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A Term Paper

On

Bangladesh Finance and investment Company ltd

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A Term Paper

ON

Bangladesh Finance and investment Company ltd

PREPARED TO

Md. Amdadul Hoque

Assistant Professor

Department of Finance (BUBT)

PREPARED BY

Sayema Sultana ID:65

Kaniz Fatima ID.58

Kamal Hossain ID:

Faruk Ibne Kabir:ID:

Submission Date: Jan 13, 2011

Bangladesh University of Business & Technology

(BUBT)

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Letter of Transmittal

Jan 06, 2011

Md. Amdadul Hoque

Assistant Professor

Department of Finance

Bangladesh University of Business & Technology

Subject: Submission of the Report.

Dear Sir,

We are highly delighted to submit our report on, Bangladesh Finance and investment

company ltd to you, as a requirement for the fulfillment of B.B.A. program. It is a great

achievement to work under your active supervision and guidance.

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We sincerely hope that this report will get your approval and its appraisal would

demonstrate our ability to prepare a formal report. We would be glad to furnish you with

clarifications, if required.

Thank you

Sincerely yours,

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ACKNOWLEDGEMENT

At the very outset we acknowledge our deep gratitude to our honorable teacher for

assigning us to such a practical and interesting report and imparting his valuable time for

preparing the paper. Our course teacher Mr. Md. Amdadul Hoquesupervised this paper.

His close supervision made it possible to prepare the paper. We are very much grateful to

him for his time, advice and guidance. We like to express our thanks and gratitude to our

entire teacher in the department of management.

And finally, we would show our gratitude to all the individuals who helped me to prepare

this report during the one month. As being a human, it is natural to forgot few names may

not be mentioned forgetfully. We would like to apologize for our forgetfulness

We also convey our heartfelt thanks to those non-mentioned names that helped us in

various ways in completion of the report.

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Executive Summary

The report which we have done, as a requirement of BBA program .This report is done

based on Bangladesh Finance and Investment Company LTd.This is an orientation report that contains the real life day to day working experience of

different tasks in Credit Department and also include financial statement analysis of

BFIC pioneer and leading finance company in Bangladesh. With institutional

shareholding structure, educated & motivated human resources, friendly working

environment & dynamic corporate culture has enabled LBFL to be a diversified financial

services providing institution of the country. 2009 was as successfully year for

BFIC.THEY are closed to profit before tax of tk11.55core posting a 37% growth and

profit after tax of tk 8.05 corer posting a growth of 25%.Revenue earned from cpital

market was tk6.52 Crore a growth of 1005 as compared to the year2008.This was achieve

due to the bullish market which prevailed in 2009.

BFIC collects funds different sources to meet investment requirements. Main sources of

fund of BFIC are term loan from banks deposits from individuals and institutions. During

the year 2009 BFIC borrowed loan from banks rate between 12% and 14%

From our part, we would like to suggest, BFIC should strictly follow the principles of

sound lending and they should make strong their credit monitoring department and also

financial statement analysis. Among the most important of these are honesty, reliability,

thoroughness and willingness to always be open to new ideas and new ways of meeting

customer needs.

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Part: 01

Introduction

1.1 Background of the Study

It has become essential for every person to have some idea on the finance company and

financing procedure. As our educational system predominantly text based, inclusion of

practical orientation program is an exception to the norm. From practical knowledge, we

will be able to know real life situations and start a career with some practical

experience. Bachelor of Business Administration (BBA) is a professional course. The

course is designed with an excellent combination of practical and theoretical aspects.

Basically, this report is highlighted on Credit management of the finance company,

Structure, Ratio Analysis, Present status, Performance of BFIC,Own Experience,

Recommendation and Conclusion.

1.2 Significance

This report is an important partial requirement of four years BBA graduation program.

This is because knowledge and learning become perfect when it is associated with theory

and practice. By this program we can establish contacts and networking. Contacts may

help to get a job in practical life.

