Internship Report On THE CREDIT PROCEDURE OF LOAN AND ADVANCE OF SONALI BANK LIMITED, PHULBARI BRANCH, DINAJPUR.

Abstract

Credit procedure of loan and advance has become an import topic for financial institutes, especially since the business sector of financial; service is related to conditions of uncertainty. The goal of credit procedure of loan advance is to maximize a bank’s risk- adjusted rate of return by maintaining credit risk exposure within acceptable parameters. This report objective was formulated in order to gain a better understanding of credit risk management and to get knowledge about the effectiveness of loan and sanction procedure that is conducted on the evaluation of credit risk. Credit risk has always been a vicinity of concern not only to bankers but to all in the business world because the risks of trading partner not fulfilling his obligations in full on due date can serious jeopardize the affairs of the other partner. The axle of this study is to have a clearer picture of how banks manage their credit risk. This study showed that banks credit risk assessment process for loans provides the bank with the necessary tools, procedures and observable data to use for assessing credit risk, accounting for impairment of loans and for determining regulatory capital requirements. The study finds, credit risk is mitigated by appropriate credit appraisal systems before lending and proper collateral or guarantees are taken to hedge the risk. The leads the researcher to conclude that banks with good credit procedure policies have a lower loan default rate and relatively higher return on asset.