bank with Paid-up Capital of BDT 4000 million. Honorable Prime
Minister of Bangladesh was kind enough to inaugurate the bank on September 1, 2016.
Shimanto Bank Ltd. is primarily focused on fulfilling all the banking need of the BGB
members as well as will be operating with all other commercial banking functions by offering
numbers of attractive asset and liability products and services tailored for country’s Retail,
SME and Corporate clients. As BGB already has its presence all over the country including
remote border areas, it will be much easier for Shimanto Bank Ltd. to expand its business
network vis-à-vis providing inclusive banking facilities to non-banked population of the
country.
The bank has a mission to excel in the banking arena with its visionary Board of directors,
experienced management team supported by highly dedicated staffs. The bank is committed
to set an example of high standards of corporate governance for the other financial
institutions of the country.
2.2 VISION OF THE SHIMANTO BANK :
To build a sound and healthy financial institution which will provide technology driven
customer centric inclusive banking.

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2.3 MISSION OF THE SHIMANTO BANK :
I. Achieve and maintain strong corporate governance, highest level of transparency and
cost-efficiency at all levels of operations.
II. Ensure continuous improvement of policies, procedures and systems across the Bank
for regulatory compliance and sustainable growth in all respect.
III. Uphold the corporate image by implementing core values and strategic priorities.
2.4 CORE VALUES OF SHIMANTO BANK LIMITED :
I. Customer centric
II. Dynamism & Techno centric
III. Innovativeness
IV. Trust worthiness & Integrity

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2.5 ORGANIZATION STRUCTURE :
Fig-01 : Hierarchy of Shimanto Bank Ltd. Management
Senior Executive Vise President
Executive Vise President
Senior Vise President
Vise President
Senior Assistant Vise President
Assistant Vise President
First Assistant Vise President
Senior Principle Officer
Principle Officer
Senior Officer
Officer
Junior Officer
Assistant Officer
Trainee Assistant Officer

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2.6 ORGANIZATIONAL HIERARCHY OF CORPORATE BRANCH :
Branch Manager
Customer Service Manager
❖ Relationship Manager
❖ Customer Service Officer
❖ Head Teller
2.7 PRODUCTS OFFERED BY SHIMANTO BANK :
Asset Products :
I. SMBL Krishi Rin
II. SMBL Dishari.
III. SMBL Salary Od.
IV. Corporated Term Loan.
V. SMBL Cash
VI. SMBLVehicle
VII. SMBL Shimanto Nir.
VIII. SMBL Shimanto Nibash.
IX. SMBL Personal Loan.
X. SMBL Marrige Loan.
XI. SMBL Education Loan.
XII. SMBL Astha
XIII. SMBL Pansion Backed Loan.
XIV. SMBL Uddipta
XV. SMBL Time Loan.

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Liability Product:
I. Shimanto Sanchay
II. BGB Payroll
III. SMBL Current Account
IV. SMBL SND Acc.
V. SMBL Term Deposite
VI. SMBL Money Saver
VII. Monthly Benefit Deposit Scheme
VIII. SMBL RFCD Acc.
IX. Student Acc.
X. Student DPS.
CARDS & ADC:
I. SOP of SMBL Internet Banking Connect
II. SOP of SMBL Atm Operation
III. PPG of VISA Credit Card
IV. PPG of Prepaid Card
V. PPG of Debit Card

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2.8 SERVICES OFFERED BY SHIMANTO BANK :
2.8.1 Personalized Services :
Shimanto Bank Limited with its widely speeded branch network and skilled personnel
provides prompt and personalized services like issuing
1. Demand Draft
2. Telegraphic Transfer
3. Mail Transfer
4. Pay Order
5. Security Deposit Receipt
6. Transfer of fund by special arrangement
7. Normal transfer
8. Electronic transfer through Ready Cash Card
9. Locker Service
2.8.2 Online Banking :
Times have changed and technological boom has given the businesses superlative
edges over the manual and traditional functionalities of business operations. So the bank
business in Bangladesh has overwhelmingly changed with the introduction of on-line banking
in bank business. Shimanto Bank Limited has also stepped into the world of on-line banking
and is rapidly progressing in implementation of on-line banking through Core Banking
System (CBS).
2.8.3 ATM Service :
To offer modern banking services, Shimanto Bank Limited is providing its customers
with ATM facilities. At present, this ATM service is being provided under the largest
network.

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2.8.4 Inland Remittance :
Shimanto Bank Ltd. with its wide-ranging branch network and skilled personnel provides
prompt and personalized services like issuing:
1. Demand Draft
2. Telegraphic Transfer
3. Mail Transfer
4. Pay Order
5. Security Deposit Receipt
2.8.5 Other Services:
Locker Service: Our safe deposit locker service offered from selected branches gives
a completely secured facility for safekeeping of precious items, confidential
documents and other valuables.
Issuance of Television License: Only Shimanto Bank Limited is providing this
service in Bangladesh.
2.9 PRINCIPLE ACTIVITIES OF SHIMANTO BANK :
Shimanto Bank Ltd. is a commercial bank in Bangladesh. The aim of the Bank is to actively
participate in the socio-economic development of the nation by operating a commercially
sound Banking system. It provides credit to deserving borrowers and at the same time,
protects depositor’s interest.