1.3 Scope of the Report

As I was assigned to the, BFIC there is enough scope of the study. The report covers the

topic Credit Management and financial performance of BFIC . To conduct a study

onCredit Management and financial performance of BFIC. , I have gathered valuable

information from BFIC , Despite this topic there are many sectors for working and

analysis, like:

An overview of BFIC Financial performance of BFIC

Credit management scenario of BFIC finance

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1.4. Objectives of the Report

1.4.1. General objective

The prime objective of this report is to analyze the Credit Management and financial

performance of BFIC.

1.4.2. Specific objectives

There are some specific objectives also:

To know the terms and conditions of credit management of BFIC To know the

lending procedure of BFIC.

To analyze the work process and monitoring system of credit department..

To measure the position of BFIC credit Performance from the view point of their

clients.

To identify problems in credit management of BFIC

To make some recommendations for the successful Credit Operations of BFIC

1.5. Methodology

Methods followed to perform a job or conducting activities to complete a task is called

methodology. In conducting this study the following methodology was adopted in

collecting data & information, preparation of reports etc. The methodology of report is

given below:

1.5.1. Research Type:

This is a Descriptive Research, which briefly reveals the overall activities of the BFIC

and also critically analyzes the Credit Management and financial performance of BFIC.

.

1.5.2. Sources of Data

To prepare this report all the necessary information collected from both primary and

secondary sources of data.

Primary sources

Secondary sources

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1.5.2.1. Primary sources of data:

In the preparation of this report, data was collected from different primary sources. The

techniques were used to collect data are:

Observation

Informal Discussion

1.5.2.2. Secondary sources of data

Secondary sources of data are of two kinds:

o Internal: Annual Reports of BFIC finance, Other published documents of the

finance company, BFIC Website.

o External: Books, Articles, Journals, Newspaper, Web browsing.

1.5.5 Data Analysis and Reporting

Both the qualitative analysis (Questionnaire analysis) and quantitative analysis (Trend

analysis, Cross sectional analysis, Ratio analysis) have been used to collect the data and

to analyze the gathered data and different types of computer softwares are used for

reporting the gathered information from the analysis, such as- Microsoft Word, Microsoft

Excel, Microsoft PowerPoint.

1.6. Limitations

Though I have given utmost effort to prepare this paper but there are some limitations of

the study. Such are as follows-

The main constrain of the study was insufficiency of information,

which was required for the study. There are various information

the finance employee cant provide due to security and other

corporate obligations.

Since the finance company personnel were very busy, they could

not provide enough time to me. Lack of opportunity to visit more

than one branch.

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The functions and activities BFIC are too vast, so they change their

strategy day by day. As a result I cant collect update information

& strategy

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Part: 02

Company Profile

2.1 Company Profile

Name of the company: Bangladesh Finance and investment Company ltd

Commencement of business: 10-May1999

Legal form: A public limited company incorporated in Bangladesh on May 10, 1999

under the Companies Act 1994 listed in Dhaka Stock Exchange on August28, 2007 and

licensed as financial institution on December 22, 1999 under Financial Institutions Act

1993

Registered Office Baitul hossain building 2nd floor 27, dilkusha C/A,Dhaka-

1000,Bangladesh

Telephone 7114489

Telefax 88-02-9566493

E-mail www.bficltd.com

Managing Director G.M.Salehuddin Ahmed

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2.2 Background of Bangladesh Finance and Investment Company Ltd:

To become one of the best customer-friendly leasing companies of the country

Bangladesh Finance and Investment Company Ltd. (BFIC) began its journey early

2000 with the objective of providing customized financial solutions to various client bases. BFIC is one of the leading Non-Banking Financial Institutions in leasing

operation, incorporated in the year 1999 as a Public Limited Company under the

Companies Act, 1994 and licensed by Bangladesh Bank under the Financial Institutions

Act, 1993. The Company provides customized services to the clients. BFIC has its

presence at the port city of Chittagong and serving the clients through its branch office at

Agrabad. BFIC believes in the proposition, a stitch in time saves nine and therefore

provides expeditious service to its customers so that timely receipt of the leased assets or

finance may be utilized properly in running their enterprise profitably. Apart from

BFICs cordial association with the conglomerate-clients the Company has very strong

business relationship with the leading commercial banks of the country.

