Consumer Credit Scheme and Its Risk Management of Different Commercial Banks in Bangladesh: Implications for Ific Bank Limited Bangladesh

CONSUMER CREDIT SCHEME AND ITS RISK MANAGEMENT

OF DIFFERENT COMMERCIAL BANKS IN BANGLADESH: IMPLICATIONS FOR IFIC BANK LIMITED BANGLADESH

1. INTRODUCTION AND BACKGROUND

Credit is the means of investment made by the bank to the entrepreneurs and business community. Alternatively this is the way of channeling fund to the deficit units where various risks and uncertainties are involved. Therefore every decision on credit matter should be taken with utmost care that can be ascertained through in-depth analysis, meticulous calculation and prudent judgment. A detailed and very comprehensive credit policy can guide the dealing credit officer to successfully maneuver the credit portfolio

Among various products and services offered by the banks, consumer credit scheme is one of popular items. In the recent days with the emergence of large numbers of banks, the competition in the banking sector has increased manifold. Thus banks are seeking outlet for innovations and ways to improve existing products and services to capture a large share in the market. This would vital for sustainability of the bank in the long run.

Banks and Financial Institutions have high exposure to credit risk and IFIC Bank Limited (Subject of this case study) is no exception. IFIC Bank has established its own credit policy which will guide them in achieving their target of maximum value addition through an efficient and effective credit risk management.

1.1Back Ground of the Problem

Consumer credit scheme is one of popular items offering to its prospective clients. But it is not the best one and should have excelled in many folds. There are some of those due to bank impose excessive charge or bank imposed obligations that clients need to fulfill to become eligible for the loan that discourage the customers or lack of promotional activities on the part of the bank. In any of the case it the bank that need to play the vital role whether to sustain the present trend of consumer loan or to...