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MANAGING CORE RISKSIN BANKING:

CREDIT RISKMANAGEMENT

Industry Best Practices

BANGLADESH BANK

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CREDIT RISK MANAGEMENT

Industry Best Practices

PREPARED FOR:

BANGLADESH BANK

PREPARED BY:

FOCUS GROUPON

CREDIT & RISK MANAGEMENT

Team Co-ordi a!or: S"d#ir C#a dra Da$Team Mem%er$: A i Re'a I(!e)#ar

Nia' Ha%i%A*G* Sar+ar

Bria ,* M G"ire

Na$er E'a' Bi.o/

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INTRODUCTION:

Risk is inherent in all aspects of a commercial operation ho!e"er for #anks an$ financialinstit%tions cre$it risk is an essential factor that nee$s to &e manage$' Cre$it risk is the

possi&ilit( that a &orro!er or co%nter part( !ill fail to meet its o&ligations in accor$ance !ithagree$ terms' Cre$it risk therefore arises from the &ank)s $ealings !ith or len$ing tocorporates in$i"i$%als an$ other &anks or financial instit%tions'

Cre$it risk management nee$s to &e a ro&%st process that ena&les &anks to proacti"el(manage loan portfolios in or$er to minimi*e losses an$ earn an accepta&le le"el of ret%rn for sharehol$ers' Central to this is a comprehensive IT system !hich sho%l$ ha"e the a&ilit( tocapt%re all ke( c%stomer $ata risk management an$ transaction information incl%$ing tra$e+ ,ore-' Gi"en the fast changing $(namic glo&al econom( an$ the increasing press%re of glo&ali*ation li&erali*ation consoli$ation an$ $is.interme$iation it is essential that &anksha"e ro&%st cre$it risk management policies an$ proce$%res that are sensiti"e an$ responsi"eto these changes'

The p%rpose of this $oc%ment is to pro"i$e $irectional g%i$elines to the &anking sector that!ill impro"e the risk management c%lt%re esta&lish minim%m stan$ar$s for segregation of $%ties an$ responsi&ilities an$ assist in the ongoing impro"ement of the &anking sector in#angla$esh' Cre$it risk management is of %tmost importance to #anks an$ as s%ch policiesan$ proce$%res sho%l$ &e en$orse$ an$ strictl( enforce$ &( the MD/CE0 an$ the &oar$ of the #ank'

The g%i$elines ha"e &een organise$ into the follo!ing sections1

0* POLICY GUIDELINES

' ' 3en$ing G%i$elines'2' Cre$it Assessment + Risk Gra$ing'4' Appro"al A%thorit('5' Segregation of D%ties'6' Internal A%$it

1* PREFERRED ORGANISATIONAL STRUCTURE & RESPONSIBILITIES

2* PROCEDURAL GUIDELINES

4' ' Appro"al Process4'2' Cre$it A$ministration4'4' Cre$it Monitoring4'5' Cre$it Reco"er(

These g%i$elines !ere prepare$ an$ en$orse$ &( senior cre$it e-ec%ti"es from pri"ate sectorforeign an$ nationali*e$ commercial &anks operating in #angla$esh' The( are inten$e$ for %se in the corporate/commercial &anking &%sinesses'

It is the e-pectation of #angla$esh #ank that these g%i$elines !ill &e a$opte$ partic%larl( for those instit%tions that ha"e a high rate of non.performing loans an$ !eak cre$it risk management proce$%res' #angla$esh #ank ma( &ase$ on its reg%lar e-amination of in$i"i$%al &anks enforce the specific a$option of these g%i$elines'

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Table of Contents

' POLICY GUIDELINES 3

' ' 3en$ing G%i$elines 6

'2' Cre$it Assessment + Risk Gra$ing 7

'4' Appro"al A%thorit(

'5' Segregation of D%ties 2

'6' Internal A%$it 2

2' PREFERRED ORGANISATIONAL STRUCTURE & RESPONSIBILITIES 02

2' Preferre$ 0rganisational Str%ct%re 4

2'2 Ke( Responsi&ilities 4

4' PROCEDURAL GUIDELINES 03

4' ' Appro"al Process 6

4'2' Cre$it A$ministration 7

4'4' Cre$it Monitoring 8

4'5' Cre$it Reco"er( 9

5' APPENDICES 11 - 34

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0* POLICY GUIDELINES

This section $etails f%n$amental cre$it risk management policies that are recommen$e$ for a$option &( all &anks in #angla$esh' The g%i$elines containe$ herein o%tline general

principles that are $esigne$ to go"ern the implementation of more $etaile$ len$ing proce$%res an$ risk gra$ing s(stems !ithin in$i"i$%al &anks'

0*0 Le di 5 G"ide i e$

All &anks sho%l$ ha"e esta&lishe$ Cre$it Policies :;3en$ing G%i$elinesea$ of Cre$it or Managing Director/CE0 + #oar$ of Directors'

The 3en$ing G%i$elines sho%l$ pro"i$e the ke( fo%n$ations for acco%ntofficers/relationship managers :RM= to form%late their recommen$ations for appro"al an$ sho%l$ incl%$e the follo!ing1

I d"$!r/ a d B"$i e$$ Se5me ! Fo "$The 3en$ing G%i$elines sho%l$ clearl( i$entif( the &%siness/in$%str(sectors that sho%l$ constit%te the ma?orit( of the &ank)s loan portfolio',or each sector a clear in$ication of the &ank)s appetite for gro!thsho%l$ &e in$icate$ :as an e-ample Te-tiles1 Gro! Cement1 MaintainConstr%ction1 Shrink=' This !ill pro"i$e necessar( $irection to the

&ank)s marketing staff'

T/6e$ o( Loa Fa i i!ie$The t(pe of loans that are permitte$ sho%l$ &e clearl( in$icate$ s%chas @orking Capital Tra$e ,inance Term 3oan etc'

Si 5 e Borro+er7Gro"6 Limi!$7S/ di a!ioDetails of the &ank)s Single #orro!er/Gro%p limits sho%l$ &e incl%$e$as per #angla$esh #ank g%i$elines' #anks ma( !ish to esta&lish moreconser"ati"e criteria in this regar$' Appen$i-.4'5'4 pro"i$es &rief $escription of financing %n$er s(n$icate$ arrangement'

Le di 5 Ca6$#anks sho%l$ esta&lish a specific in$%str( sector e-pos%re cap to a"oi$o"er concentration in an( one.in$%str( sector'

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Di$ o"ra5ed B"$i e$$ T/6e$#anks sho%l$ o%tline in$%stries or len$ing acti"ities that are$isco%rage$' As a minim%m the follo!ing sho%l$ &e $isco%rage$1

. Militar( E %ipment/@eapons ,inance

. >ighl( 3e"erage$ Transactions

. ,inance of Spec%lati"e In"estments

. 3ogging Mineral E-traction/Mining or other acti"it( that isEthicall( or En"ironmentall( Sensiti"e

. 3en$ing to companies liste$ on CI# &lack list or kno!n$efa%lters

. Co%nterparties in co%ntries s%&?ect to BN sanctions

. Share 3en$ing

. Taking an E %it( Stake in #orro!ers

. 3en$ing to >ol$ing Companies

. #ri$ge 3oans rel(ing on e %it(/$e&t iss%ance as a so%rce of

repa(ment'

Loa Fa i i!/ Parame!er$,acilit( parameters :e'g' ma-im%m si*e ma-im%m tenor an$co"enant an$ sec%rit( re %irements= sho%l$ &e clearl( state$' As aminim%m the follo!ing parameters sho%l$ &e a$opte$1

. #anks sho%l$ not grant facilities !here the &ank)s sec%rit( position is inferior to that of an( other financial instit%tion'

. Assets ple$ge$ as sec%rit( sho%l$ &e properl( ins%re$'

. al%ations of propert( taken as sec%rit( sho%l$ &e performe$ prior to loans &eing grante$' A recogni*e$ 4r$ part( professional "al%ation firm sho%l$ &e appointe$ to con$%ct"al%ations'

Cro$$ Border Ri$) Risk associate$ !ith cross &or$er len$ing' #orro!ers of a partic%lar co%ntr( ma( &e %na&le or %n!illing to f%lfill principle an$/or interesto&ligations' Disting%ishe$ from or$inar( cre$it risk &eca%se the$iffic%lt( arises from a political e"ent s%ch as s%spension of e-ternal

pa(ments

. S(non(mo%s !ith political + so"ereign risk

. Thir$ !orl$ $e&t crisis

,or e-ample e-port $oc%ments negotiate$ for co%ntries like Nigeria'

0*1 Credi! A$$e$$me ! & Ri$) Gradi 5

'2' Cre$it AssessmentA thoro%gh cre$it an$ risk assessment sho%l$ &e con$%cte$ prior to the granting of

loans an$ at least ann%all( thereafter for all facilities' The res%lts of this assessmentsho%l$ &e presente$ in a Cre$it Application that originates from the relationshipmanager/acco%nt officer :;RM

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:CRM=' The RM sho%l$ &e the o!ner of the c%stomer relationship an$ m%st &e hel$responsi&le to ens%re the acc%rac( of the entire cre$it application s%&mitte$ for appro"al' RMs m%st &e familiar !ith the &ank)s 3en$ing G%i$elines an$ sho%l$con$%ct $%e $iligence on ne! &orro!ers principals an$ g%arantors'

It is essential that RMs kno! their c%stomers an$ con$%ct $%e $iligence on ne! &orro!ers principals an$ g%arantors to ens%re s%ch parties are in fact !ho the(represent themsel"es to &e' All &anks sho%l$ ha"e esta&lishe$ Kno! o%r C%stomer :K C= an$ Mone( 3a%n$ering g%i$elines !hich sho%l$ &e a$here$ to at all times'

Cre$it Applications sho%l$ s%mmaries the res%lts of the RMs risk assessment an$incl%$e as a minim%m the follo!ing $etails1

. Amo%nt an$ t(pe of loan:s= propose$'

. P%rpose of loans'

. 3oan Str%ct%re :Tenor Co"enants Repa(ment Sche$%le Interest=

. Sec%rit( Arrangements

In a$$ition the follo!ing risk areas sho%l$ &e a$$resse$1

. #orro!er Anal(sis' The ma?orit( sharehol$ers management team an$gro%p or affiliate companies sho%l$ &e assesse$' An( iss%es regar$ing lack of management $epth complicate$ o!nership str%ct%res or inter.gro%ptransactions sho%l$ &e a$$resse$ an$ risks mitigate$'

. In$%str( Anal(sis' The ke( risk factors of the &orro!er)s in$%str( sho%l$ &e assesse$' An( iss%es regar$ing the &orro!er)s position in the in$%str(o"erall in$%str( concerns or competiti"e forces sho%l$ &e a$$resse$ an$

the strengths an$ !eaknesses of the &orro!er relati"e to its competitionsho%l$ &e i$entifie$'