2.3 Company Vision

To be seen as an innovator in the financial industry with a passion for change and creat

good value for stakeholders.

2.4 Company Mission

Serve customers with trust & reliability.

Offer full range of customized solution.

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Take products and services to the door step of the customer.

Win the mind of the customer for a rewarding and loyal relationship.

2.5 Values

Integrity: we are committed to conduct that reflects the highest standards of integrity in

everything we do.

Teamwork: it is the essence of our ability to succeed as a trusted and preferred provider

of financial solutions to our clients. Our overriding loyalty is to the good of the whole

organization. We learn from each other and share our skills and resources across

organizational boundaries for our clients benefit and our own.

Respect:

We respect every individual. We draw strength from equal opportunity at the same time

supporting personal growth and development. We value and we all benefit from the

entrepreneurial spirit of each individual.

Professionalism:

We are committed to the highest standards of professionalism, we pursue innovation, we

continually quest for quality at each level, we are open to new ideas and we act decisively

and consistently. We are determined to deliver outstanding quality so that our

relationships with our clients will be long-lasting.

Value creation:

We offer what creates and maximizes value to the stakeholders

2.6 Goal:

To lead by example through a commitment that empowers the organization at every level

to strive for the highest levels of quality, customer care and stakeholder value. To be the

most sought after facilitator in creating wealth. To optimize the value of being our

Customer, Shareholder or Employee. To establish strong regional presence.

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2.7 Strategic Objective

Enrichment & expansion of financial offerings by introducing new

Product and service lines through proper diversification and

Customization of existing products & services for ensuring Maximum market coverage to

meet & exceed stakeholders' needs & expectations.

Continuous improvement in operational processes through technological

advancement, employee capacity building and improvement through human

resources development programs, thereby ensuring effective and efficient

utilization of resources to maximize the value of the company.

Strengthening building blocks to consolidate the product & service framework

and maintaining strict compliance to good governance norms and regulations toensure long term sustainability of the company.

Building synergy among resources and activities to ensure maximum outputs

from resource inputs.

Contribute to the society to share the achievements of the company with the

nation.

2.10 Ordinary Share information:

(Amount in millions)

year EPS Cash dividend Net asset value

per share

2005 16.32 - 114.85

2006 19.30 15% 120.98

2007 36.04 5% 125.42

2008 17.52 141.27

2009 21.93 150.35

Source: Annual Report Dhaka Bank (Year 2005-2009

Product and Services of Bangladesh Finance and investment company ltd:

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1. Corporate product:

Lease finance:

Term finance

Project finance

Working capital

Factoring

SME finance

Equity investment

Bridhge finance

Realstaet finance

Transport finance

Syndication

Structured finance

2. Retail products:

Car loan

Home loan

Doctors loan

Toplnvent loan

Home appliance lone

Profit earner

Money dabble

Money triple

Millionaire

Small Saver Dps

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Source: Annual Report Bangladesh finance and investment company ltd (Year2009)

Deposit Scheme

BFICs fixed deposit scheme offers lucrative and attractive interest rate of individuals andinstitutional depositors.

With Effect From: February 01, 2010

Plain TDR

For Individuals For Institutions

Term Int. Rate Int. Rate

6 Months - 10.25%

9 Months - 10.50%

1 Year 11.50% 10.50%

2 Years 11.75%** 10.75%**

3 Years and above12.00%** 11.00%**** annual interest will not be compounded

Money Double Money Triple

Period / Term Interest Rate Period / Term Interest Rate

6 Years 6 Months 11.23% 10 Years 11.61%

Profit Earner

Monthly Quarterly Half-yearly

Term Interest Rate Interest Rate Interest Rate

1 Year 10.25% 11.00% 11.25%

2 Years 10.50% 11.25% 11.50%

3 Years and above11.25% 11.50% 11.75%

Millionaire Plan

Term Installment Interest Rate Maturity Value

4 Years 17,000 10.10% 1,000,000

6 Years 10,200 10.15% 1,000,000

8 Years 6,900 10.04% 1,000,000

10 Years 4,950 10.04% 1,000,000

Small Saver 'DPS' (Installment amount BDT 1,000 to BDT

20,000)

Term Min Installment Interest Rate Maturity Value

4 Years 1,000 9.50% 58,128

5Years 1,000 9.75% 76,747

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8 Years 1,000 10.00% 1,44,664

10 Years 1,000 10.50% 2,07,036

Part: 03

About Credit

4.1 Credit

The word credit comes from the Latin word Credo meaning I believe. It is a lenders

trust in a persons or firms or companys ability or potential ability and intention to repay.Credit is a contractual Agreement, in which a borrower receives something of value now,

with the agreement to repay the lender at some date in the future.