24. CHAPTER-3
CONCEPTUAL FRAMEWORK

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3.1 INTRODUCTION :
Banks don’t want to make loans to those borrowers who can’t repay to them. Prior to making
loans bank evaluate the credit risk of respected borrowers and their ability to repay loans.
Over years the purpose & process of evaluating credit risk has been changed. The traditional
method includes. Evaluation of financial statements such as income statement, balance sheet
and cash follow statement is followed by recent time’s banks to measure credit risk analysis
models and related credit rating of different types of loans. These methods have become
popular among the banks credit risk management strategies.
3.2 RISK MANAGEMENT :
Bangladesh Bank advised the bank industry to identify the risk factor associated with their
business and to take effective measures in the functional process to minimize and control the
risk in the area of lending, internal control, liquidity and treasury management. Introduction
of risk analysis culture, loan classification and ratings are the board schemes for assessing the
risk status of banking assets. The bank has already implemented the risk management
guidelines which cover the following areas.
 Credit Risk
 Internal Control and Compliance Risk
 Asset and Liability Management Risk
 Foreign Exchange Risk
 Money Laundering Risk
 Information and Communication Technology Risk
The Risk Management Department within the Bank is responsible for monitoring and
reporting on the risk faced by the Bank in its operations in financial market as follows :

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Fig-02 : Risk Management Process
3.3 CREDIT RISK :
Credit Risk and default risk are two inter-changeable terms. Credit risk arises mainly from
the lending, trade finance, leasing and treasury business. This can describe as potential loss
from the failure of a country party to perform as per contractual agreement with the bank as
the borrowers fail to repay it. The financial incapability arises when the creditor’s source of
earning becomes volatile. And the unwillingness comes from the creditor’s tendency is to
cheat and to make a bulk gain from the fraudulence activities. At a stretch the illustration of
credit risk for the bank is that the performing loan portion of bank can turn into non-
performing ones. And that will decrease the recovery rate of the loan extended and as a result
bank will face trouble providing profit of bank will be hampered. Gradually the bank will
become insolvent and may be some days a bankrupt one.
The extension and scope of credit risk for any bank is very broad. Here below a table is being
presented to give a little insight about the credit risk of any bank.
Classification Status Length of Overdue Provision
Requirements
Unclassified Less than 6 months 1%
Substandard 6 month or more but less than 9 months 20%
Doubtful 9 month or more but less than 12 months 50%
Bad and Loss 12 month or more 100%
Table-01 : Credit Risk of any Bank
Risk Assessment and Management
Risk Control
Risk Monitoring
Risk Identification

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3.4 CREDIT RISK MANAGEMENT :
Credit risk refers to the probability of loss due to a borrower’s failure to make payments on
any type of debt. Credit risk management is the practice of mitigating losses by
understanding the adequacy of a bank’s capital and loan loss reserves at any given time – a
process that has long been a challenge for financial institutions.
The global financial crisis – and the credit crunch that followed – put credit risk management
into the regulatory spotlight. As a result, regulators began to demand more transparency.
They wanted to know that a bank has thorough knowledge of customers and their associated
credit risk. And new Basel III regulations will create an even bigger regulatory burden for
banks.
To comply with the more stringent regulatory requirements and absorb the higher capital
costs for credit risk, many banks are overhauling their approaches to credit risk. But banks
who view this as strictly a compliance exercise are being short-sighted. Better credit risk
management also presents an opportunity to greatly improve overall performance and secure
a competitive advantage.
3.5 CHALLENGES TO SUCCESSFUL CREDIT RISK
MANAGEMENT:
 Inefficient data management. An inability to access the right data when it’s needed
causes problematic delays.
 No groupwide risk modeling framework. Without it, banks can’t generate complex,
meaningful risk measures and get a big picture of groupwide risk.
 Constant rework. Analysts can’t change model parameters easily, which results in too
much duplication of effort and negatively affects a bank’s efficiency ratio.
 Insufficient risk tools. Without a robust risk solution, banks can’t identify portfolio
concentrations or re-grade portfolios often enough to effectively manage risk.
 Cumbersome reporting. Manual, spreadsheet-based reporting processes overburden
analysts and IT.