. S%pplier/#%(er Anal(sis' An( c%stomer or s%pplier concentration sho%l$ &e a$$resse$ as these co%l$ ha"e a significant impact on the f%t%re"ia&ilit( of the &orro!er'

. >istorical ,inancial Anal(sis' An anal(sis of a minim%m of 4 (earshistorical financial statements of the &orro!er sho%l$ &e presente$' @herereliance is place$ on a corporate g%arantor g%arantor financial statementssho%l$ also &e anal(se$' The anal(sis sho%l$ a$$ress the %alit( an$s%staina&ilit( of earnings cash flo! an$ the strength of the &orro!er)s

&alance sheet' Specificall( cash flo! le"erage an$ profita&ilit( m%st &eanal(se$'

. Pro?ecte$ ,inancial Performance' @here term facilities :tenor (ear=are &eing propose$ a pro?ection of the &orro!er)s f%t%re financial

performance sho%l$ &e pro"i$e$ in$icating an anal(sis of the s%fficienc(of cash flo! to ser"ice $e&t repa(ments' 3oans sho%l$ not &e grante$ if

pro?ecte$ cash flo! is ins%fficient to repa( $e&ts'

. Acco%nt Con$%ct' ,or e-isting &orro!ers the historic performance inmeeting repa(ment o&ligations :tra$e pa(ments che %es interest an$

principal pa(ments etc= sho%l$ &e assesse$'

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. A$herence to 3en$ing G%i$elines' Cre$it Applications sho%l$ clearl( state!hether or not the propose$ application is in compliance !ith the &ank)s3en$ing G%i$elines' The #ank)s >ea$ of Cre$it or ManagingDirector/CE0 sho%l$ appro"e Cre$it Applications that $o not a$here to the

&ank)s 3en$ing G%i$elines'

. Mitigating ,actors' Mitigating factors for risks i$entifie$ in the cre$itassessment sho%l$ &e i$entifie$' Possi&le risks incl%$e &%t are not limite$to1 margin s%staina&ilit( an$/or "olatilit( high $e&t loa$:le"erage/gearing= o"erstocking or $e&tor iss%esF rapi$ gro!th ac %isitionor e-pansionF ne! &%siness line/pro$%ct e-pansionF management changesor s%ccession iss%esF c%stomer or s%pplier concentrationsF an$ lack of transparenc( or in$%str( iss%es'

. 3oan Str%ct%re' The amo%nts an$ tenors of financing propose$ sho%l$ &e ?%stifie$ &ase$ on the pro?ecte$ repa(ment a&ilit( an$ loan p%rpose'

E-cessi"e tenor or amo%nt relati"e to &%siness nee$s increases the risk of f%n$ $i"ersion an$ ma( a$"ersel( impact the &orro!er)s repa(ment a&ilit('

. Sec%rit(' A c%rrent "al%ation of collateral sho%l$ &e o&taine$ an$ the%alit( an$ priorit( of sec%rit( &eing propose$ sho%l$ &e assesse$' 3oans

sho%l$ not &e grante$ &ase$ solel( on sec%rit(' A$e %ac( an$ the e-tent of the ins%rance co"erage sho%l$ &e assesse$'

. Name 3en$ing' Cre$it proposals sho%l$ not &e %n$%l( infl%ence$ &( ano"er reliance on the sponsoring principal)s rep%tation reporte$in$epen$ent means or their percei"e$ !illingness to in?ect f%n$s into

"ario%s &%siness enterprises in case of nee$' These sit%ations sho%l$ &e$isco%rage$ an$ treate$ !ith great ca%tion' Rather cre$it proposals an$the granting of loans sho%l$ &e &ase$ on so%n$ f%n$amentals s%pporte$ &(a thoro%gh financial an$ risk anal(sis'

A66e di8 0*1*0 contains a template for cre$it application'

'2'2 Risk Gra$ing

All #anks sho%l$ a$opt a cre$it risk gra$ing s(stem' The s(stem sho%l$ $efine therisk profile of &orro!er)s to ens%re that acco%nt management str%ct%re an$ pricingare commens%rate !ith the risk in"ol"e$' Risk gra$ing is a ke( meas%rement of a#ank)s asset %alit( an$ as s%ch it is essential that gra$ing is a ro&%st process' Allfacilities sho%l$ &e assigne$ a risk gra$e' @here $eterioration in risk is note$ theRisk Gra$e assigne$ to a &orro!er an$ its facilities sho%l$ &e imme$iatel( change$'#orro!er Risk Gra$es sho%l$ &e clearl( state$ on Cre$it Applications'

The follo!ing Risk Gra$e Matri- is pro"i$e$ as an e-ample' Refer also to the Risk Grade Scorecard attached as Appendix 1.2.2 ' The more conser"ati"e risk gra$e:higher= sho%l$ &e applie$ if there is a $ifference &et!een the personal ?%$gement an$the Risk Gra$e Scorecar$ res%lts' It is recogni*e$ that the &anks ma( ha"e more or less Risk Gra$es ho!e"er monitoring stan$ar$s an$ acco%nt management m%st &eappropriate gi"en the assigne$ Risk Gra$e1

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Ri$) Ra!i 5 Grade De(i i!ioS%perior H 3o! Risk ,acilities are f%ll( sec%re$ &( cash $eposits

go"ernment &on$s or a co%nter g%arantee from a toptier international &ank' All sec%rit( $oc%mentationsho%l$ &e in place'

Goo$ H Satisfactor( Risk 2 The repa(ment capacit( of the &orro!er is strong'The &orro!er sho%l$ ha"e e-cellent li %i$it( an$lo! le"erage' The compan( sho%l$ $emonstrateconsistentl( strong earnings an$ cash flo! an$ ha"ean %n&lemishe$ track recor$' All sec%rit($oc%mentation sho%l$ &e in place' Aggregate Scoreof 96 or greater &ase$ on the Risk Gra$e Scorecar$'

Accepta&le H ,air Risk 4 A$e %ate financial con$ition tho%gh ma( not &ea&le to s%stain an( ma?or or contin%e$ set&acks'These &orro!ers are not as strong as Gra$e 2

&orro!ers &%t sho%l$ still $emonstrate consistent

earnings cash flo! an$ ha"e a goo$ track recor$' A &orro!er sho%l$ not &e gra$e$ &etter than 4 ifrealistic a%$ite$ financial statements are notrecei"e$' These assets !o%l$ normall( &e sec%re$

&( accepta&le collateral : st charge o"er stocks /$e&tors / e %ipment / propert(=' #orro!ers sho%l$ha"e a$e %ate li %i$it( cash flo! an$ earnings'An Aggregate Score of 86.95 &ase$ on the RiskGra$e Scorecar$'

Marginal . @atch list 5 Gra$e 5 assets !arrant greater attention $%e tocon$itions affecting the &orro!er the in$%str( orthe economic en"ironment' These &orro!ers ha"ean a&o"e a"erage risk $%e to straine$ li %i$it(higher than normal le"erage thin cash flo! an$/orinconsistent earnings' ,acilities sho%l$ &e$o!ngra$e$ to 5 if the &orro!er inc%rs a loss loan

pa(ments ro%tinel( fall past $%e acco%nt con$%ct is poor or other %nto!ar$ factors are present' AnAggregate Score of 76.85 &ase$ on the Risk Gra$eScorecar$'

Special Mention 6 Gra$e 6 assets ha"e potential !eaknesses that$eser"e management)s close attention' If left%ncorrecte$ these !eaknesses ma( res%lt in a$eterioration of the repa(ment prospects of the

&orro!er' ,acilities sho%l$ &e $o!ngra$e$ to 6 ifs%staine$ $eterioration in financial con$ition isnote$ :consec%ti"e losses negati"e net !orthe-cessi"e le"erage= if loan pa(ments remain past$%e for 4 .7 $a(s or if a significant petition orclaim is lo$ge$ against the &orro!er' ,%llrepa(ment of facilities is still e-pecte$ an$ interestcan still &e taken into profits' An Aggregate Score

of 66.75 &ase$ on the Risk Gra$e Scorecar$'S%&stan$ar$ 7 ,inancial con$ition is !eak an$ capacit( orinclination to repa( is in $o%&t' These !eaknesses

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Ri$) Ra!i 5 Grade De(i i!io ?eopar$i*e the f%ll settlement of loans' 3oanssho%l$ &e $o!ngra$e$ to 7 if loan pa(ments remain

past $%e for 7 .9 $a(s if the c%stomer inten$s tocreate a len$er gro%p for $e&t restr%ct%ring

p%rposes the operation has cease$ tra$ing or an(in$ication s%ggesting the !in$ing %p or clos%re ofthe &orro!er is $isco"ere$' Not (et consi$ere$ non.

performing as the correction of the $eficiencies ma(res%lt in an impro"e$ con$ition an$ interest canstill &e taken into profits' An Aggregate Score of56.65 &ase$ on the Risk Gra$e Scorecar$'

Do%&tf%l an$ #a$:non.performing=

8 ,%ll repa(ment of principal an$ interest is %nlikel(an$ the possi&ilit( of loss is e-tremel( high'>o!e"er $%e to specificall( i$entifia&le pen$ingfactors s%ch as litigation li %i$ation proce$%res or

capital in?ection the asset is not (et classifie$ as3oss' Assets sho%l$ &e $o!ngra$e$ to 8 if loan pa(ments remain past $%e in e-cess of 9 $a(s an$interest income sho%l$ &e taken into s%spense :non.accr%al=' 3oan loss pro"isions m%st &e raise$against the estimate$ %nrealisa&le amo%nt of allfacilities' The a$e %ac( of pro"isions m%st &ere"ie!e$ at least %arterl( on all non.performingloans an$ the &ank sho%l$ p%rs%e legal options toenforce sec%rit( to o&tain repa(ment or negotiate anappropriate loan resche$%ling' In all cases the

re %irements of #angla$esh #ank in CI# reportingloan resche$%ling an$ pro"isioning m%st &efollo!e$' An Aggregate Score of 46.55 &ase$ onthe Risk Gra$e Scorecar$

3oss:non.performing=

Assets gra$e$ are long o%tstan$ing !ith no progress in o&taining repa(ment :in e-cess of $a(s past $%e= or in the late stages of !in$%p/li %i$ation' The prospect of reco"er( is poor an$legal options ha"e &een p%rs%e$' The procee$se-pecte$ from the li %i$ation or reali*ation ofsec%rit( ma( &e a!aite$' The contin%ance of theloan as a &anka&le asset is not !arrante$ an$ theanticipate$ loss sho%l$ ha"e &een pro"i$e$ for' Thisclassification reflects that it is not practical or$esira&le to $efer !riting off this &asicall( !orthlessasset e"en tho%gh partial reco"er( ma( &e effecte$in the f%t%re' #angla$esh #ank g%i$elines fortimel( !rite off of &a$ loans m%st &e a$here$ to' AnAggregate Score of 46 or less &ase$ on the RiskGra$e Scorecar$