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The objective of the credit management is to maximize the performing asset and the

minimization of the non-performing asset as well as ensuring the optimal point of loans

and advances and their efficient management.

4.2 Factors Related with Credit

Risk

Time

Interest Rate

Security or Collateral

Operating Expense

Legal Considerations

Inflation

Finance Charge

4.3 Importance of Credit

Credit plays a vital role in national economy in the following ways-

I. It provides working capital for industrialization

II. It helps to create employment opportunities

III. Credit controls almost all kinds of production activities of the country

IV. It brings social equity

V. Cash generation occurs for its successful performance

VI. Business cycle can run well only by the help of lending system

VII. Economic stabilization

VIII. Raise standard of living.

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4.4 Credit Management

Credit management is a dynamic field where a certain standard of long-range planning is

needed to allocate the fund in diverse field and to minimize the risk and maximizing the

return on the invested fund. Continuous supervision, monitoring and follow-up are highly

required for ensuring the timely repayment and minimizing the default.

4.7 Principles of Sound Lending

It should be clearly understood that the criteria/principles are not inflexible laws & are

given as guidelines for protecting credit. In a practical competitive world, risks are

defined, accepted and credit is often granted even though a proposal does not strictly with

some of the criteria described below:

The basic lending criteria can be considered as eight main headings, as follows:

Principle of Safety

Principle of Liquidity

Principle of Purpose

Character and ability of the borrower

Principle of Security

Principle of profitability

Source of repayment

Principle of National Interest

Each of the headings will now be discussed further in the following paragraph:

Principle of Safety

The first lending Principle of sound lending is safety. Safety should not be sacrificed for

profitability. So utmost care should be exercised to ensure that the funds go to the right

type of borrower, are utilized in such a way that they remain safe and the repayment

comes in the normal course.

Principle of Liquidity

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Liquidity means the availability of funds on short notice. The liquidity of an advance

means it repayment on demand on due date or after a short notice. Therefore, the banks

must have to maintain sufficient liquidity to repay its depositors and trade off between

the liquidity and profitability is must.

Principle of Purpose

The bank should not lend money for any purposes for which a borrower may be free from

all risks but if the funds borrower are employed for unproductive. Purpose like marriage

ceremony, pleasure trip etc or speculative activities, the repayment in the normal course

will become uncertain. Banks therefore discourage advances from boarding stocks and

refuse advances for speculative activities.

Character and ability of the borrower:

The primary responsibility is know your customer and his business. While

considering the character and ability of a borrower, the following point must be kept in

mind.

Do know your customer already?

Was he respectively introduced?

If he was previously customer of any finance company, why has he come

to. Try to see previous statement?

Have any past criminal report?

What are the business its ownership?

What is the customers background and financial track record?

Customers honesty & integrity and personal stability?

How has the customer managed his financial circumstances in the past?

The branch manger should have the answer of the above queries and should be to judge

his ability to use the credit facilities to his advantage. Advance should be granted only to

those borrowers in whom the branch manager has full confidence. Integrity of the

borrower and his ability to conduct business are of paramount importance and take

precedence over the value of securities offered.

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Principle of Security

The security offered by a borrower for an advance is insurance to the banker. It serves as

the safety value for an unforeseen emergency. So another principle of sound lending is

the security of lending. The security accepted by a banker to cover a bank advance must

be adequate, readily marketable, easy to handle and free from any encumbrance.

Principle of Profitability

Financing is essentially a business, which aims at earning of a good profit. Finance

company has also to meet their establishment charges and other expenses. Interest earned

by a finance company on its advance is the main source of its income.