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3.6 BEST PRACTICES IN CREDIT RISK MANAGEMENT :
The first step in effective credit risk management is to gain a complete understanding of a
bank’s overall credit risk by viewing risk at the individual, customer and portfolio levels.
While banks strive for an integrated understanding of their risk profiles, much information is
often scattered among business units. Without a thorough risk assessment, banks have no way
of knowing if capital reserves accurately reflect risks or if loan loss reserves adequately cover
potential short-term credit losses. Vulnerable banks are targets for close scrutiny by
regulators and investors, as well as debilitating losses.
The key to reducing loan losses and ensuring that capital reserves appropriately reflect the
risk profile – is to implement an integrated, quantitative credit risk solution. This solution
should get banks up and running quickly with simple portfolio measures. It should also
accommodate a path to more sophisticated credit risk management measures as needs evolve.
The solution should include:
 Better model management that spans the entire modeling life cycle.
 Real-time scoring and limits monitoring.
 Robust stress-testing capabilities.
 Data visualization capabilities and business intelligence tools that get important
information into the hands of those who need it, when they need it.

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3.7 RISK MEASUREMENT, MONITORING AND CONTROL
FUNCTION :
Risk Measurement : Once risks have been identified, they should be measured in order to
determine their impact on the banking institution’s profitability and capital. This can be done
using various techniques ranging from simple to sophisticated models. Accurate and timely
measurement of risk is essential to effective risk management systems. An institution that
does not have a risk measurement system has limited ability to control or monitor risk levels.
Banking institutions should periodically test their risk measurement tools to make sure they
are accurate. Good risk measurement systems assess the risks of both individual transactions
and portfolios.
Risk Monitoring : Institutions should put in place an effective management information
system (MIS) to monitor risk levels and facilitate timely review of risk positions and
exceptions. Monitoring reports should be frequent, timely, accurate, and informative and
should be distributed to appropriate individuals to ensure action, when needed.
Risk Control : After measuring risk, an institution should establish and communicate risk
limits through policies, standards, and procedures that define responsibility and authority.
These limits should serve as a means to control exposure to various risks associated with the
banking institution’s activities. Institutions may also apply various mitigating tools in
minimizing exposure to various risks. Institutions should have a process to authorize and
document exceptions or changes to risk limits when warranted.

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3.8 MAJOR FUNCTION OF CRM :
 To update Banks credit policy/lending guideline, procedures and control mechanisms
related with all credit risk arising from corporate/commercial banking and retail
banking etc.
 To approve/decline credit proposal received from corporate division within delegated
authority and to recommend to the higher authority if it is beyond delegation.
 To provide advice/assistance regarding all credit matters to corporate
Division/Brances.
 Periodical review of different types of credit, maintain effective follow up and
supervision and take all possible measures in time to save from classification.

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3.9 DUTIES AND RESPONSIBILITIES OF CRM :
 Examine/review credit proposals (new/renewal) sent by corporate division/branches
to.
i.Process for approval.
ii.Placing credit proposals in the Head Office Credit Committee.
iii.Decline credit proposals if they do not meet criteria.
iv.Recommendation of credit proposal to the Managing Director/EC/Board for their
approval.
v.Prepare facility sanction letter and send copies to:
Corporate division/Branches
Credit Administration Division
 A Review of the following things on a periodical basis in the light of
Structuring
Adequacy of security
Pricing and profitability
Financial analysis
Form and content
Performance
Turnover
Repayment
 Revise and ratify borrower’s risk grade developed by Corporate Division/branches.
 Credit approval authorities delegated review on an annual basis.
 Retail Credit from time to time review approval procedures
 Review and update banks and credit operating procedures on an annual basis.
 Conduct industry analysis and detect risk involved with each industry.
 To minimize risk of lending to specific industry formulate strategy
 Guide and educate officers of all units of credit division and corporate
division/branches.

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3.10 RISK CONTROL AND MEASUREMENT TAKEN BY SHIMANO
BANK LTD. :
 Manuals and standards Operating Procedure (SOP) is in place and implementation
regularly monitored.
 Regular review of system and network by Management Committee ( MANCOM ) and
Management Information System Committee ( MIS ).
 Management through Internal Control and Complaince Division controls operational
procedure of the bank.
 Internal control and compliance division undertakes periodical and special audit of the
branches and departments at Head Office for review of the operation and compliance
statutory requirement.
 Comprehensive and special audit branches and business units by internal audit,
internal control and vigilance department.
 Risk based audit by internal audit division segregationduties and multi-tire approva;
procedure.
 IT audit is conducted on a regular basis.
 Periodic review meeting on operational and other risk by audit Committee of the
board of Directors.
 Disaster recovery site for ICT operation.