At least top t!ent( fi"e clients/o&ligors of the #ank ma( prefera&l( &e rate$ &( an o%tsi$e

cre$it rating agenc('

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The Earl( Alert Report : Appendix 3.3.1 = sho%l$ &e complete$ in a timel( manner &( the RMan$ for!ar$e$ to CRM for appro"al to affect an( $o!ngra$e' After appro"al the reportsho%l$ &e for!ar$e$ to Cre$it A$ministration !ho is responsi&le to ens%re the correctfacilit(/&orro!er Risk Gra$es are %p$ate$ on the s(stem' The $o!ngra$ing of an acco%ntsho%l$ &e $one imme$iatel( !hen a$"erse information is note$ an$ sho%l$ not &e postpone$%ntil the ann%al re"ie! process

0*2 A66ro9a A"!#ori!/

The a%thorit( to sanction/appro"e loans m%st &e clearl( $elegate$ to senior cre$ite-ec%ti"es &( the Managing Director/CE0 + #oar$ &ase$ on the e-ec%ti"e)skno!le$ge an$ e-perience' Appro"al a%thorit( sho%l$ &e $elegate$ to in$i"i$%ale-ec%ti"es an$ not to committees to ens%re acco%nta&ilit( in the appro"al process'The follo!ing g%i$elines sho%l$ appl( in the appro"al/sanctioning of loans1

Cre$it appro"al a%thorit( m%st &e $elegate$ in !riting from the MD/CE0 +#oar$ :as appropriate= ackno!le$ge$ &( recipients an$ recor$s of all

$elegation retaine$ in CRM'

Delegate$ appro"al a%thorities m%st &e re"ie!e$ ann%all( &(MD/CE0/#oar$'

The cre$it appro"al f%nction sho%l$ &e separate from themarketing/relationship management :RM= f%nction'

The role of Cre$it Committee ma( &e restricte$ to onl( re"ie! of proposalsi'e' recommen$ations or re"ie! of &ank)s loan portfolios'

Appro"als m%st &e e"i$ence$ in !riting or &( electronic signat%re' Appro"alrecor$s m%st &e kept on file !ith the Cre$it Applications'

All cre$it risks m%st &e a%thori*e$ &( e-ec%ti"es !ithin the a%thorit( limit$elegate$ to them &( the MD/CE0' The ;pooling< or com&ining of a%thorit(limits sho%l$ not &e permitte$'

Cre$it appro"al sho%l$ &e centralise$ !ithin the CRM f%nction' Regionalcre$it centres ma( &e esta&lishe$ ho!e"er all large loans m%st &e appro"e$

&( the >ea$ of Cre$it an$ Risk Management or Managing

Director/CE0/#oar$ or $elegate$ >ea$ 0ffice cre$it e-ec%ti"e' The aggregate e-pos%re to an( &orro!er or &orro!ing gro%p m%st &e %se$ to$etermine the appro"al a%thorit( re %ire$'

An( cre$it proposal that $oes not compl( !ith 3en$ing G%i$elines regar$lessof amo%nt sho%l$ &e referre$ to >ea$ 0ffice for Appro"al

MD/>ea$ of Cre$it Risk Management m%st appro"e an$ monitor an( cross. &or$er e-pos%re risk'

An( &reaches of len$ing a%thorit( sho%l$ &e reporte$ to MD/CE0 >ea$ of Internal Control an$ >ea$ of CRM'

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It is essential that e-ec%ti"es charge$ !ith appro"ing loans ha"e rele"anttraining an$ e-perience to carr( o%t their responsi&ilities effecti"el(' As aminim%m appro"ing e-ec%ti"es sho%l$ ha"e1

. At least 6 (ears e-perience !orking in corporate/commercial &ankingas a relationship manager or acco%nt e-ec%ti"e'

. Training an$ e-perience in financial statement cash flo! an$ riskanal(sis'

. A thoro%gh !orking kno!le$ge of Acco%nting'

. A goo$ %n$erstan$ing of the local in$%str(/market $(namics'

. S%ccessf%ll( complete$ an assessment test $emonstrating a$e %atekno!le$ge of the follo!ing areas1

o Intro$%ction of accr%al acco%nting'o In$%str( / #%siness Risk Anal(siso #orro!ing Ca%seso ,inancial reporting an$ f%ll $isclos%reo ,inancial Statement Anal(siso The Asset Con"ersion/Tra$e C(cleo Cash ,lo! Anal(siso Pro?ectionso 3oan Str%ct%re an$ Doc%mentationo 3oan Management'

Refer Appendix 1. for &rief o&?ecti"es of the a&o"e mo$%les'

•

A monthl( s%mmar( of all ne! facilities appro"e$ rene!e$ enhance$ an$ alist of proposals $ecline$ stating reasons thereof sho%l$ &e reporte$ &( CRMto the CE0/MD'

0* Se5re5a!io o( D"!ie$#anks sho%l$ aim to segregate the follo!ing len$ing f%nctions1

. Cre$it Appro"al/Risk Management

. Relationship Management/Marketing

. Cre$it A$ministration

The p%rpose of the segregation is to impro"e the kno!le$ge le"els an$ e-pertise ineach $epartment to impose controls o"er the $is&%rsement of a%thorise$ loanfacilities an$ o&tain an o&?ecti"e an$ in$epen$ent ?%$gment of cre$it proposals'

0*3 I !er a A"di!

#anks sho%l$ ha"e a segregate$ internal a%$it/control $epartment charge$ !ithcon$%cting a%$its of all $epartments' A%$its sho%l$ &e carrie$ o%t ann%all( an$sho%l$ ens%re compliance !ith reg%lator( g%i$elines internal proce$%res 3en$ingG%i$elines an$ #angla$esh #ank re %irements'

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1* PREFERRED ORGANISATIONAL STRUCTURE & RESPONSIBILITIES

The appropriate organisational str%ct%re m%st &e in place to s%pport the a$option of the policies $etaile$ in Section of these g%i$elines' The ke( feat%re is the segregation of theMarketing/Relationship Management f%nction from Appro"al/Risk Management/A$ministration f%nctions'

Cre$it appro"al sho%l$ &e centralise$ !ithin the CRM f%nction' Regional cre$it centers ma( &e esta&lishe$ ho!e"er all applications m%st &e appro"e$ &( the >ea$ of Cre$it an$ Risk Management or Managing Director/CE0/#oar$ or $elegate$ >ea$ 0ffice cre$it e-ec%ti"e'

1*0 Pre(erred Or5a i$a!io a S!r" !"reThe follo!ing chart represents the preferre$ management str%ct%re1

Detaile$ organogram is attache$ in Appendix 2.1

1*1 Ke/ Re$6o $i%i i!ie$The ke( responsi&ilities of the a&o"e f%nctions are as follo!s' Please also refer to

Appendices 2.2A!" for sample ?o& $escriptions1

Cre$it Risk Management :CRM=0"ersight of the &ank)s cre$it policies proce$%res an$ controls relating to allcre$it risks arising from corporate/commercial/instit%tional &anking personal

&anking + treas%r( operations'

0"ersight of the &ank)s asset %alit('

Directl( manage all S%&stan$ar$ Do%&tf%l + #a$ an$ 3oss acco%nts to ma-imi*ereco"er( an$ ens%re that appropriate an$ timel( loan loss pro"isions ha"e &eenma$e'

Page 4

C r e d i t A d m in is t ra t io n( M a y r e p o r t s e p a r a t e ly

t o M D / C E O )

C r e d it A p p r o v a l( in c lu d e s r e g io n a l c r e d i t

c e n t r e s i f a p p l ic a b l e )

M o n i t o r in g / R e c o v e r y(in c l u d e s r e g io n a l r e c o v e r y

c e n t r e s i f a p p l ic a b l e)

H e a d o f C r e d it R is M a n a g e m e n t( C R M )

R e l a t io n s ! i p M a n a g e m e n t /M a r e t in g ( R M )

" u s in e s s D e v e lo p m e n t

H e a d o f C o r p o r a t e /C o m m e r c i a l " a n i n g

O t ! e r D i r e c t R e p o r ts( #n t e r n a l A u d i t $ e t c % )

M a n a g i n g D ir e c t o r / C E O

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2* PROCEDURAL GUIDELINES

This section o%tlines of the main proce$%res that are nee$e$ to ens%re compliance !ith the policies containe$ in Section ' of these g%i$elines'

2*0 A66ro9a Pro e$$The appro"al process m%st reinforce the segregation of RelationshipManagement/Marketing from the appro"ing a%thorit(' The responsi&ilit( for

preparing the Cre$it Application sho%l$ rest !ith the RM !ithin thecorporate/commercial &anking $epartment' Cre$it Applications sho%l$ &erecommen$e$ for appro"al &( the RM team an$ for!ar$e$ to the appro"al team!ithin CRM an$ appro"e$ &( in$i"i$%al e-ec%ti"es' #anks ma( !ish to esta&lish"ario%s threshol$s a&o"e !hich the recommen$ation of the >ea$ of Corporate/Commercial #anking is re %ire$ prior to on!ar$ recommen$ation to CRMfor appro"al' In a$$ition &anks ma( !ish to esta&lish regional cre$it centres !ithinthe appro"al team to han$le ro%tine appro"als' E-ec%ti"es in hea$ office CRM sho%l$

appro"e all large loans'

The recommen$ing or appro"ing e-ec%ti"es sho%l$ take responsi&ilit( for an$ &e hel$acco%nta&le for their recommen$ations or appro"al' Delegation of appro"al limitssho%l$ &e s%ch that all proposals !here the facilities are %p to 6J of the &ank)scapital sho%l$ &e appro"e$ at the CRM le"el facilities %p to 26J of capital sho%l$ &eappro"e$ &( CE0/MD !ith proposals in e-cess of 26J of capital to &e appro"e$ &(the EC/#oar$ onl( after recommen$ation of CRM Corporate #anking an$ MD/CE0'

The follo!ing $iagram ill%strates the preferre$ appro"al process1

2

4 5

6 7

8

Page 6

Cre$it ApplicationRecommen$e$ #( RM / Marketing

onal Cre$it 0fficer : C0=

>ea$ of Cre$it :>0C= +>ea$ of Corporate #anking :>0C#=

Managing Director

E-ec%ti"e Committee/#oar$

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' Application for!ar$e$ to onal 0ffice for appro"e$/$ecline

2' A$"ise the $ecision as per $elegate$ a%thorit( :appro"e$ /$ecline= to recommen$ing &ranches' A monthl( s%mmar( of C0 appro"als sho%l$ &e sent to >0C an$ >0C#to report the pre"io%s months appro"als sanctione$ at the onal 0ffices' The >0Csho%l$ re"ie! J of C0 appro"als to ens%re a$herence to 3en$ing G%i$elines an$#ank policies'

