1. The Bank shall provide suitable credit services and products for the market in which it operates. Product innovation shall be a continuous process.
2. Loans and advances shall normally be financed from customers deposit and not out of temporary fund or borrowing from money market.
iii. Credit facilities shall be allowed in a manner so that credit expansion goes on ensuring quality i.e. no compromise with the Bank’s standard of excellence. Credit is extended to customers who will complement such standards.
1. All credit extension must comply with the requirements of Bank’s Memorandum and Articles of Association, Bank companies Act as amended from time to time, Bangladesh Bank’s instructions Circulars, Guidelines and other applicable laws, rules and regulations.
2. The conduct of the loan portfolio should contribute, within defined risk limitation, to the achievement of profitable growth and superior return on the Bank’s capital.
3. Credit advancement shall focus on the development and enhancement of customer’s relationship and shall be measured on the basis of the total yield for each relationship with a customer (on the global basis), though individual transactions should also be profitable.
vii. Credit facilities will be extended to those companies/persons, which can make best use of the facility thus helping maximize our profit as well as economic growth of the country. To ensure achievement of this objective lending decision shall be based mainly on the borrower’s ability to repay.
viii. Diversification: The portfolio shall be well diversified sector wise, Industry wise, geographical area wise, maturity wise, size wise, mode wise, purpose wise. Concentration of credit shall be carefully avoided to minimize risk.
1. Remunerative: If Credit facilities are granted on a transaction/one-off basis, the yield from the facility should be commensurate with the risk.
2. Loan pricing: Loan pricing shall depend on the level of risk and type of securities offered. Rate of interest is the reflection of risk in the Transaction. The higher the risk, the higher is pricing. Interest rate may be revised from time to time in view of the change in the cost of Fund and market condition. Effective yield can be enhanced by requiring the customer to maintain deposit to support borrowing activities. Yield may be further improved by realizing Management fee, Commitment fee, service charge etc where possible.
3. Proper staffing: Proper analysis of Credit proposal is complex and required high level of numerical as well as analytical ability and common sense. To ensure effective understanding of the concept and thus to make the overall credit port-folio of the Bank healthy, proper staffing shall be made through placement of qualified officials having appropriate background, who have got the right aptitude, formal training in Credit Risk Analysis, Bank’s credit procedures as well as required experience.