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3.11 METHODS OF CREDIT RISK ANALYSIS :
There are two kinds of analyses that Shimanto Bank Ltd. performs to manage credit risk.
These are Qualitative analysis and Quantitative analysis.
Fig-03 : Methods of Credit Risk Analysis
3.11.1 Qualitative Factors :
Effective credit management is a must for to sustain its profitability and growth. Shimanto
Bank Ltd. uses some Qualitative tools or instruments by means of which it can manage its
credit portfolio in a fruitful way. Some of these tools that are regarded as indispensable for
management of different credit portfolio are furnished below.
Qualitative
analysis
Security
Margin
Creation of Charge
Six C Aspects
Proper Documentation
Quantitative
Analysis
ALTMAN
Z-Score Model
PayBack Period Analysis
NPV& IRR Analysis
Premium for risky
borrowings
CRG(Credit Risk
Grading)

34. 20 | P a g e
Security:
It insures recovery of loans and advances. Though now-a-days greater emphasis is put on the
purpose of the loan rather than securities, nevertheless the securities play an important role to
take a decision. The types of Securities offered vary from place. However, securities can be
classified into two categories on the basis of their nature.
a. Primary security:
Primary security means the security offered by the borrower himself as coverage for the loan.
It infers to the asset, that has been bought with the help of the bank.
b. Collateral security:
Collateral security means all other additional security other than the primary securities such
as land/ building, etc are considered as collateral securities which may be offered/ deposited
by the borrower or, by any other third party.
❖ Margin :
Margin is a cushion against any possible scarcity of fund. It is a proportion of borrower’s
contribution. The certainty of margin depends on the nature and type of security and the
financial stability of the customer and also keeping in view the restrictions imposed by the
Bangladesh Bank (Head office from time to time). In case of goods reasonable margin should
be retained for covering any shortage due to shortage, fluctuation in rate, fall in prices and
charging of bank interest.
❖ Creation of Charge :
Creation of Charge means making a security legally available as cover against advance
enabling the bank to realize the security in the event of borrower’s default to liquidate the
credit extended as per terms of the contract entered into. While advancing money Shimanto
Bank Ltd. secures its position. Not only should he insist on good security but the method of
charging it should be legal perfect. There are different types of securities as per their nature.
Common Methods of creation of charge by Shimanto Bank Ltd. are:
▪ Pledge
▪ Hypothecation
▪ Assignment
▪ Lien
▪ Set off
▪ Mortgage.

35. 21 | P a g e
• Pledge:
When goods are bailed as security against advances or performance of a promise then it is known as
pledge. In this case, ownership keeps with the pledge and profession lies with the pledge that acquires
a special priority and lien so long his loan is not paid.
• Hypothecation:
It creates a change on property or goods for the amount of the debt. The owner retains his ownerships
as well as possession. But in case of default bank will be the legal owner of the goods.
• Mortgage:
Transfer of an interest in specific property immovable property for the purpose of securing the
payment of money advances or to be advanced by way of loan, existing or future debt, the
performance, which may gives raise to a pecuniary liability. Usually there are two types of mortgage
such as registered mortgage such as registered mortgaged & equitable mortgage.
• Assignment:
An assignment means transfer of right, property or debt or to make it over to another person. It is
same as mortgage, with the difference that in mortgage there is always a right of redemption but in the
assignment, it is provided by separate agreement.
• Lien:
Lien is a right to retain goods /properties belonging to the debtor given to the creditor as security until
he has discharged the debt due. Lien entitles the retainer to only retain the goods. He cannot sell the
goods in the absence of a contract to the contrary.
• Set off:
The right of set off enables the banker to adjust wholly or partially, a debt balance in a customer’s
account with any balance lying at his credit in any other account.
Guarantee:
Guarantees are obtained from the third parties to secure advances under different situations such as in
case of clean advances, which is subject to credit restrictions. Guarantee should never be accepted
from minors and persons of unsound mind, insolvent person who can’t enter in to a valid contract.
 Whether information regarding the borrower has been obtained from all possible
sources?
 Whether personal contacts with the borrower have been kept on at regular intervals?
 Whether debtor approach for enhancement of existing limit for genuine reason and
has been properly appraised?
 Whether careful watch has been kept on ups and downs of prices of goods with the
passage of time?
 Whether keen watch is being exercised on irregularity of any form on the loan
account.

36. 22 | P a g e
Insurance:
Insurance is a written and definite contract between two parties under which one party pays the other
party, the insurer, a definite sum of money called the premium in consideration of which the insurer
agrees to indemnify the losses under agreed terms and conditions. This insurance policy can be a
security for the bank in the time for sanctioning loans.
❖ Six C-Aspects :
The CRM division of NCCBL bank responsible for analyzing and recommendations on the
destiny of must loan applications is known as the main duty of loans and advances
department. It is widespread that this department must satisfactory answer three major
questions regarding each loan application
▪ Is the borrower creditworthy?
▪ Can the loan agreement be adequately protected and has the customer a high
probability of being able to service the loan without excessive strain?
▪ Can the bank perfect its claim against the assets or earnings of the clients so that, in the
event of default, bank available funds can be recovered rapidly at low cost and with low
risk?
3.11.2 Quantitative Analysis
The borrower’s different aspects are also justified and assessed through some quantitative
analysis. Some of these are subjective judgment depended. And some of them are quite
precise in lieu of calculation and numbers.
❖ ALTMAN Z-Score Model:
Through ALTMAN Z-Score Model the bankruptcy possibility of the borrower is judged. The
formula of the model may be used to predict the probability that a firm will go into distress
within few years. Z-scores are normally used to predict possibility of corporate defaults and
an easy-to-calculate control measure for the financial distress status of companies in
academic studies. The Z-score generally uses multiple corporate income statement and
balance sheet values to measure the financial health of a company.