4' C0 s%pports + for!ar$e$ to >ea$ of Corporate #anking :>0C#= or $elegate for en$orsement an$ >ea$ of Cre$it :>0C= for appro"al or on!ar$ recommen$ation'

5' >0C a$"ises the $ecision as per $elegate$ a%thorit( to C0

6' >0C + >0C# s%pports + for!ar$e$ to Managing Director

7' Managing Director a$"ises the $ecision as per $elegate$ a%thorit( to >0C + >0C#'

8' Managing Director presents the proposal to EC/#oar$

' EC/#oar$ a$"ises the $ecision to >0C + >0C#

LL Regar$less of the $elegate$ a%thorit( >0C to a$"ise the $ecision :appro"al/$ecline= tomarketing $epartment thro%gh C0

Re omme ded De e5a!ed A66ro9a A"!#ori!/ Le9e $

>0C/CRM E-ec%ti"es Bp to 6J of Capital

Managing Director/CE0 Bp to 26J of Capital

EC/#oar$ all e-cee$ 26J of Capital

A66ea Pro e$$

An( $ecline$ cre$it ma( &e re.presente$ to the ne-t higher a%thorit( for reassessment/appro"al' >o!e"er there sho%l$ &e no appeal process &e(on$ theManaging Director'

2*1 Credi! Admi i$!ra!io

The Cre$it A$ministration f%nction is critical in ens%ring that proper $oc%mentationan$ appro"als are in place prior to the $is&%rsement of loan facilities' ,or this reasonit is essential that the f%nctions of Cre$it A$ministration &e strictl( segregate$ fromRelationship Management/Marketing in or$er to a"oi$ the possi&ilit( of controls

&eing compromise$ or iss%es not &eing highlighte$ at the appropriate le"el'

Cre$it A$ministration proce$%res sho%l$ &e in place to ens%re the follo!ing' Refer to

flo!chart attache$ as Appendix 3.2 1

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4'2' Di$%"r$eme ! 1

Sec%rit( $oc%ments are prepare$ in accor$ance !ith appro"al terms an$ arelegall( enforcea&le' Stan$ar$ loan facilit( $oc%mentation that has &eenre"ie!e$ &( legal co%nsel sho%l$ &e %se$ in all cases' E-ceptions sho%l$ &ereferre$ to legal co%nsel for a$"ice &ase$ on a%thorisation from anappropriate e-ec%ti"e in CRM'

Dis&%rsements %n$er loan facilities are onl( &e ma$e !hen all sec%rit($oc%mentation is in place' CI# report sho%l$ reflect/incl%$e the name of allthe len$ers !ith facilit( limit + o%tstan$ing' All formalities regar$ing largeloans + loans to Directors sho%l$ &e g%i$e$ &( #angla$esh #ank circ%lars +relate$ section of #anking Companies Act' All Cre$it Appro"al terms ha"e

&een met' A sample $oc%mentation an$ $is&%rsement checklist is attache$ as Appendix 3.2.1 !hich &anks ma( !ish to %se to control $is&%rsements'

4'2'2 C"$!odia D"!ie$ 1

3oan $is&%rsements an$ the preparation an$ storage of sec%rit( $oc%mentssho%l$ &e centralise$ in the regional cre$it centres'

Appropriate ins%rance co"erage is maintaine$ :an$ rene!e$ on a timel( &asis= on assets ple$ge$ as collateral'

Sec%rit( $oc%mentation is hel$ %n$er strict control prefera&l( in locke$fireproof storage'

4'2'4 Com6 ia e Re;"ireme !$ 1

All re %ire$ #angla$esh #ank ret%rns are s%&mitte$ in the correct format in atimel( manner'

#angla$esh #ank circ%lars/reg%lations are maintaine$ centrall( an$ a$"ise$to all rele"ant $epartments to ens%re compliance'

All thir$ part( ser"ice pro"i$ers :"al%ers la!(ers ins%rers CPAs etc'= areappro"e$ an$ performance re"ie!e$ on an ann%al &asis' #anks are referre$

to #angla$esh #ank circ%lar o%tlining appro"e$ e-ternal a%$it firms that areaccepta&le'

2*2 Credi! Mo i!ori 5

To minimise cre$it losses monitoring proce$%res an$ s(stems sho%l$ &e in place that pro"i$e an earl( in$ication of the $eteriorating financial health of a &orro!er' At aminim%m s(stems sho%l$ &e in place to report the follo!ing e-ceptions to rele"ante-ec%ti"es in CRM an$ RM team1

Past $%e principal or interest pa(ments past $%e tra$e &ills acco%nt e-cessesan$ &reach of loan co"enantsF

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3oan terms an$ con$itions are monitore$ financial statements are recei"e$ ona reg%lar &asis an$ an( co"enant &reaches or e-ceptions are referre$ to CRMan$ the RM team for timel( follo!.%p'

Timel( correcti"e action is taken to a$$ress fin$ings of an( internal e-ternal

or reg%lator inspection/a%$it'All &orro!er relationships/loan facilities are re"ie!e$ an$ appro"e$ thro%ghthe s%&mission of a Cre$it Application at least ann%all(' Refer to the Cre$itApplication format attache$ as Appendix 1.2.1 '

Comp%ter s(stems m%st &e a&le to pro$%ce the a&o"e information for central/hea$office as !ell as local re"ie!' @here a%tomate$ s(stems are not a"aila&le a man%al

process sho%l$ ha"e the capa&ilit( to pro$%ce acc%rate e-ception reports' E-ceptionssho%l$ &e follo!e$ %p on an$ correcti"e action taken in a timel( manner &efore theacco%nt $eteriorates f%rther' Refer to the Earl( Alert Process :section 4'4' = an$

Appendix 3.3.1 '

4'4' Ear / A er! 6ro e$$:

An Earl( Alert Acco%nt is one that has risks or potential !eaknesses of a materialnat%re re %iring monitoring s%per"ision or close attention &( management'

If these !eaknesses are left %ncorrecte$ the( ma( res%lt in $eterioration of therepa(ment prospects for the asset or in the #ank)s cre$it position at some f%t%re $ate!ith a likel( prospect of &eing $o!ngra$e$ to CG 6 or !orse :Impaire$ stat%s=!ithin the ne-t t!el"e months'

Earl( i$entification prompt reporting an$ proacti"e management of Earl( AlertAcco%nts are prime cre$it responsi&ilities of all Relationship Managers an$ m%st &e%n$ertaken on a contin%o%s &asis' An Earl( Alert report : Appendix 3.3.1 = sho%l$ &ecomplete$ &( the RM an$ sent to the appro"ing a%thorit( in CRM for an( acco%ntthat is sho!ing signs of $eterioration !ithin se"en $a(s from the i$entification of !eaknesses' The Risk Gra$e sho%l$ &e %p$ate$ as soon as possi&le an$ no $ela(sho%l$ &e taken in referring pro&lem acco%nts to the CRM $epartment for assistancein reco"er('

Despite a pr%$ent cre$it appro"al process loans ma( still &ecome tro%&le$'Therefore it is essential that ear / ide !i(i a!io an$ 6rom6! re6or!i 5 of $eteriorating cre$it signs &e $one to ens%re s!ift action to protect the #ank)s interest'The s(mptoms of earl( alert sho!n in Appendix 3.3.2 are &( no means e-ha%sti"e an$hence if there are other concerns s%ch as a &reach of loan co"enants or a$"ersemarket r%mors that !arrant a$$itional ca%tion an Earl( Alert report sho%l$ &e raise$'

Moreo"er reg%lar contact !ith c%stomers !ill enhance the likelihoo$ of $e"elopingstrategies m%t%all( accepta&le to &oth the c%stomer an$ the #ank' Representationfrom the #ank in s%ch $isc%ssions sho%l$ incl%$e the local legal a$"iser !henappropriate'

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An acco%nt ma( &e reclassifie$ as a Reg%lar Acco%nt from Earl( Alert Acco%nt stat%s!hen the s(mptom or s(mptoms ca%sing the Earl( Alert classification ha"e &eenreg%larise$ or no longer e-ist' The conc%rrence of the CRM appro"al a%thorit( isre %ire$ for con"ersion from Earl( Alert Acco%nt stat%s to Reg%lar Acco%nt stat%s %

2* Credi! Re o9er/

The Reco"er( Bnit :RB= of CRM sho%l$ $irectl( manage acco%nts !ith s%staine$$eterioration :a Risk Rating of S%& Stan$ar$ :7= or !orse=' #anks ma( !ish totransfer E IT acco%nts gra$e$ 5.6 to the RB for efficient e-it &ase$ onrecommen$ation of CRM an$ Corporate #anking' @hene"er an acco%nt is han$e$o"er from Relationship Management to RB a >an$o"er/Do!ngra$e Checklist: Appendix 3. .1 = sho%l$ &e complete$'

The RB)s primar( f%nctions are1

Determine Acco%nt Action Plan/Reco"er( Strateg(P%rs%e all options to ma-imi*e reco"er( incl%$ing placing c%stomers intorecei"ership or li %i$ation as appropriate'Ens%re a$e %ate an$ timel( loan loss pro"isions are ma$e &ase$ on act%al an$e-pecte$ losses'Reg%lar re"ie! of gra$e 7 or !orse acco%nts'

The management of pro&lem loans :NP3s= m%st &e a $(namic process an$ theassociate$ strateg( together !ith the a$e %ac( of pro"isions m%st &e reg%larl(re"ie!e$' A process sho%l$ &e esta&lishe$ to share the lessons learned from thee-perience of cre$it losses in or$er to %p$ate the len$ing g%i$elines'

4'5' NPL A o" ! Ma a5eme !

