Report

CREDIT POLICY AND RISK MANAGEMENT

GUIDE

(Revised)

MARCH 2007

A B BANK LIMITED

INTRODUCTION:

In all business dealings, officers and employees must be guided by the principles of honesty and integrity and safeguard the interest of the shareholders and the depositors of the Bank. They should strictly adhere to the Banking Laws, Rules and Regulations of the Govt. of Bangladesh and the instructions issued by the Bangladesh Bank from time to time, which affect the business practices of the Bank.

In formulating a credit judgment and making quality Credit Decisions, the lending officer must be equipped with all information needed to evaluate a borrower’s character, management competence and capacity, capital, ability to provide collaterals and external conditions which may affect his ability in meeting financial obligations.

POWER OF BANGLADESH BANK TO CONTROL ADVANCES:

Under the provisions of the Banking Companies Act. 1991, Bangladesh Bank is empowered to determine the lending policy of the banks and give directions among others, as to the purpose for which loans and advances may or may not be made, margins to be maintained, rates of interest to be charged etc. and the banks are bound to comply with any such directions, failing which the Banks will be liable to penalty. It is, therefore, advised that while considering a credit proposal, current credit restrictions imposed by Bangladesh Bank are kept in view by the Lending Officers.

GENERAL PRINCIPLES OF LENDING:

A prudent banker should always adhere to the following general principles of lending funds to his customers, viz. safety, liquidity, security, adequate yield and diversity. He should never put “ALL HIS EGGS” in one basket. It should be remembered that selection of appropriate borrowers, proper follow-up and end-use supervision...