Source of Repayment

After the branch manager has ensured that the credit will be a profitable propositioning

for the company, he should then turn his attention to the cash flow situation of the

borrower. The credit can be classified into three main categories, as follows:

A very short-term advance will be liquidated by funds received in the very near

future, such as advances against foreign or local bills or bridge functioning where

evidence of credit sanction from another financial institution is available.

Provision for current assets; this type facility is needed for trading and /or

manufacturing activities.

Long term loans, generally over 5 years; example of such facilities as investmentin plant and machinery, a farm or a shop, generally, a long term is repaid out

profits generated by the business.

Principle of National Interest

The development of finance company has reached a stage where a it is required to

identify his business with national policies. Financing Industry has significant role to play

in the economic development of a country.

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Interest Rate Structure

BFIC offers various Deposit Schemes with attractive rate of return. You are entitled to

select any of these schemes as per your requirement. The general interest rate structure

for any amount is given below:

4.14 The Cs of Good and Bad Loan in Credit Management

The Branch manager of Bangladesh finance and Investment try to judge the possible

client based on some criteria. These criteria are called the Cs of good and bad loans.

These Cs are described below:

CharacterThe outcome of analyzing the character is to have overall idea about the integrity,

experience, and business sense of the borrower. Two variables; Interaction/interview, and

Market Research are used to analyze the character of the borrower.

1. Interaction/interview: the indicators are:

a)Prompt and consistent information supply, information given has not been found false

(Willingness to give information).

b)CIB also reveals business character.

c) Willingness to give owns stake/equity & collateral to cover.

d) Tax payer.

2. Market Research:

a) Information on business is verified.

b) Dealing with supplier and or customer as supplier is also a kind of lender; the payment

character can also be verified.

Capital

For identifying the capital invested in the business can be disclosed using the following

indicators:

a) Financial Statements

b) Receivable, Payable, statements to practically assess the business positions. Net worth

through financial statements or from declaration of Assets & Liability statement.

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Capacity (Competence)

Capability of the borrower in running the business is highly emphasized in the time of

selecting a good borrower. As the management of the business is the sole authority to run

the business that is use the fund efficiently, effectively and profitably. The indicators

help to identify the capacity of the borrower.

a) Entrepreneurship skills i.e. risk taking attitude shown by equity mobilization.

b) Management competencies both marketing and products detail, ability to take

decision.

c) Resilience or shock absorption: Connection, Back up (if first time falls second

lines come to help.

Collateral

Make sure that there is a second way out of a credit, but do not allow that to drive the

credit decision.

Cash Flow

Cash flow is the vital factor that is used to identify whether the borrower will have

enough cash to repay the loan or advance. Cash keeps the liquidity to ensure repayment.

The relationship manager tries to identify the annual cash flow from the submitted

statements.

Credit risk

Credit risk encompasses potential losses arising from the failure of counterparty to

perform according to contractual arrangement with the company. This is very difficult to

prescribe full proof mechanism for efficient management of credit risk. Considering the

rapid globalization, liberalization and competition, it is essential that institution has tough

risk management policies and processes.

Celling for sector company, company and group exposure

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Clean credit report(CIB) for every client

Past payment performance of the borrower before approval

Strong credit administration for defaulted clients

Interim as well as annual review of the client business/operation

Obtaining independent legal opinion from external legal advisor on

documentation relating to security.

In addition the credit committee regularly meets to review the performed of each client

and takes decisions regarding any default.

Liquidity risk

Liquidity risk is the possibility that an institution will be unable to meet its

obligations as they fall due because of inability to liquidate assets or obtain adequate

funding or that it cannot easily unwind or offset specific exposures without

significantly lowering market prices because of inadequate market depth or market

disruptions. This arises from undesirable variance between maturities of assets and

liabilities.

Market risk

Market risk can be defined as the probable changes in the earning due to fluctuation in a

variety of market factors such as rate of interest, forign exchange in equity prices.