All NP3s sho%l$ &e assigne$ to an Acco%nt Manager !ithin the RB !ho isresponsi&le for coor$inating an$ a$ministering the action plan/reco"er( of theacco%nt an$ sho%l$ ser"e as the primar( c%stomer contact after the acco%nt is$o!ngra$e$ to s%&stan$ar$' @hilst some assistance from Corporate#anking/Relationship Management ma( &e so%ght it is essential that the a%tonom( of the RB &e maintaine$ to ens%re appropriate reco"er( strategies are implemente$'

4'5'2 A o" ! Tra $(er Pro ed"re$@ithin 8 $a(s of an acco%nt &eing $o!ngra$e$ to s%&stan$ar$ :gra$e 7= a Re %estfor Action :R,A Appendix 3. .2A = an$ a han$o"er/$o!ngra$e checklist : Appendix 3. .1= sho%l$ &e complete$ &( the RM an$ for!ar$e$ to RB for ackno!le$gment'The acco%nt sho%l$ &e assigne$ to an acco%nt manager !ithin the RB !ho sho%l$re"ie! all $oc%mentation meet the c%stomer an$ prepare a Classifie$ 3oan Re"ie!Report :C3R Appendix 3. .2B = !ithin 6 $a(s of the transfer' The C3R sho%l$ &eappro"e$ &( the >ea$ of Cre$it an$ copie$ to the >ea$ of Corporate #anking an$ tothe #ranch/office !here the loan !as originall( sanctione$' This initial C3R sho%l$highlight an( $oc%mentation iss%es loan str%ct%ring !eaknesses propose$ !orko%tstrateg( an$ sho%l$ seek appro"al for an( loan loss pro"isions that are necessar('

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,ollo!ing form%la is to &e applie$ in $etermining the re %ire$ amo%nt of pro"ision1

' Gross 0%tstan$ing

2' 3ess1 :i= Cash margin hel$ or ,i-e$Deposits/SP %n$er lien' : =

:ii= Interest in S%spense Acco%nt : =4' 3oan al%e

:,or !hich pro"ision is to &e create$ &efore consi$eringestimate$ reali*a&le "al%e of other sec%rit(/collateral hel$=

5' 3ess1 Estimate$ sal"age "al%e of sec%rit(/collateral hel$ : =:See Note &elo!=

Net 3oan al%e

Note1 The amo%nt of re %ire$ pro"ision ma( in some circ%mstances &e re$%ce$ &( anestimate$ reali*a&le force$ sale "al%e of :i'e' Sal"age al%e= of an( tangi&lecollateral hel$ :"i*1 mortgage of propert( ple$ge$ goo$s / or h(pothecate$ goo$srepossesse$ &( the &ank ple$ge$ rea$il( marketa&le sec%rities etc=' >ence in thesesit%ations it !ill &e a$"isa&le to e"al%ate s%ch collateral estimate the most realisticsale "al%e %n$er $%ress an$ net.off the "al%e against the o%tstan$ing &efore$etermining the Net 3oan "al%e for pro"ision p%rposes' Conser"ati"e approachsho%l$ &e taken to arri"e at pro"ision re %irement an$ #angla$esh #ank g%i$eline to

&e properl( follo!e$'

4'5'6 I e !i9e Pro5ramme:

#anks ma( !ish to intro$%ce incenti"e programmes to enco%rage Reco"er( BnitAcco%nt Managers to &ring $o!n the Non Performing 3oans :NP3s=' The ta&le &elo!sho!s an in$icati"e incenti"e plan for RB acco%nt managers1

Re o9er/ a$ a ? o( Pri i6a6 "$ I !ere$!

Re omme ded I e !i9e a$ ? o(e! re o9er/ amo" !

I( CG @- i( +ri!!e o((

87J to J ' J 2' J6 J t 86J '6 J ' J2 J to 6 J '26J '6 J

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A66e di e$

0*1*0 Credi! A66 i a!io Tem6 a!e

0*1*1 Ri$) Grade S ore ard

0* Credi! S)i $ A$$e$$me !

1*0 Or5a i'a!io a S!r" !"re

1*1A D Sam6 e ,o% De$ ri6!io $

2*1 Credi! Admi i$!ra!io F o+ #ar!

2*1*0 Se "ri!/ Do "me !a!io 7Di$%"r$eme ! C#e ) i$!

2*2*0 Ear / A er! Re6or! Tem6 a!e

2*2*1 Ear / A er! C#ara !eri$!i $

2* *0 Ha do9er7Do+ 5rade C#e ) i$!

2* *1A Re;"e$! (or A !io Tem6 a!e

2* *1B C a$$i(ied Loa Re9ie+ Tem6 a!e

2* *2 S/ di a!io Fi a i 5

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Credi! A66 i a!io A66e di8 0*1*0

,acilities !ill onl( &e pro"i$e$ after anal(sis of the risks associate$ !ith the co%nter.parties an$facilities propose$ in !riting' A template of the cre$it application is pro"i$e$ &elo!1

0* E ECUTI E SUMMARY

0*0 RE UIREMENT7SECURITY

Fa i i!/ T/6e E8i$!i 5 imi! Pro6o$ed imi! O"!$!a di 5

3/C3ATR Re"ol"ing 3oan0"er$raftTerm 3oan,- ,!$TOTAL

Se "red %/:

0*1 INTRODUCTION

0*2 ACTI ITIES7MARKET

Acti"itiesGro%p Acti"ities

Market

0* KEY RISK ISSUES>igh le"erage sensiti"e to retail $o!nt%rn0ne man &%siness no s%ccession no ke( man ins%ranceM%lti&anke$ %nsec%re$ &%t reg%lar relia&le management information'

0*3 >HY DO >E >ANT TO DO ITIn line !ith &ank)s &%$get + &%siness strateg(

0*4 SOURCE OF REPAYMENTPrimar(1Secon$ar(1Tertiar(1

'7 CREDIT POLICY COMPLIANCE:3en$ing G%i$elines .Complie$/Not complie$Cre$it Polic( .Complie$/Not complie$

o Please gi"e reason for non compliance'

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A66e di8 0*1*0 igh t%rno"er of staffsO Training %n$ertakenO

2* ANALYSIS OF RISK This is the ;meat< of the application an$ !here !e nee$ to s!itch from historic factsto looking at the position to$a( an$ f%t%re prospects an$ risks in"ol"e$ for the &ank inthe relationship'

There are n%mero%s risks attache$ to e"er( transactions/relationship &%t there is anee$ for certain f%n$amental risk aspects to &e consi$ere$ for e"er( relationship'Certain of these risks ha"e &een i$entifie$ !hich !ill &e re %ire$ to &e commente$%pon on a man$ator( &asis'

2*0 BUSINESS RISK

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S>OT A a /$i$ o !#e (o o+i 5:

In$%str(Si*eMat%rit(Pro$%ctionDistri&%tion

%lnera&ilit(CompetitionDeman$. s%ppl( sit%ationStrategic importance for the gro%p an$ for the co%ntr(ConcentrationMarket rep%tation

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2*3 ACCOUNT PERFORMANCE RISK

Cre$it T%rno"er "s stock mo"ement + sales>ar$ Core element or goo$ s!ingRepa(ment track recor$ of !orking capital loans an$ installment loans

* RE>ARD7RELATIONSHIP STRATEGY

Re"en%e from the relationship1 Pre"io%s (ear)s act%al

Pro?ecte$ re"en%e for the ne-t (ear

Acco%nt Strateg(1 Gro!>ol$/MaintainRe$%ce/Restr%ct%reE-it

3* RECOMMENDATION

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A66e di8 0*1*1Ri$) Grade S ore ard

#orro!er / Gro%p1

In$%str( Co$e1

Date of Gra$ing1

Date of ,inancials1

Complete$ &(1

S ore Ri$) Grade

3 1@3- 2

43-@33-4 3

3-3 423- @

23

A55re5a!e S ore:

Ri$) Grade:

Cri!eria >ei5#! Parame!er Poi !$ A !"a Poi !$ >ei5#!ed S ore:Points L @eight=

Geari 5 1J?

The ratio of a &orro!er)s Total "ebt to Tan$ible %et &orth.

All calc%lations sho%l$ &e &ase$ on ann%al financialstatements of the &orro!er:a%$ite$ preferre$='

J*13 0JJJ*14 J*23 3J*24 J*3J JJ*30 J*@3 3J*@4 0*13 J0*14 1*JJ @31*J0 1*13 @J1*14 1*3J 431*30 1*@3 4J1*@4 2*JJ 33

2*JJ J

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Li;"idi!/ 1J?

The ratio of a &orro!er)sCurrent Assets to Current

'iabilities

2*3J 0JJ2*JJ 2* 31*@3 1* J1*3J 1*@ 31*JJ 1* J0*3J 0* @30*0J 0* @JJ* J 0*J 43J* J J* 4JJ*@J J*@ 33

J*@J J

Pro(i!a%i i!/ 1J?

The ratio of a &orro!er)s(peratin$ Profit to )ales '0perating Profit $efine$ as

Gross Profit min%s alle-penses'

J*2J 0JJJ*13 - J*1 3J*1J - J*13 3J*03 - J*0 JJ*0J - J*0 @3

J*J3 - J*J @JJ*J1 - J*J 43J*J - J*J0 3J

J J

A o" ! Co d" ! 0J?C"$!omer (or more!#a 1 /ear$ +i!# o 0JJ6a$! d"e$ a d (a" ! e$$re ord*

C"$!omer (or more!#a 4 mo !#$ "6 !o J1 /ear$ +i!# (a" ! e$$%e#a9ior*

Ne+ A o" ! +i!#) o+ $a!i$(a !or/ Jdea i 5$ +i!# o!#er%a )$*

Some a!e 6a/me !$or %o" ed #e;"e$ @3

!#o"5# a +a/$ earedi 03 da/$ or e$$*

Fre;"e ! 6a$! d"e$irre5" ar i!em$ or J%o" ed #e;"e$*

B"$i e$$ O"! oo) 0J?

A critical assessment of theme$i%m term prospects of the

&orro!er taking into acco%ntthe in$%str( market share an$economic factors'

E8 e6!io a 0JJ

Fa9o"ra% e J

S!a% e J

S i5#! / U er!ai @J

Ca"$e (or Co er J

Page 29

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Ma a5eme ! 3?

The %alit( of management &ase$ on the aggregate n%m&er of (ears that the SeniorManagement Team :top 6e-ec%ti"es= has &een in thein$%str('

2J /ear$ 0JJ 13 2J /ear$ J 1J 1 /ear$ J 03 0 /ear$ @3 0J 0 /ear$ 43

0J /ear$ or a /$" e$$io i$$"e$ or Jo!#er ma a5eme !+ea) e$$e$ areide !i(ied*

Per$o a De6o$i!$ 3?

The e-tent to !hich the &ankmaintains a personal &ankingrelationship !ith the ke(

&%siness sponsors/principals'

A 6er$o a a o" !$are mai !ai ed i !#e 0JJ%a ) +i!# $i5 i(i a !de6o$i!$*

Pri i6a $ mai !ai$ome a o" !$ %"! #a9e @3re a!io $#i6 +i!# o!#er%a )$*

No re a!io $#i6 JA5e o( B"$i e$$ 3?

The n%m&er of (ears the &orro!er has &een engage$ inthe primar( line of &%siness'

13 /ear$ 0JJ1J 13 /ear$ 303 1J /ear$ 30J 03 /ear$ J3 0J /ear$ @31 3 /ear$ @J

1 /ear$ J

Si'e o( B"$i e$$ 3?