37. 23 | P a g e
The formula is given below-
Z = 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + 1T5
T1 = Working Capital / Total Assets
T2 = Retained Earnings / Total Assets
T3 = Earnings before Interest and Taxes / Total Assets
T4 = Market Value of Equity / Book Value of debt
T5 = Sales/ Total Asset
Where, Z > 2.99 -“Safe” Zones
1.81 < Z < 2.99 -“Grey” Zones
Z < 1.81 -“Distress” Zones
Using this formula, the credit officer of Shimano Bank Ltd. come upon a decision regarding
the Bankruptcy condition of the borrower.
Fig-04: IRR Decision Rule
❖ Premium for risky Borrowing:
When the term allotment of credit comes the term risk usually gets attached with it. While
taking more risk allotting credit to a borrower obviously bank will expect more return from
17%
17%
18%
18%
19%
19%
20%
20%
21%
21%
Cost of Capital IRR
Series1 18% 21%
IRR DECISION RULE

38. 24 | P a g e
the Borrower. The same case also goes with Shimanto Bank Ltd. like other Banks. Two
Scenarios are depicted below on the basis of-
• Gestation Period
• Riskiness of the Project to be financed
❖ Credit Risk Grading (CRG) :
The credit risk grading (CRG) is a collective definition based on the pre-specified scale and
reflects the underlying credit-risk for a given risk. Generally, credit risk grading consists of a
number/ alphabet/symbol as a primary summary indicator of risks associated with a credit
risk. Credit risk grading model is the basic framework for developing a credit risk
management system.
Credit Risk Grading System :
Credit risk grading is an important tool for credit risk management as it helps the Banks &
financial institutions to understand various dimensions of risk involved in different lending
transactions. The accumulation of such grading across the prospective borrowers, activities
and the products of business can provide better assessment of the quality of credit portfolio of
a bank or a branch. The credit risk grading system is essential to take decisions both at the
pre-sanction stage as well as post-sanction stage.
At the pre sanction stage, credit grating helps the sanctioning authority to decide whether to
lend or not, what should be the price of loan, what should be the extent of exposure, what
should be the perfect credit facility, what are the various loan facilities, what are the various
risk mitigation methods to put a cap on the risk level. Having considered the significance of
credit risk grading, it becomes mandatory for the banking system to carefully develop a credit
risk grading model which meets the objective outlined above.
The lending risk analysis (LRA) manual introduced in 1993 by the Bangladesh Bank has
been practice for mandatory use by the Banks & financial institutions for loan size of amount
1.00 crore and above. In spite of that, the LRA manual suffers from a lot of subjectively,
sometimes creating confusion to the lending Bankers in terms of selection of credit proposals

39. 25 | P a g e
on the basis of risk possibility. In the mean time, in 2003 end Bangladesh Bank designated
guidelines for credit risk management of Banks wherein it recommended the introduction of
risk grade score card for risk assessment of credit proposals.
Function of Credit Risk Grading :
Well-managed credit risk grading systems promote bank safety and soundness by facilitating
informed decision-making. Grading system measure credit risk and differentiate individual
credits and groups of credits by the risk they face. This permits bank management and
examiners to oversee changes and trends in the level of risks. This process also permits bank
management to manage risk to optimize returns.
Number & Short Name of Grades Used in the CRG :
The proposed CRG scale for the banks consists of 8 categories with Short names and
Numbers are provided as follows:
GRADING SHORT NAME NUMBER
Superior SUP 1
Good GD 2
Acceptable ACCPT 3
Marginal/Watchlist MG/WL 4
Special Mention SM 5
Sub standard SS 6
Doubtful DF 7
Bad & Loss BL 8
Table-02 : Number & Short Name of Grades
A clear operational definition of the different categories of credit risk grading is given as
follow:
Superior-(SUP)-1
▪ Credit facilities, which are completely secured i.e. cash covered.
▪ Credit facilities completely covered by government guarantee.
▪ Credit facilities fully recovered by the guarantee of a top tier international Bank.