The treasury department reviews the trend analysis of market interest rate movement and

carry out assets liability gap analysis, forwards this to the asset liability management

committee regularly for their reviews and to assess the changes, as a result re-pricing the

interest rates of product to minimized and control the interest rate risk.

Operational risk

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Operational risk is the risk of losses which arises due to lack of systems, procedures and

internal control, fraud, unauthorized activities, error, omission, inefficiency, ignorance of

compliance requirements, non-compliance of corporate governance practices, or failure

of internal process and external events. The main cause that leads to operational risk is as

under:

Incompetence, insufficient training, lack of integrity and turnover of efficient

employees

Business volume variation, organizational complexity, major changes in product s

Improper segregation of duties,lack of regular monitoring, ineffective procedures,

shortcoming of company structure.

Poor technology, lack of automation, simultaneous manual and automation

process, it complexity.

Natural calamities, deteriorated social and political context, changes in statutory

requirements/policies.

4.16 General procedure of sanctioning loan

The following procedure is applicable for giving advance to the customer. These are:

a) Partys application

b) Filling form-A

c) Collecting companys investigation branch(CIB) report from

Bangladesh Bank.

d) Processing loan proposal

e) Project appraisal

f) Head office approval

g) Sanction letter

h) Documentation

i) Disbursement

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A. Partys application

At first borrower had to submit an application to the respective branch for loan, where

he/she has to clearly specify the reason for loan. After receiving the application form the

borrower finance company verifies all the information carefully. They also checks the

account maintains by the borrower with the Bank. If the official becomes satisfied then

he gives form-A (prescribed application form of Bank) to the prospective borrower.

B. Filling Form -A

After satisfying with partys application the applicant need to fill Form-A. It is the

prescribed form provides by the respective branch that contains information of the

borrower. It contains- Name with its factory location, Official address and telephone

number, details of past and present business, its achievement and failures, type of loan

needed etc.

D. Processing loan Proposal

After receiving CIB report from Bangladesh Bank, then respective branch prepare an

Investment proposal, which contains terms and conditions of Investment for approval of

Head Office. Documents those are necessary for sending Investment proposal are:

Necessary Documents

While advancing money, companys create a lot of documents, which are required to be

signed by the borrowers before the disbursement of the loan. Of them some are

technically called charge documents. Necessary steps and documents:

1. Loan application form duly signed by the customer.

2. Acceptance of the term and conditions of sanction advice.

3. Trade license.

4. In Case of Partnership Firm, copy of registered partnership deed du to certify as

true copy or a partnership deed on non-judicial stamp of taka-150 denomination

duly notarized.

5. In Case of Limited Company

a. Copy of memorandum and articles of association of the company

including certificate of incorporation duty certified by Registered Joint

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Stock Companies (RJSC) and attested by the managing director and

accompanied by an up-to-date list of directors.

b. Copy of board resolution of the company for availing credit facilities and

authorizing managing director/chairman/director for execution of

documents and operation of the accounts.

c. An undertaking not to change the management of the company and the

memorandum and article of the company without prior permission

d. Copy of last audited financial statement up to last 3 years.

e. Personal guarantee of the directors including the chairman and managing

director.

f. Certificate of registration of charges over the fixed and floating assets of

the company duly issued by RJSC.

g. Certificate of registration of amendment of charges over the fixed and

floating assets of the company duly issued by RJSC in case of repeat loan

or change in terms and conditions of sanction advice regarding loan

amount and securities etc.

Credit Risk Grading (CRG) System

Credit risk grading is an important tool for credit risk management as it helps the

financial institutions to understand various dimensions of risk involved in different credit

transactions. The aggregation of such grading across the borrowers, activities and the

lines of business can provide better assessment of the quality of credit portfolio of a

company . The credit risk grading system is vital to take decisions both at the pre-

sanction stage as well as post-sanction stage. At the pre-sanction stage, credit grading

helps the sanctioning authority to decide whether to lend or not to lend, what should be

the loan price, what should be the extent of exposure, what should be the appropriate

credit facility, what are the various facilities, what are the various risk mitigation tools to

put a cap on the risk level. At the post-sanction stage, the company can decide about the

depth of the review or renewal, frequency of review, periodicity of the grading, and other

precautions to be taken. Usually there includes six steps for CRG.