The si*e of the &orro!er)s &%siness meas%re$ &( the mostrecent (ear)s total sales'Prefera&l( &ase$ on a%$ite$financial statements'

Sa e$ iBDT Mi io $

0 JJJ 0JJ@3J 0 JJJ 33JJ @3J J13J 3JJ 30JJ 13J J3J 0JJ @313 3J @J

13 J

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A66e di8 0*OB,ECTI ES OF CREDIT SKILL ASSESSMENT:

I !rod" !io !o A r"a A o" !i 5

• Descri&e the information pro"i$e$ &( the &alance sheet an$ profit an$ loss acco%nt• I$entif( the connecting links &et!een the t!o statements• Prepare an$ manip%late simple financial statements that reflect the &%siness acti"ities of a

small compan(• Appl( the correct criteria to $etermine the point at !hich sales an$ e-penses sho%l$ &e

recogni*e$ on the profit an$ loss acco%nt• Bsing financial statement information calc%late p%rchases of stock an$ fi-e$ assets

I d"$!r/ Ri$) A a /$i$

Managers sho%l$ &e a$$ressing1• Cost str%ct%re• Mat%rit(• C(clicalit(• Profita&ilit(• Depen$ence• %lnera&ilit( to s%&stit%te pro$%cts• Reg%lator( en"ironment :like #angla$esh #ank g%i$elines %$iciar( Ta- a%thorit(

g%i$elines e'g' !ork ha*ar$ chil$ la&or etc'=

B"$i e$$ Ri$) A a /$i$• Determine !hether the &%siness)s strateg( increase or $ecrease the risks face$ &( all

&%sinesses in its in$%str(• State !hat a$$itional risks are inherent in the compan()s strateg( an$ practices on its

financial statements. state ho! (o% !o%l$ e-pect those statements to look

Ide !i(/i 5 Borro+i 5 Ca"$e$

• Bse financial statements to $iagnose pro&a&le &orro!ing nee$s• Determine &ase$ on the pro&a&le &orro!ing ca%ses !hether loans sho%l$ &e short or

long.term an$ i$entif( the pro&a&le repa(ment so%rce'

Fi a ia Re6or!i 5 a d F" Di$ o$"re

• Descri&e the infl%ence of acco%nting organi*ations an$ go"ernment agencies on the presentation of financial information

• Descri&e the scope of an acco%ntant)s role in compiling re"ie!ing an$ a%$iting financialstatements

• Recogni*e the $ifferent ass%rances of acc%rac( an$ fairness gi"en in a%$itor)s reports an$the e-tent of the acco%ntant)s legal lia&ilit(

• Recogni*e the importance of f%ll $isclos%re• Bse notes to acco%nts to fin$ "al%a&le information on a compan()s financial position

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Fi a ia S!a!eme ! A a /$i$

• Recogni*e t(pical asset an$ lia&ilit( str%ct%res of $ifferent t(pes of &%siness• Determine the $egree of acco%nting risk present in a profit an$ loss acco%nt• Bn$erstan$ the effects of $iffering acco%nting metho$s on the profit an$ loss acco%nt an$

&alance sheet• Bn$erstan$ the &enefits of rearranging the elements of the statement for anal(sis• Perform a common.si*e anal(sis an$ interpret the res%lts• Compare the compan( to similar companies in the in$%str( an$ $etermine !hether its

performance is &etter or !orse than the in$%str( a"erage• Calc%late li %i$it( capital str%ct%re an$ operating efficienc( ratios• Determine historical tren$s in the ratios

I !er6re! !#e$e !re d$ %/ e8ami i 5 #a 5e$ i ra!io om6o e !$

T#e A$$e! Co 9er$io C/ e

•

Define the terms operating c(cle an$ capital in"estment c(cle• I$entif( &%siness acti"ities as part of one of the c(cles• E-plain the terms hol$ing perio$ pa(mentperio$ an$ collection perio$ an$ e-plain ho!

changes in these perio$s can affect cash flo!

A o" !i 5 (or !#e O6era!i 5 C/ e

• Recogni*e appropriate an$ inappropriate application of &asic principles that affect the%alit( of financial statement information

• Recogni*e !a(s in !hich the principles ma( affect (o%r perception of information presente$ in financial statements

• I$entif( &asic so%rces an$ %ses of cash to anal(*e the total cash flo! of the &%siness

A o" !i 5 (or !#e I 9e$!me ! C/ e

• Recogni*e sit%ations in !hich cash o%tflo!s are capitali*e$ inappropriatel( or fi-e$assets are $epreciate$ inappropriatel(

• Pre$ict the effects of "ario%s $epreciation metho$s on reporte$ net income• Asses the effects of $ifferences &et!een Inlan$ Re"en%e r%les an$ acco%ntants) r%les on

reporte$ net income an$ internall( generate$ cash• Differentiate &et!een the market "al%e of an asset an$ its state$ &ook "al%e•

Interpret notes to the acco%nts on fi-e$ assets an$ $epreciation• Determine !hether a compan( has properl( classifie$ an in"estment• Calc%late the amo%nt of the so%rce or %se of f%n$s represente$ &( the Qintangi&le assets)

an$ other Qassets) &alance sheet'

Ca$# F o+ A a /$i$

• Prepare an$ anal(*e a cash flo! s%mmar(• Calc%late %ick cash flo! to i$entif( ma?or cash inflo!s o%tflo!s an$ repa(ment

capacit(• Anal(*e a compan()s cash flo! statement prepare$ in accor$ance !ith GAAP

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Pro.e !io $

• De"elop logical h(potheses &ase$ on (o%r assessment of possi&le f%t%re scenarios• Calc%late the cash flo! effect of (o%r h(potheses• Perform a sensiti"it( anal(sis of ke( "aria&les affecting cash flo! an$ cash flo!

pro?ections• Pro?ect a profit an$ loss acco%nt cash flo! s%mmar( an$ &alance sheet for a f%t%re

perio$'

Loa S!r" !"re a d Do "me !a!io• I$entif( the most appropriate cre$it facilit(• Determine the timing for $is&%rsing f%n$s an$ esta&lish a repa(ment sche$%le• Determine !hether s%pport is nee$e$ s%ch as sec%rit( or g%arantees an$ if so the

appropriate t(pe• Recogni*e ho! the risk characteristics of a loan sho%l$ &e reflecte$

Loa Ma a5eme !• Manage loans effecti"el( &( foc%sing on risks an$ opport%nities i$entifie$ in the

%n$er!riting process an$ s%pporte$ &( loan $oc%mentation'• Preser"e cre$it %alit( &( recogni*ing an$ respon$ing to earl( !arning signals'• Recogni*e ho! to e"al%ate an$ choose the &est options of resol"ing a !eak cre$it an$

e-ploiting a goo$ cre$it

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A66e di8 1*0

Pro6o$ed Or5a i'a!io a S!r" !"re

Page 45

Board o( Dire !or$

CE0 / MD

>ea$ of Corporate#anking

>ea$ of Cre$it

ManagerCre$it A$min

:North=

ManagerCre$it A$min

:So%th=

ManagerCre$it A$min

:@est=

Manager

Cre$it A$min:East=

Reco"er( Manager :North=

Reco"er( Manager :So%th=

Reco"er( Manager :@est=

Reco"er(

Manager :East=

RegionalManager :North=

RegionalManager :So%th=

RegionalManager :@est=

Regional

Manager :East=

RelationshipManagement

Team


Team


Team

Relationship

ManagementTeam

Cre$itManager :North=

Cre$itManager :So%th=

Cre$itManager :@est=

Cre$it

Manager :East=

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Sam6 e ,o% De$ ri6!io $ A66e di8 1*1A

,o% Ti! e: Head o( Credi!

Re6or!$ !o: Ma a5i 5 Dire !or7CEO

P"r6o$e o( ,o%:

To ens%re so%n$ asset %alit( an$ a conser"ati"e cre$it c%lt%re thro%gho%t the len$ingan$ treas%r( tra$ing/%n$er!riting acti"ities of the &ank !hile ens%ring the cre$it appro"al

process is responsi"e to c%stomer nee$s an$ cre$it losses an$ collection costs areminimi*e$' To pro"i$e an in$epen$ent thir$ part( assessment/appro"al of cre$it an$

&%siness risks of the &ank an$ ser"e on the #ank)s Asset an$ 3ia&ilit( Managementcommittee'

Pri i6a A o" !a%i i!ie$:

' Promote strong asset %alit( an$ en$ea"o%r to ens%re that o%tstan$ings classifie$as Gra$es to 4 are at least 92J of total o%tstan$ing assets'

2' Bp$ating the #ank)s len$ing g%i$elines/cre$it policies as an$ !hen re %ire$ &%tat least ann%all('

4' Ens%re cre$it recommen$ations/appro"als are taken in a timel( manner'

5' Ens%re a pr%$ent le"el of portfolio $i"ersification'

6' Ma-imi*e reco"er( of pro&lem loans an$ minimi*e cre$it losses an$ collectione-penses'

7' Ens%re compliance !ith internal policies an$ proce$%res an$ e-ternal reg%lator(re %irements'

8' Contri&%te to the $e"elopment of cre$it risk management skills of staff in Cre$itA$ministration an$ Corporate #anking $epartments'

' Pro"i$e inp%t/a$"ice to the MD/CE0/#oar$ regar$ing the form%lation of strategicoperating plans'

Agree$ &( 1 >ea$ of Cre$it Managing Director / CE0

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Sam6 e ,o% De$ ri6!io $ A66e di8 1*1B

,o% Ti! e: Head o( Cor6ora!e Ba )i 5

Re6or!$ !o: Ma a5i 5 Dire !or7CEO

P"r6o$e o( ,o%:

To plan $e"elop an$ manage the #ank)s corporate commercial an$ instit%tional &%sinesses to ens%re high profita&ilit( an$ s%staine$ gro!th in line !ith the #ank)sstrategic plan cre$it policies an$ &%siness o&?ecti"es' To pro"i$e o"erall coor$ination ofmarketing efforts for the #ank)s non.personal &%siness incl%$ing the form%lation ofstrateg( esta&lishment of performance tracking s(stems an$ ?oint campaigns !ith other

&ank $epartments' Ser"e on the #ank)s Asset an$ 3ia&ilit( Management Committee'


' 0"ersee the marketing an$ &%siness $e"elopment acti"ities of the &ank)s non. personal &%siness'

2' Ma-imi*e c%stomer profita&ilit( thro%gh cross sales of all &ank pro$%cts an$appropriate loan pricing'

4' Ens%re cre$it %alit( is maintaine$ an$ that re"ie!s are c%rrent at all times'

5' Ens%re a pr%$ent le"el of portfolio $i"ersification'

6' Ens%re compliance !ith #ank Cre$it Policies an$ Central #ank reg%lations'

7' Contri&%te to the $e"elopment of relationship management skills of staff inCorporate #anking'

8' Pro"i$e inp%t/a$"ice to the MD/CE0/#oar$ regar$ing the form%lation of strategicoperating plans'

' Maintain an in $epth kno!le$ge of the local market'

Agree$ &(1 >ea$ of Corporate #anking Managing Director / CE0

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Sam6 e ,o% De$ ri6!io $ A66e di8 1*1C

,o% Ti! e: Credi! Admi i$!ra!io Ma a5er

Re6or!$ !o: Head o( Credi!