40. 26 | P a g e
Good-(GD)-2
▪ Good repayment capacity of the borrower
▪ The borrower has enough liquidity and low leverage.
▪ The company describes consistently strong earnings and cash flow.
▪ Borrower is well established, has strong market share.
▪ Very good management skill & expertise.
▪ All security documentation should be in rightly placed.
▪ Credit facilities completely covered by the personal guarantee of a top tier local
Bank.
▪ Aggregate consolidated score of 85 or greater based on the risk grade score sheet.
Acceptable-(ACCPT)-3
▪ These borrowers are not so much strong as Best Grade borrowers, but still entails with
consistent earnings, cash flow and have a good track record.
▪ Borrowers have sufficient liquidity, cash flow and earnings.
▪ Credit of this criteria would normally be backed by acceptable collateral (1st charge
over inventory/ receivables/ equipment/ property).
▪ Acceptable management.
▪ Acceptable parent or sister concern company guarantee.
▪ Consolidated score of 75-84 based on the Risk Grade Score.
Special Mention-(SM)-5
▪ This grade has potential weaknesses that deserve management’s complete
attention. If left not corrected, these lack of strength may result in a deterioration
of the repayment prospects of the borrower.
▪ Serve management problems exist.
▪ Facilities should be downgraded to this grate if sustained deterioration in financial
condition is noted (consecutive losses, negative net worth, excessive leverage).
▪ An consolidated score of 55-64 based on the Risk Grade Score Sheet.

41. 27 | P a g e
Substandard-(SS)-6
▪ Financial condition is not strong and capacity to repay is in doubt.
▪ These weaknesses endanger the full settlement of loans.
▪ Bangladesh Bank requirements for sub-standard credit should be applied .
▪ A complete Score of 45-54 based on the Risk Grade Score Sheet.
Doubtful-(DF)-7
▪ Repayment of principal and interest in full amount is not likely and the probability
of loss is extremely high.
▪ However, due to different factors, such as litigation, liquidation procedures or
capital injection, the asset is not yet classified as bad & loss.
▪ Bangladesh Bank specific requirements for doubtful credit should be applied.
▪ A consolidated score of 35-44 based on the Risk Grade Score Sheet.
Bad & Loss-(BL)-8
▪ Credit of this division has long outstanding with no improvement in obtaining
repayment or on the verge of wind up/liquidation.
▪ Prospect of recovery is not satisfactory and legal options have been strictly
pursued.
▪ Proceeds generated from the liquidation or realization of security may be awaited.
The continuity of the loan as a bankable asset is not secured and the forecasted
loss should have been provided for.
▪ This classification shows that it is not practical or desirable to defer writing off
this basically valueless asset even though partial recovery may be affected in the
next periods.
▪ Guidelines of Bangladesh Bank for timely write off of bad loans must be adhered
to. Legal procedures should be initiated.
▪ Bangladesh Bank specific requirements for bad & loss credit shall apply.
▪ A consolidated score of less than 35 based on the Risk Score Sheet.

42. 28 | P a g e
Calculation Process of CRG (Credit Risk Grading) :
 The Financial Statement from the borrower is obtained for 03 years
 From the Financial Statement the required elements are taken into the input Income statement
and Balance sheet of the Spreadsheet guided by the Bangladesh Bank.
 These inputs automatically turns into output in some other excel sheets.
 Then the most important four types of ratios are calculated through the output elements.
These are-
I. Profitability ratio
II. Liquidity Ratio
III. Leverage Ratio
IV. Coverage Ratio
 Then from the Spreadsheet taking the ratios data ( last year), these are used as input in the
score sheet accompanied by some other qualitative factors
 Individual Score is given to all parameters both Qualitative and Quantitative factors
 Finally a grand total of the score is calculated to define a category as described before
Credit Risk Grading (Score Sheet) :
Credit risk grading is an important part of borrowers risk analysis. The use of score sheet
according to the guidelines of Bangladesh Bank estimates the overall condition of credit
worthiness of borrower. A case study has been included in this empirical analysis chapter to
evaluate the overall process of credit risk grading. The allocation of risk weights are as
follows.
Particulars Weight
Financial Risk 50%
Business Risk 18%
Management Risk 12%
Security Risk 10%
Relationship Risk 10%
Table-03 : CRG Risk Weight

43. CHAPTER-4
ANALYSIS

44. 29 | P a g e
4.1 INTRODUCTION :
In this chapter empirical analysis of Shimanto Bank Ltd. has been performed. The analysis
presents the performance evaluation of Shimanto Bank credit risk management. The empirical
analysis includes ratio analysis related to credit risk management, regression analysis of banks
credit disbursement and non-performing loans, trend analysis of related ratios and credit
disbursement. Probability of default and Altman Z score model estimates the level of default
risk of the bank. At the end of this chapter credit risk grading of a particular borrower has been
calculated representing the process of credit grading dine by the Shimanto Bank Ltd. to
measure the credit worthiness of borrower.