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E. Project Appraisal

It is the pre-investment analysis. Project appraisal in the Banking sector is important for

the following reasons:

To achieve organizational goals,

To recommend if the project is not designed properly.

To justify the soundness of an investment,

To ensure repayment.

Techniques of Project Appraisal

An appraisal is a systematic exercise to establish that the proposed project is a viable

preposition. Appraising officer checks the various information submitted by the promoter

in first information sheet, application for Investment and Investment proposal.

Considers the following aspects in appraising a proposal.

Technical viability

Commercial viability

Financial viability

Economic viability

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Part: 04

Analysis

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247.6292.62

422.22471.35

551.82

2005 2006 2007 2008 2009

Shareholders equity

Shareholders equity

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:

Tearm loan Term deposit Scheme deposit Other deposit

2009 905 902 84 64

2008 1199.28 1031.25 0 51.45

0

200

400

600

800

1000

1200

1400

AxisTitle

Sources of fund

million taka

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Major Findings, Recommendations, Conclusion

6.1 Major Findings:

The loan and advances is increasing year by year. And it carries positive sign for

BFIC

The loan processing time of BFIC is quite lengthy according to the clients of

BFIC

From the last two years analysis it is seen that BFIC is providing more credit

facilities in urban areas than rural areas.

Higher rate of interest plays a great role in credit management. Some times the

rate is so high that the return from the investment is not so adequate enough to

repay the loan. And hence default occurs.

Credit deposit ratio of BFIC is quite satisfactory though their deposit amount is

less than other finance company.

It is found from the survey that most of the client prefers because of their easy

loan and disbursment

6.2 Conclusion

Proper financial system in our country can contribute towards the development of the

countrys economy. In our country finance companies are leading in the financial system

and BFIC take a important role to countrys progress.

Despite stiff competition among finance companies operating in Bangladesh both foreign

and local, BFIChas achieved satisfactory progress in areas of its operations and earned an

impressive operating income over the previous years. It hopes to achieve a satisfactory

level of progress in all areas of its operations including target of profitability.

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In achieving the aforesaid objectives of the finance companies, credit operation is of

paramount importance as the greatest share of total revenue of the company is generated

from it, maximum risk is centered in it and even the very existence of finance company

depends on prudent management of its credit portfolio.

From my part, I would like to suggest, a finance company requires some special personal

traits that not every company possesses. Among the most important of these are honesty,

reliability, thoroughness and willingness to always be open to new ideas and new ways of

meeting customer needs.

7.3 Recommendations

Capital adequacy is important for a financial institution. Its capital adequacy

ratio is in better position and they should maintain it.

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As BFIC is providing loan to experienced clients so there is less possibility to

default the loan and company should maintain it. There is a tendency in young

businessman not to repay the loan.

The officers of this department to make a remarkable standard should follow

advance procedure.

BFIC should maintain a written guideline for credit management. If all

documents are available than it will help to analyze their client.

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Appendix

Books

Lawrence, J Gitman (2003), Principle of Managerial Finance, 10th edition,

Pearson EducationPte. Ltd, Singapore.

Bedi, H.L. Practical Banking Advances UBS Publishers Distributions Ltd.

New Delhi.

C.R Kotheri, Research Methodology 2nd Edition, 2003-2004, Wishwa

Prakashan, Calcutta, India.

Frederic S. Miskhin, The Economics of Money Banking & Financial Market

6th Edition, 2003, Boston.

Frank K. Reilly & Keith C. Brown, Investment Analysis Portfolio Management,

7th Edition.

Prospectors:

Dhaka Bank Ltd,Annual report 2005-2009.

Prime Bank Ltd,Annual Report 2009

Mercantile Bank Ltd,Annual Report 2009

Websites:

www.dhakabankltd.com

www.bangladesh-bank.org.bd

www.mblbd.com

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http://www.dhakabankltd.com/http://www.bangladesh-bank.org.bd/http://www.mblbd.com/http://www.dhakabankltd.com/http://www.bangladesh-bank.org.bd/http://www.mblbd.com/

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