P"r6o$e o( ,o%:

To plan organi*e $irect control an$ re"ie! the operational an$ a$ministrati"e f%nctionsof cre$it a$ministration $epartment to ens%re efficient an$ effecti"e s%pport to the relate$

&anking $epartments in line !ith reg%lator( an$ #ank re %irements !hile e-ercisingappropriate control an$ in$epen$ent ?%$gment'


' Ens%re loan $oc%mentation an$ sec%rities are $%l( complete$ an$ in place prior to$is&%rsement of loans'

2' Ens%re acc%rate an$ timel( s%&missions of ret%rns of &oth the Central #ank an$the #ank)s hea$ office'

4' Act on e-ception reports an$ ens%re timel( receipt of loan installments'

5' Ens%re that a$e %ate ins%rance is in place on all ple$ge$ assets all appro"alcon$itions ha"e &een met an$ an( e-ceptions are appropriatel( appro"e$ prior to$is&%rsement of loans'

6' Ens%re that $epartment operations incl%$ing the preparation of loan$oc%mentation recor$ing of charges an$ reporting of e-ceptions is $one in atimel( an$ efficient manner'

7' Ens%re compliance !ith internal policies an$ proce$%res an$ e-ternal reg%lator(re %irements an$ that all internal an$ e-ternal a%$it recommen$ations areimplemente$'

Agree$ &(1 Cre$it A$ministration Manager >ea$ of Cre$it

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Sam6 e ,o% De$ ri6!io $ A66e di8 1*1D

,o% Ti! e: Re a!io $#i6 Ma a5er

Re6or!$ !o: Head o( Cor6ora!e Ba )i 5

P"r6o$e o( ,o%:

The ?o&hol$er ser"es as the primar( relationship contact !ith the #ank)s corporate an$commercial c%stomers' To ma-imi*e relationship profita&ilit( thro%gh cross selling' Tominimi*e cre$it losses thro%gh thoro%gh risk assessment an$ timel( i$entification of$eteriorating cre$it risk of c%stomers'


' Pro"i$e goo$ c%stomer ser"ice !hile ens%ring the #ank)s interest is protecte$'

2' Gro! the c%stomer &ase thro%gh marketing an$ &%siness $e"elopment effortsincl%$ing cross selling to e-isting c%stomer &ase'

4' Ens%re that cre$it %alit( is maintaine$ an$ c%stomer re"ie!s are complete$ intimel( manner'

5' Maintain an in.$epth kno!le$ge of the c%stomer)s &%siness thro%gh reg%lar

c%stomer "isits an$ in$%str( research'6' Ens%re facilit( risk gra$es are acc%rate an$ are change$ in a timel( manner as

soon as a$"erse information is kno!n'

7' Seek assistance from CRM at the earliest if a$"erse tren$s in a c%stomer)sfinancial position are note$'

8' ,ollo! %p !ith c%stomers to ens%re the timel( receipt of financial statementsloan pa(ments an$ all $oc%mentar( re %irements of the #ank'

' Ens%re compliance !ith internal policies an$ proce$%res an$ e-ternal reg%lator(re %irements an$ that all internal an$ e-ternal a%$it recommen$ations areimplemente$'

Agree$ &(1 Relationship Manager >ea$ of Corporate #anking

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39/57

Credi! Admi i$!ra!io F o+ #ar!

A66e di8 2*1L Perio$icall( Means1 Risk Gra$e Re"ie! ,re %enc(

7 %arterl(5'6 Semi.Ann%al

.4 Ann%all(

Page 49

F" !io $ o(Credi! Admi i$!ra!io De6ar!me !

Di$%"r$eme ! C"$!odia Mo i!ori 5 Com6 ia e

eeeeeeeeAppro"al from

CRM

Completion of Sec%rit(Doc%mentation

3imit Creation +Compl(ing Dis&%rsement

Check 3ist

Dis&%rsement

0&taining Sec%rit(Doc%mentation as per

appro"al

Safel( Storing3oan/Sec%rit( Doc%ments

:fire.proof=

Perio$ic Re"ie! of

Doc%mentation L

Con$itions + Co"enant#reach Monitoring

Monitoring of Past D%e3imit E-pir( +

Doc%ments Deficienc(

A%$it Internal/##

Inspection Compliance

Ens%re Collateral isIns%re$ + Properl(

al%e$'

Ret%rns to ## CI#Reporting $efa%lt listcirc%lation'

Maintain ## Circ%lars+ ens%re compliance

&( all Depts'

Ens%re all "al%ers

la!(ers ins%rers areappro"e$ enliste$ +their performance arere"ie!e$ perio$icall(

Ens%re a$herence to appro"e$

terms + other re %irements &efore $is&%rsement'

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b Date and amounts are correctc ' "an Officials 8 itnessd 4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%; certified by ta. aut!ority Ac no2ledgement/Annuals Reminder issued

f +etter of ?uarantee (Ac no2ledgment of +iability) to be obtained before e.piry of yr% from t!e dateof relative ?uarantee or prior ac no2ledgment%a) ,igned across t!e Revenue ,tampb) ,ignature verified%c) Date and ?uarantee particulars are correct%

7 Letter !- 6uarantee /8!int 9 Se#eral9ull =ame and address of all e.ecutant(s) -uoted%Date and amounts are correct' "an Officials 8itness4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%; certified by ta. aut!ority Ac no2ledgement/Annuals Reminder issued

+etter of ?uarantee (Ac no2ledgment of +iability) to be obtained before e.piry of yr% from t!e dateof relative ?uarantee or prior ac no2ledgment%

a) ,igned across t!e Revenue ,tampb) ,ignature verified%c) Date and ?uarantee particulars are correct%

Letter !- 6uarantee /Limite$ C!m"an2a Ob0ect clause permits to issue rd party guaranteeb "oard Resolution covering amount and signatory of ?uarantee%

c 4roperly e.ecuted (as per "R)$ Company seal affi.ed%d Date and amounts are correct

4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%;

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4roperly e.ecuted (as per "R)$ Company seal affi.ed%Date and amount are correct4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%;

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Compre!ensive #nsurance 4olicy along 2it! 4remium paid receipt !eld4o2er of Attorney

1 /a Letter !- H2"!t)e0ati!n /O#er e)i0les %it) s0)e$ule4roperly e.ecuted(as per "R)$ Company seal affi.ed%Date$ amounts and 4articulars of Be!icles are correct sc!edule attac!ed4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%;

8/9/2019 CRM Mahmud

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c) ?uarantee of rd party 9DA/,5D/," A/c etc% !olders% *do*d) "oard Resolution if +imited Co% Berify signatures%e) Memorandum of Association to c!ec Mortgage/+ien aut!ority of company assets%f) "", 4rintout confirming +ien Mar ed$ Refer$ Re0ect mar ed !eld%g) Half*yearly confirmation obtained%!) Confirmation !eld to remit fund at our re-uest 2it!out reference to customer* s%v%

1 /a LIEN O ER F&A,ST&,SB ETC' A,C (ITH OUR O ERSEAS OFFICES'

All local formalities completed * item &6 above% All overseas formalities re-uire under t!eir country regulation completedConfirmation !eld to remit fund at our re-uest 2it!out reference to customer* ,%B%Half yearly confirmation obtained%

1; PLE&6E O ER F&R,PSP,BPS,(E&B,ICB UNIT,SHARES ETC'

a) +etter of 4ledge * properly e.ecuted$ 4roper ,tamp affi.ed$ ,ignature verified

b) +etter of +ien Rig!t to set*off% properly e.ecuted$ 4roper ,tamp affi.ed$ ,ignature verified

c) ?uarantee of rd party 9DR/4,4/",4/#C"/,HARE, etc% !olders% *do*d) "oard Resolution if +imited Co%$ ,ignature verifiede) Memorandum of Association to c!ec Mortgage/+ien aut!ority of company assets%f) +ien confirmation from issuing aut!ority/"an duly signature verified%g) #dentity ,lip for 4,4/"4, duly mar ing lien and signature verified%!) 9orm D"*&; ( sets) duly signature verified by t!e issuing aut!ority for 8ED"%#) 9orm*&&: duly signature verified by t!e issuing aut!ority for #C"/,HARE, E5C%

0) +ien Confirmation from issuing "an /"ranc! duly signed by t!e aut!ori3ed signatory*,%B)Confirmation !eld to remit fund at our re-uest 2it!out reference to customer* ,%B%

l)Half yearly confirmation obtained%

1< MORT6A6E O ER PROPERTY :

a) Original purc!ase deed and along 2it! "ia deed(s)b) ,RO Certified copy purc!ase deed plus endorsed Deed delivery receipt(interim period)c) =on*encumbrance Certificate 2it! searc! fee paid receipt%d) Certified Mutation !atian including mutation fee paid receipt (DCR)e) ,%A%$C%,%$R%,% !atian(s) $f) p to date rent paid/municipal ta. paid receipt(s) etc%g) Baluation Certificate * along 2it! 9,B

!) +a2yers confirmationi) ?uarantee of t!ird party mortgagors%

0) "oard Resolution if t!e property is in t!e name of +imited Co%) Memorandum of Association to c!ec Mortgage aut!ority of company s property%

l) #nsurance Covering Construction value%m) Certified Mat! !atiann) +ocation Map ( if t!ere is no !olding number or outside main city)%o) Re*valuation Certificate * along 2it! 9,B every rd year%p) 5opograp!ical survey map on Mou3a Manp for agricultural lands or covering t!e property 2!ere!olding number is not available%-) 4o2er of Attorney

Lease property *

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NO +A AN, -LO,S O LEASE - O-E ,Y A E NO, A E-,A$LE AS SE 0,Y

a) Original +ease deed and "ia deed(s) if any%b) Allotment letter$ 4ossession letterc) =o ob0ection Certificate/Mortgage permission (business purpose)from RA /M%8OR ,%d) =on Encumbrance Certificate from RA /M%8OR ,%e) Our interest to be noted 2it! RA /M%8OR ,%

ollect Stamp duty/ egd.charges from customer to obtain stamps from , EAS Ya) Obtain Certified copy Registered Mortgage 2it! Original Delivery Receipt duly endorsedb) Obtain Certified copy 4o2er of Attorney 2it! Original Delivery Receipt duly endorsedc) Diaries to obtain Original Registered Mortgage /4o2er of Attorney from ,RO%d) 5itle Deed mortgage deed refers to t!e same property%e) Amount and E.piry date of t!e mortgage deedFF9ull Balue Memorandum Recording Deposit of 5itle Deeds on "D5%&67 ,5AM4@*

or creating charge over company property in the office of 1S .a) 9orm B### 4roperly filled in duly signed by Customer "anb) 9ee collected and submitted to R ,C for registration%c) Registration Certificate along 2it! original Memorandum obtained from R ,C%d) ,earc! Report from R ,C%e F!r Full #alue Equita=le M!rt*a*e !#er "ers!nal "r!"ert2

