Credit Risk Management

Guidelines-2018

Agrani Bank Limited

Head Office : 9D, Dilkusha C/A, Dhaka.
Credit Risk Management Guidelines-2018

Chairman
Mohammad Shams-Ul Islam, Managing Director & CEO

Member Secretary
Susmita Mandal, Deputy General Manager

Members
Md. Yusuf Ali, Deputy Managing Director
Md. Khairul Kabir, Deputy Managing Director
S. M. Nurul Ahsan, Deputy Managing Director
Md. Anisur Rahman, Deputy Managing Director
Md. Golam Kabir, General Manager
Md. Abdus Salam Mollah, General Manager
Md. Aminul Haque, Deputy General Manager
Khondokar Shafiul Alam, Assistant General Manager
Sajal Saha, Senior Principal Officer
 CREDIT RISK MANAGEMENT GUIDELINES-2018
Contents Page No.
Introduction ................................................................................... 01
Objectives........................................................................................................ 01
Credit Risk Management ................................................................................ 03
Principal Guidelines ........................................................................................ 13
Organizing Credit Risk Management ............................................................. 25
Managing Credit Risk in the origination Process ........ ................................ 31
Credit Risk Mitigation Strategies....................................................................54
Managing Credit Risk in the Administration Process.................................... 57
Managing Credit Risk with Appropriate Management Information Systems (MIS)62
Managing Credit Risk of Problem Assets......................................................66
Roles and Responsibilities of Credit Officers & Staff....................................69

Annexure

Annexure-1 Risk Scoring & Risk grading Score Card 70

Annexure-2 Credit Documentation Checklist 73
Annexure-3 Authorization & Responsibilities for Credit Approvals 93
Annexure-4 Early Alert Report 94
Annexure-5 Classified Loan Review Form( CLRF) 95
Annexure-6 Syllabus for Training Programs for Credit Officers 96
Annexure-7 Environmental Risk Management 98
Annexure-8 Green Banking 103
Annexure-9 Loan Application Form 105
Annexure-10 Papers Required with Loan application 128
Annexure-11 Avoidable Reasons for Problem credits 131
Annexure-12 Circular of Corporate Guarantee 133
 Section I
1. INTRODUCTION:
Agrani Bank Limited has formulated a set of policy guidelines entitled "Credit Risk
Management" to cover the entire cycle of lending (i.e., processing, sanction, disbursement,
implementation, monitoring and recovery). These have formed the basis of credit policies and
procedures of Agrani Bank Limited in order to assure that its long-term objectives are met
through sound lending activities and practices, i.e., that the portfolio of credit risk exposure is
diversified, secured and profitable. This manual is updated in a prudent manner with a view
to managing various risk in the financial services industry as per instruction provided by
Banking Regulation & Policy Department, Bangladesh Bank circular No. 04 dated 08 March
2016. However, it require to be updated further from time to time due to the evolving nature
of the business and regulatory environments in which the Bank operates.

Objectives
The purpose of credit risk management is to identify potential problematic areas before they
occur so that risk-handling strategies may be planned and invoked in advance across the life
of the product or project to mitigate adverse impacts on achieving objectives.
The main objectives of the Credit Risk Management Guidelines are:
* Establishing an appropriate credit environment.
* Maintaining an appropriate credit administration and monitoring process.
* Ensuring adequate controls over credit risk.
* Establishing better risk management culture within the institutions.
* Focusing on qualitative credit.
*Ensuring due compliance of all regulatory requirements, such as capital adequacy, exposure
norms, asset-liability management guidelines etc.

Operational & Performance Objectives

Monitoring and Control
To ensure the prudent conduct of the Bank’s lending and investment affairs, adequate control
measures should be maintained in critical areas of its lending and investment operations. For
this purpose, the segregation of potentially conflicting functions and independent
assessments of operations and the Bank’s portfolio will be institutionalized. Accounts must
be monitored with a view to detecting early deterioration and appropriate intervention.
Timely and Adequate Delivery of Assistance
ABL will respond to the needs of worthy customers through the provision of timely and
adequate financial assistance and advice. This is to ensure that financial packages facilitate
the implementation and operation of customers’ business plans and/or projects with neither
too much nor too little capital at each stage of the project or business cycle. This implies the
need to have a thorough knowledge of broad industry requirements, in general, and of
individual customers' operations and financial needs, in particular.

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Minimum Cost and Efficient Delivery of Services
The profitability of ABL's lending and related service operations is of paramount
importance, requiring the delivery of products and services with maximum cost-efficiency.
Appraisal and decision-making, internal processes that assure the minimization of project
and credit risks, should be undertaken prudently and with the least possible handling and
delay.