45. 30 | P a g e
4.2 FINANCIAL LEVERAGE :
Financial leverage refers to the relationship between liability and shareholders’ equity. The
following ratios are used to measure the leverage position of Shimanto Bank Ltd.
Debit Ratio : Debit ratio indicates the portion of firm’s total assets financed by borrowed fund.
The debit ratio position of the bank is as-
Debit Ratio 2016 2017 2018
Total Liabilities / Total Asset 0.93 0.84 0.9
Table-03: Debit Ratio
Figure-05 : Financial Leverage
Interpretation: The table indicates the trend of Debit Ratio of Shimanto Bank Ltd. The result
reveals that from year 2016 banks debit ratio has a decreasing trend. In year 2017 bank has the
lowest Debt ratio comparing to the past year. This is due to change in the debit management
strategy indicates the dependency on debt has been reduced by the bank successfully. The
global economic downtrend shifts the banks income growth in decreasing trend causes banks
to manage credit risk with cautions.
0.94
0.84
0.9
0.75
0.8
0.85
0.9
0.95
2016 2017 2018

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4.3 CAPITAL ADEQUACY RATIO :
Capital adequacy ratio states the banks equity position of tier 1 and tier 2 capitals over its risk
weighted asset. The calculation of capital adequacy from year 2006-2011 are shown in the
table following-
Capital adequacy ratio 2016 2017 2018
Tire-1 + Tire-2 Capital/RWA 4.2% 7.6% 8.1%
Table-05: Capital Adequacy Ratio (Car)
Figure-06 : Capital Adequacy Ratio ( Car )
Interpretation: The table indicates the trend of Capital Adequacy Ratio (Car) of Shimanto
Bank Ltd. The result reveals that from year 2016 bank maintains the required Car according to
the guidelines of Bangladesh bank. In year 2017 Car is 7.60% & year 2018 Car is 8.10%. It
has been increased from 2016 due to increase in capital reserve comparing year 2016.
4.20%
7.60% 8.10%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2016 2017 2018

47. 32 | P a g e
4.4 ADVANCES TO DEPOSITE RATIO :
This ratio indicates the portion of advances that bank has made from its deposit. The ratio must
be kept in a consistent form so that deposit may not become idle in banks balance sheet.
Advances to Deposit Ratio 2016 2017 2018
Advances/Deposit 0.74 0.79 0.81
Table-06 : Advances to Deposit Ratio
Figure-09 : Advances to Deposit Ratio
Interpretation: A mixed trend has been revealed in calculation of Advances to Deposit Ratio
of Shimanto Bank Ltd. Both the table and graph below present that banks this ratio has been
increased in years 2018 which is the highest among last two years, but 2016 & 2017, it slightly
decreases than 2018. This is due to management strategy of holding deposit in short term
investments due to the fluctuation in economy. It is mostly due to the economic downtrend and
poor increase in operating revenue in year 2016. A huge quantity of investment income from
capital market has been decreased due to the market collapse. The advance disbursement has
been reduced in year 2016 as borrower’s incurred negative growth in return from their
investment.
0.74
0.79
0.81
0.7
0.72
0.74
0.76
0.78
0.8
0.82
2016 2017 2018

48. 33 | P a g e
4.5 CLASSIFIED LOAN TO TOTAL LOAN ANDADVANCES :
This Ratio indicates the portion of classified loan from its total loan and advances. The
calculation has been presented the below table.
Classified loan to total loan 2016 2017 2018
Classified loan/total loan 0.08 0.05 0.13
Table-07: Classified Loan to total Loan and Advances
Figure-08 : Classified Loan to total Loan and Advances
Interpretation: A decreasing trend has been revealed in calculation of Classified Loan to total
Loan and Advances of Shimanto Bank Ltd. Both the table and graph above presents that banks
this ratio has been decreased from years 2016 to year 2017 which indicates that banks classified
loan has been decreased comparing to the growth of loan. But in 2018, it has been increased at
13%. This is due to management strategy of holding sound loan management system of the
bank.
0.08
0.05
0.13
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
2016 2017 2018

49. 34 | P a g e
4.6 STANDARD LOAN TO TOTAL LOAN RATIO :
The portion indicates the portion of standard loan from its total loan. The calculation has
been presented the following table :
Standard Loan to Total Loan 2016 2017 2018
Standard Loan / Total Loan 0.91 0.93 0.95
Table-09: Standard Loan to Total Loan
Figure-11 : Standard Loan to Total Loan
Interpretation: An increasing trend has been revealed in calculation of Standard Loan to total
Loan of Shimanto Bank Ltd. Both the table and graph above presents that this ratio has been
increased from years 2016 to year 2017 which indicates that banks standard loan has been
increased comparing the growth of loan.
0.91
0.93
0.95
0.89
0.9
0.91
0.92
0.93
0.94
0.95
0.96
2016 2017 2018