1> INSURANCE POLICIES (ITHOUT MENTIONIN6 ALUE :

a) Original #nsurance 4olicies covering ade-uate value and ris sb) Original 4remium paid receipt%c) +ocation(s) of stoc s/property are correct in t!e 4olicyd) 4olicy valide) "an Mortgage Clause

1@ Ne*ati#e Ple$*e

"oard Resolution covering negative 4ledge and signatory%4roperly e.ecuted (as per "R)$ Company seal affi.ed%4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%;

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,ignature verified

35 Ban. 6uarantee,In$emnit2Balid and Current5e.t aut!ori3ed"an Ris approval !eld for GG valid up to GGG,ignature verified

Ac no2ledgment issued

37 Letter !- Lien 9 Ri*)t T! Set O--'4roperly e.ecuted (as per "R)$ Company seal affi.ed%8itnessed4roper ,tamp affi.ed ("D5%&67 8%E%9% &%:%;

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3@ 5ERM +OA= A?REEME=5 9OR 5ERM, +OA=,%

5 O5HER A?REEME=5

MAN&ATORY LE6AL OPINION RE UIRE FOR ANY NON?STAN&AR& &OCUMENTS'ALL NON?MAN&ATORY &OCUMENTS MAY BE E PIRE& IN LINE (ITH BAL4 IF IT IS PREPARE& OR

ACCEPTS BAL !nl2'

MAN&ATORY LE6AL OPINION RE UIRE FOR ANY ACCOUNT &O(N6RA&E& TO MS6?13'

U"$ate Se0urit2 Le$*er ? l!$*ment "arti0ulars 9 eG"ir2 $ates are 0!rre0t'

U"$ate Insuran0e &iar2 ? l!$*ment "arti0ulars 9 eG"ir2 $ates are 0!rre0t'Pre"are 6uarantee A0.n!%le$*ment,Biennial C!n-irmati!ns

Rem!#e !=s!lete $!0uments -r!m Se0urit2

U"?$ate C!ntr!l &iar2 -!r missin*,irre*ular,eG"ire$ $!0uments'

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Loa Di$%"r$eme ! 7Limi! Loadi 5 C#e ) i$! & A"!#ori$a!io A66e di8 2*1*0 < o !*=

Borro+er: A o" ! :

Sec%rit( Doc%mentation is in Place1

Appro"al Terms Complie$ @ith1

Co"enants/Con$itions Prece$ent >a"e #een Met1

3arge 3oan Compliance/ #'# Appro"als 0&taine$ as Re %ire$1

E-ceptions1

'

2'

4'

I ha"e re"ie!e$ the a&o"e $oc%ments/sec%rit( an$ confirm the acc%rac( of the informationcontaine$ herein' The re %ire$ $oc%mentation/sec%rit( is in place an$ enforcea&le'

erifie$ &(1 Cre$it A$ministration 0fficer

A%thori*e$ &(1 Cre$it A$ministration Manager

E-ceptions Appro"e$ &(1 Cre$it + Risk Management

Page 5

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A66e di8 2*2*0

Ear / A er! Re6or!

Borro+er7Gro"6: C"rre ! Da!e:

Bra #: La$! Re9ie+ Da!e:

To!a Limi!$: S!ra!e5/: Ho d 7 Red" e 7 Re$!r" !"re 7 E8i!

To!a O"!$!a di 5$:

E8i$!i 5 Ri$) Grade: Pro6o$ed Ri$) Grade:

Fa i i!/ De!ai $:

Limi! P"r6o$e O"!$!a di 5$ Se "ri!/

I$ Se "ri!/ Com6 e!eQ Y 7 N E8!er a / C#e )edQ Y 7 N

De!ai $ o( a / De(i ie ie$:

S/m6!om$ Re;"iri 5 Ear / A er! Re6or!i 5:

I d"$!r/ Co er $ Ca$# F o+ >ea) e$$ O+ er$#i67ma a5eme ! o er $ Poor A o" ! Co d" ! Ba a e S#ee! >ea) e$$e$ E86ired imi!$7 6e di 5 do $*

Pro9ide De!ai $ o( S/m6!om$ I di a!ed a%o9e:

A66e di8 2*2*0 < o !*=

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A o" ! S!ra!e5/ !o Re5" ari$e A o" !:

Ha9e T#e$e Bee A5reed +i!# !#e C"$!omerQ Y 7 N

Ha$ !#e A5reeme ! Bee Do "me !edQ Y 7 N

Ha$ !#e C"$!omer Brea #ed a / Co di!io $ Si e !#e Mo$! Re e ! A5reeme !Q

>#e +i !#e$e de(i ie ie$ %e re !i(iedQ

U6da!e Si e La$! Ear / A er! Re6or!:

Re a!io $#i6 Ma a5eme ! Comme !$:

Grade ,"$!i(i a!io :

CRM Comme !$:

Re omme ded %/: Re a!io $#i6 Ma a5er

A66ro9ed %/: Credi! a d Ri$) Ma a5eme !

Page 6

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A66e di8 2*2*1

T2"i0al C)ara0teris ti0sDefinition of Early Alert

Accounts

In$ustr2 9

C!m"etiti!n O%ners)i",Mana*ement Balan0e S)eet

Cas)-l!%,Re"a2ment

s!ur0e Per-!rman0e

EG"ire$Limit

,In0!m"lete&!0umentati!

n

EA1 EA3 EA5 EA7 EA EA; 8ea nesses or potential

2ea nesses 2!ic!re-uire close monitoring

and pro* active accountmanagement to protectt!e ban Is position% #ft!ese 2ea nesses arenot corrected t!ey mayresult in deterioration ofrepayment prospects$2it! t!e li eli!ood ofdo2ngrade to C?&'2it!in &' mont!s%

- 4osition 2it!inindustry rapidlyeroding

- #ndustry may bemature and inlong term decline$and / or in acyclical do2nturn

- Concerns overt!e ability ofmanagement to

effectivelymanage e.istingoperations$and/or t!ebusinesse.pansion plans%

- O2ners s!o2lac ofcommitment tosupport businessoperations%

- Delay insubmission$ stalefinancials and / or

continued2ea ness and/ordeterioration%

- Operating resultsare deterioratingand/or 2or ingcapital cycledeteriorating%

- Hig!ly gearedrelative to peers /industry and onup2ard trend%

- Rapid ac-uisitionof assets 2it!outproper financialstructuring

- Declining asset

cover for s!ort*term debt%

- +i-uidity strainedand t!ere is aneed for

additionalborro2ing orcapital no2 or int!e near future%

- cas!flo2 isunli ely to coverbot! mandatorydebt service(principal plusinterest) andot!er businessneeds (e%g%Cape.)%

- Ability to reduce2or ing capitalban lines islimited or none.istent%

- Evidence ofmisuse of fundsor moniesdiverted into non*core activities%

Payment Default:• #nterest or

principal &6 daysoverdue

• 5emporaryoverdraft ;7 daysor more 2!ic!!as not beenregularised viaformal limit andsecuritydocumentation

- 9acilitiese.pired formore t!an

7 days%- ,ecuritydocumentation pendingafter 7days fromt!eapprovedtime frame%

Page 6

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=ote@

• The matri- pro$%ce$ a&o"e is not a $efiniti"e checklist' The characteristics of an( gi"en Earl( Alert acco%nt ma( not e-actl( correspon$ tothe specific $escriptions for each of EAR .EAR5' >o!e"er the o"erall cre$it !orthiness of the &orro!er !ill fit the general $escriptiongi"en %n$er the QDefinition) col%mn'

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Ha do9er 7 Do+ 5rade C#e )-Li$! A66e di8 2* *0

Re a!io $#i6 Ma a5er Re o9er/ U i! Ma a5er

Page 64

1. Group Name (if applicable)

2. Company Name(s)

3. Confirm Outstanding CCY:

. Group Outstandings (if applicable) !imit: O"#:

$. %elations&i 'ana er Code. *+istin Credit Grade

,. Ne- Credit Grade. /ate of /o-n rade

0. % to 'ana e1 4 if Y*#5 Name of 'ana er11. /o-n rade %67 fa+ed to Credit 7dmin12. %ecei8ed latest C75 financials5 documents etc

13. 9a eo8er memo issued1 . ;as % met -it& t&e com an1$. uired

4 if Y*#5 C7

4 if NO5 limits ?eroed

1,. Guarantors and /irectors @ any accounts -it& t&eban

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RE UEST FOR ACTION A66e di8 2* *1A

Customer =ame@ ?roup =ame

Credit ?rade@ ,tatus Code@

Account Manager@ Date Do2ngraded"elo2 6@

R Head@ ?roup E.posure

R Regional Manager@ ?roup #mpaired E.posure @

"rief Description of "usiness@ Customer ,egment@

Related Accounts@

+ocal Currency

5otal ?ross Outstanding@

=et At Ris @

=AR After ,ecurity@

?roup E.posure@

Attac!ment(s)@ 3ist an( an$ all $oc%ments !hich are ph(sicall( attache$ to the R,A an$ consi$ere$necessar( for making an informe$ $ecision' If there are too man( $oc%ments to list!itho%t &reaching the one.page r%le refer instea$ to a list of $oc%ments !hich canitself &ecome an attachment to the R,A'

Reference(s)@ 3ist an( rele"ant $oc%ments !hich !ill &e rea$il( a"aila&le to the Appro"er :s%ch asthe c%rrent SARR an earlier R,A or other correspon$ence !hich is kno!n to &e in theappro"er)s possession='

"ac ground@ ,oc%s on ma?or iss%es regar$ing the acco%nt an$ &e s%ccinct' If a$$itional $etail isconsi$ere$ necessar( information memoran$a ma( &e attache$ an$ cross.reference$

Re-uest(s)@ State s%ccinctl( the precise p%rpose of the re %est together !ith a recommen$ation'Again if a$$itional $etail is nee$e$ information memoran$a ma( &e attache$ an$cross.reference$'

,igned "y @Comments @

Approved "y @Comments @

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C a$$i(ied Loa Re9ie+

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A66e di8 2* *1B

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Appen$i- H 4'5'4

S NDICATI0N

S(n$ication means ?oint financing &( more than one &ank to the same clients against a

common sec%rit(' This is $one &asicall( to sprea$ the risk' It also pro"i$es a scope for anin$epen$ent e"al%ation of risk an$ foc%se$ monitoring &( the agent/lea$ &ank'

In s(n$ication financing &anks also enter into an agreement that one of the len$ers ma( act as3ea$ #ank' In s%ch cases lea$ &ank has to co.or$inate the acti"ities at "ario%s stages ofhan$ling the proposal i'e' appraisal sanction $oc%mention sharing of sec%rit( $is&%rsementinspection follo!.%p reco"er( etc' It ma( also call meetings of s(n$iction mem&ers!hene"er necessar( to finali*e an( $ecision'

The central &ank also s%ggests to finali*e large o&ligor thro%gh s(n$icate$ financing to$i"ersif( risks'

Documents

CRM Mahmud