Price Competitiveness and Service Quality

The competitive business environment requires ABL to deliver its services at competitive
rates and with the highest quality standards. Despite relatively higher level of NPL in the
industry pricing of services and financial products should be regularly assessed, in order to
assure that ABL's costs are covered and a reasonable return on its deployed capital is
achieved. In pricing its products and services, ABL shall ensure that inefficiencies that inflate
capital and operating costs are to be expunged from the system before profit margins are
sacrificed; ABL shall also provide for pricing premiums in accordance with perceived credit
and investment risks. Officers and staff of ABL must conduct themselves at all times with
the objective of satisfying customer needs - keeping in mind, however, ABL's prudential
guidelines and fiduciary obligations.

Health of Risky Assets Portfolio

In the final analysis, the Bank's future profitability and welfare is dependent on a base of
healthy, earning assets. To this end, ABL shall manage its credit and investment risks in a
manner as to assure ABL’s stability and the attainment of profitability and growth objectives.
In the context of current socio-economic conditions, lending and investment activities will
invariably encounter the following identified risks:
a. Business risk
b. Economic & financial risk
c. Management risk
d. Security risk, and
e. Account performance (recovery) risk
To mitigate these identified risks, ABL's credit and investment risk management policies,
procedures and best practices are hereby established in order to:
 Cultivate a proper risk culture under which its activities are undertaken, in order
to assure that every loan and investment is created and managed prudently
Institutionalize a diligent process to know the background and business needs
of the customer (KYC)
 Institutionalize a system of grading each borrower on the basis of perceived
business and facility risks.
 Ensure that an effective risk management system is established to cover all
phases of lending and investment activities, including the institution of controls
in order to minimize unnecessary risk exposures particularly those of an
avoidable operational nature
 Ensure dependability (i.e., timeliness and accuracy) of information related to
credit and investment risk management, and
 Comply with internal policies and laws and regulations that are promulgated
from time to time.
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 2. CREDIT RISK MANAGEMENT
2.1 Definition of credit risk
Credit risk arises from the potential that a bank’s borrower will fail to meet its obligations in
accordance with agreed terms. Credit risk also refers the risk of negative effects on the
financial result and capital of the bank caused by borrower’s default on its obligations to the
bank.
Generally credits are the largest and most obvious source of credit risk. However, credit risk
could steam from both on- balance sheet and off-balance sheet activities. It may arise from
either an inability or an unwillingness to perform in the pre-committed contracted manner.
Credit risk comes from a bank’s dealing with individuals, corporate, banks and financial
institutions or a sovereign.
The assessment of credit risk involves evaluating both the probability of default by the
borrower and the exposure or financial impact on the bank in the event of default.

2.2 Principles of ABL's credit risk management

While developing ABLS's Credit Risk Management Guideline following principles have
been taken into consideration.
Principle 1: The board has responsibility for approving and periodically reviewing the
credit risk strategy and significant credit risk policies of the bank. The
strategy reflects the bank’s risk appetite and the level of profitability the
bank expects to achieve for incurring various credit risks with the
regulatory guidelines.
Principle 2: Senior management has responsibility for implementing the credit risk
strategy approved by the board and for developing policies and
procedures for identifying, measuring, monitoring and controlling credit
risk. Such policies and procedures will address with credit risk in all of
the bank’s activities and at the individual credit and portfolio levels.
Principle 3: Agrani Bank Limited has to identify and manage credit risk inherent in all
products and activities. Bank will ensure that the risks of products and
activities new to them are subject to adequate procedures and controls
before being introduced or undertaken, and approved in advance by the
Board of Directors (BOD) or its appropriate committee.
Principle 4: Agrani Bank Limited will operate under sound, well defined credit
granting criteria. These criteria will include a thorough understanding of
the borrower or counter party, as well as the purpose and structure of
the credit, and its source of repayment.
Principle 5: Agrani Bank Limited will establish overall credit limits at the level of individual
borrowers, and group of connected counter parties that aggregate
different types of exposures, both in the banking and trading book and
on and off balance sheet.

Principle 6: Agrani Bank Limited has a clearly established process in place for
approving new credits as well as the extension of existing credits.
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Principle 7: All extensions of credit will be made on an arm’s length basis. In
particular, credits to related companies and individuals will be monitored
with particular care and other appropriate steps taken to control or
mitigate the risks of connected lending.

Principle 8: Agrani Bank Limited has in place a system for the ongoing administration
of their various credit risk bearing portfolios.
Principle 9: Agrani Bank Limited put in place a system for monitoring the condition of
individual credits, including determining the adequacy of provisions and
reserves.

Principle 10: Agrani Bank Limited will develop and utilize internal risk rating systems in
managing credit risk. The rating system will be in line with the regulatory
instructions and consistent with the nature, size and complexity of the bank's
activities.