50. 35 | P a g e
4.7 TREND ANALYSIS :
Trend analysis has been performed in this chapter with ratios related to credit risk management.
These ratios are considered as important benchmark for the bank which refers to the banks
position in profitability, default risk level and efficiency. The trend analysis involves
comparison of ratio of the same firm over time periods. The present ratios are compared with
past data of the same firm focusing on the time series ratio analysis. The trend analysis indicates
a direction in change in the performance of banks improvement, deuteriation or consistency
over years. For analyzing the trend the performance of ratios related to credit risk are presented:
Total loan to advance trend 2016 2017 2018
Total loan/Advance trend 2113 million 1723 million 2540 million
Table-09 : Total loan to advance trend
Figure-10 : Total loan to advance trend
Interpretation: An increasing trend has been revealed in the total loan and advance trend og
Shimanto Bank Ltd. Both the table and graph above presents that in 2016 loan and advances
was higher than 2017 and this analysis has been increased in 2017 to 2018 which indicates that
banks standard loan has been increased comparing the growth of loan.
2113
1723
3145
0
500
1000
1500
2000
2500
3000
3500
2016 2017 2018

51. CHAPTER-5
FINDINGS, RECOMMENDATIONS
AND CONCLUSION

52. 36 | P a g e
5.1 FINDINGS :
Every bank has its own credit procedure. Bank under study possesses a standard credit
procedure. As the objective of my study is to make a comment on the credit management of
Shimanto Bank Ltd. I try my best to collect data for the study and find out the reality. Based
on the data generated during my study period I will sum up my findings here and I think this
will help me to achieve my objectives.
I. Bank follows the overall credit assessment and risk grading process according to the
sales of Bangladesh Bank.
II. Loan & the advances are vital to finance the projects. An appropriate credit
distribution system and monitoring will ultimately lead to the profit maximization of
banks. It is evident from that the size of SMBL loans & advances are increasing over
the years.
III. Sometime the loan documentation is not fairly done by the branch.
IV. Sometime the document verification is done after loan sanctioning the loan.
V. Sometimes it is difficult to collect formal documents and financial statements from
the client, means the non-availability of client’s detailed information.
VI. There is Shortage of manpower and Lack of proper training for the employees in
credit section of the branch.

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5.2 RECOMMENDATIONS :
The Following recommendations can be prescribed for the SMBL, like:
1. The Branch can organize more training program and workshop to make the
employees more efficient in their sector.
2. The bank has to establish a strong “credit Manual”, so that the clients easily can
understand about the credit rules of the bank.
3. All the loan documentations have to done honestly. The bank should concentrate
more on proper documentation of all types of loans to make the department trust
worthy & healthy.
4. All the document verifications have to done by the branch before sanction the loan.
5. The bank should introduce short term schemes like micro credit for poor & urban
people.

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5.3 CONCLUSION :
It goes without saying that credit policy cannot be isolated from the broader monitory policy
of the country. Like any other segment of the economic policy, credit is very important for
any financial institution as it generates profit and gear up economic activities of the country.
In other words, credit is business and it is input in the production process of the country.
Since credit has an inherent risk, therefore proper utilization of the loans are essential to meet
the requirements of the borrower. The loan applied for by the borrower must not be employed
for unproductive purpose. In this regard, the Shimanto Bank Ltd. must closely follow the
progress of the loan and the way the borrower is utilizing the funds. In this way the Shimanto
Bank Ltd. will deter any fake activities on the part of the borrower Credit evaluation system
of Shimanto Bank Ltd. is very lengthy process. It has been revised time to time in response to
the respective circular of Bangladesh Bank. The overall credit activity of Shimanto Bank
Limited is composed of corporate credit division and credit administration. The credit
management system of Shimanto Bank Limited is more or less effective as recovery position
of classified loan is high and classified loan has been decreasing gradually during the year.
They always trying to improve their credit policy for minimizing loss and maximizing profit
and various measures are undertaken to develop the credit management system.

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BIBLIOGRAPHY
Books:
1. Bernstein, Leopold A.(2015). Financial Statement Analysis (5th
Edition) USA: R. R.
Dornelly & Sons Company.
2. P.N. Varsheny. (2014). Banking Law & Practices ( 21st
Revised Edition ). India :
Sultan Chand & Sons.
3. Saidur, (2015) “Credit Risk Management Practices In Bangladesh: An Appreciation,’’
Journal of Islamic Economics, Banking and Finance,Vol-07,No-3,jul-Sep 2015.
4. Annual Report of Shimanto Bank limited, 2016-2018.
5. Rosen, Harvey S. and Gayer, Ted. ( 9th Edition ) Public Finance, McGRAW – HILL
International Edition 2010, Princeton University, Georgetown University.
Website:
1. Official Website of Shimanto Bank Limited: www.shimantobank.com
2. Official Website of Bangladesh Bank Limited: www.bangladesh-bank.org.com
( Circular-19 )
3. Official Website of Google: www.google.com
4. Official Website of Google: www.wikipedia.org