Principle 11: Agrani Bank Limited has information systems and analytical techniques that
enable management to measure the credit risk inherent in all on balance sheet
and off balance sheet activities. The management information system provide
adequate information on the composition of the credit portfolio, including
identification of any concentrations of risk.

Principle 12: Agrani Bank Limited has in place a system for monitoring the overall
composition and quality of the credit portfolio.

Principle 13: Agrani Bank Limited will take into consideration potential future changes in
economic conditions when assessing individual credits and their credit
portfolios, and will assess their credit risk exposures under stressful conditions.

Principle 14: Agrani Bank Limited has established a system of independent, ongoing credit
review and the results of such reviews should be communicated directly to the
board and senior management.

Principle 15: Agrani Bank Limited will ensure that the credit granting function is being
properly managed and that credit exposures are within levels consistent with
prudential standards and internal limits. Bank will establish and enforce internal
controls and other practices to ensure that exceptions to policies, procedures
and limits are reported in a timely manner to the appropriate level of
management.

Principle 16: Agrani Bank Limited has a system in place for managing problem credits and
various other workout situations.

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2.3 Credit risk management framework
The Credit Risk Management framework of Agrani Bank is developed based on the following
internationally acceptable practices. The framework is broadly categorized into following main
components:
a. Board oversight
b. Senior management’s oversight
c. Organizational structure
d. Systems and procedures for identification, acceptance, measurement of
risks
e. Monitoring and control of risks

2.4 Credit risk as range of possible outcomes

Credit risk arises from the potential that a bank borrower or counterparty fails to meet its
obligations in accordance with agreed terms, resulting in a negative effect on the
profitability and capital of the bank.

Generally credits are the largest and most obvious source of credit risk. However, credit
risk could stem from both on-balance sheet and off-balance sheet activities such as
guarantees. It may arise from either an inability or an unwillingness to perform in the pre
committed contracted manner. Credit risk comes from a bank’s dealing with households,
small or medium-sized enterprises (SMEs), corporate clients, other banks and financial
institutions, or a sovereign.

In more technical terms, credit risk can be viewed as the existence of multiple possible
outcomes when bank makes a loan or other extension of credit. The possible outcomes
range from full and timely payments according to the contract, all the way to a complete
absence of any repayment (a total loss on the loan). Payments could be made in full but
not in a timely manner, or payments could be made in a timely manner but not in full. Every
possible outcome, and there are a great many possible outcomes, can be said to have a
probability of occurrence, and the probabilities, as in any distribution, sum to 100 percent.

In this and all the subsequent sections on credit risk management, “loan” is used as
shorthand for all possible types of exposure to a single client or group of related clients. It
is to be understood that many different types of transactions, including off-balance sheet
transactions, pose credit risk to the bank, and all such transactions are subject to these
Guidelines as appropriate.

2.5 Indicators of high credit risk or poor credit risk management

Just as credit risk can be estimated for an individual loan, so the bank as a whole can be said
to have varying degrees of credit risk. Unlike measuring credit risk for a loan, however,
measuring credit risk of an entire institution is a complicated assessment, involving many
quantitative and qualitative factors, the most important factors are summarized below (some
to be developed in more detail later in this document).
Moreover, whatever may be the overall level of credit risk, the bank may be said to have poor
credit risk management. While these assessment factors are mostly qualitative in nature, they
cannot be ignored, and Agrani Bank will consider these lapses as evidence of
mismanagement requiring corrective action.
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Indicators of high credit risk (not an exhaustive list):

The level of loans is high relative to total assets and equity capital.

expertise.
Highly dependent on interest and fees from loans and advances.

Having one or more large concentrations. Concentrations have exceeded internal limits.
xtensions of credit reflect liberal judgment and risk-selection
standards.

Large volume and/or number of classified loans.

oans, the portfolios are skewed toward
lower internal ratings.

requirements.

inadequate protection.

periods of time.
Liberally rescheduling and/or restructuring loans in a manner that raises substantial
concern about the accuracy or transparency or maintainablity of rescheduling of reported
problem loan numbers.
tinely
exceed established provisions.
Indicators of poor credit risk management (not an exhaustive list)

ominates planning activities.

Engage in new loan products or initiatives without conducting sufficient due diligence
testing.
Changes in credit policies emphasizing particular segment of customers or sector or of
securities.
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 nnel may not possess sufficient expertise and/or experience.

management processes are unclear and undefined.

Concentrated exposures may not be identified, and/or identifies them but takes little or no
actions to limit, reduce, or mitigate risk.

le evidence of accountability for loan quality in the origination and/or

administration function.

w.

one or more areas. They may not be sufficiently clear or are too general to adequately
communicate portfolio objectives, risk tolerance, and loan judgment and risk selection
standards.
Approves significant policy exceptions, but does not report them individually or in the
aggregate and/or does not analyze their effect on portfolio quality. Policy exceptions do
not receive appropriate approval.
s deficient. Analysis is superficial and key risks are overlooked.

and advances are not identified accurately or in a timely manner; as a result, portfolio risk
is likely misstated.
Bank’s risk ratings (including the classification system) frequently deviate from BB’s risk
ratings or classifications.

insufficient to stratify risk for early warning or other purposes, such as loan pricing or capital
allocation.

accuracy and/or timeliness of information is affected in a material way, and portfolio risk
information is incomplete. As a result, the Board and senior management may not be
receiving appropriate or sufficient information to analyze and understand the bank’s credit
risk profile.

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2.6 Concentration risk
Even if a bank’s origination and administration policies and procedures for individual loans
are sound, a bank may have high credit risk and/or poor credit risk management if the loan
book is concentrated. Concentration risk arises when a bank invests its most or all of the
assets to single or few individuals or entities or sectors or instruments. Downturn in
concentrated activities and/or areas may cause huge losses to a bank relative to its capital
and can threaten the bank’s health or ability to maintain its core operations. Proper attention
has been given on the following credit concentration risk areas:
Sector wise exposure,

-50 borrowers will be counted)

The bank will establish internal limits to concentration across all the possible dimensions of
concentration risk. It follows that if any part of a bank’s loan portfolio is concentrated in any
way, the bank must endeavor to reduce the volume of loans in that category, raise capital, or
take a combination of both actions.

2.7 Robust credit risk management policy as an answer to high credit

risk/poor credit risk management

Banks always have a “credit policy,” but what is really needed is a high-quality “credit risk
management policy” (CRMP). The CRMP in its expanded form contains all of the elements
that a “credit policy” would contain, and goes beyond these. It must be updated at least
annually, with Board approval for these annual updates.

i) Risk appetite statement

Risk appetite is the level and type of risk a bank is able and willing to assume in its exposures
and business activities, given its business objectives and obligations to stakeholders
(depositors, creditors, shareholders, borrowers, regulators).

A robust CRMP starts with a well-crafted risk appetite statement (RAS) which will be made
15th January every year. In this regard, The Risk Appetite approved by board and embodied
in risk policy and delegated authorities. Risk appetite is generally expressed through both
quantitative and qualitative means and considerd extreme conditions, events, and outcomes.
It should be stated in terms of the potential impact on profitability, capital, and liquidity, and
should be consistent with the bank’s strategic and business plans. The credit RAS is an
example of a bank’s overall RAS being concretely expressed at the business line level. The
RAS shall be approved by board and embodied in risk policy and delegated authorities.

For credit risk specifically, the RAS should quantify the maximum expected loss the bank is
willing to endure across all credit products, including off-balance-sheet items such as letters
of credit and guarantees. The maximum expected losses need to be specified so that the
business lines that take on credit risk know where the bank wishes to be along the risk-return

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tradeoff. The bank should also specify the minimum expected losses, since it is possible for
a bank to take on too little credit risk and face the consequence of weak earnings.

The RAS should also address the maximum and minimum allowable concentrations
(expressed as a percentage of CET1) for all major types of credit products, borrowers, and
sectors. The existing concentrations to be taken in to account and will take adjustment
measures to minimise the over exposures in terms of the afforesaid products, borrowers,
sectors and geographical locations.

Contents of the Risk Appetite Statement shall be, but are not limited to, the following
statements:
Industry-wise sectoral concentration
Product-wise funded loan concentration (composition of term loan, mid-term loan, demand
loan, continuous loan etc)
Product-wise non-funded loan (OBS) concentration (composition of bank guarantee,
acceptance, etc.)
Area wise/geographical, currency wise and maturity wise credit concentration
Business segment-wise concentrations (corporate, MSMEs, Retail, Micro Credit, Card etc)
Client concentration based on external/internal credit rating.
Classification boundaries in terms of portfolio percentage, beyond which further growth
may be halted.
Maximum level of ‘high’ rated clients in terms of environmental and social due diligence.
ii) Limits on loan type, borrower type, rating grade, industry or economic sector

As stated above, it is an essential component of credit risk management to establish limits

on concentrations across all possible dimensions of the credit portfolio. The first task in that
effort is to establish a sensible disaggregation of the portfolio, along the following lines:

A Agriculture, Fishing, and Forestry

B Industry
Nature of Industry loan
a) Term loans
b) Working capital loans
(i) Secured by eligible securities
(ii) Secured by other than eligible securities
Scale-wise distribution of industry portfolio
1. Large Industries
2. Small, medium, cottage & micro industries
3. Service industries

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C Trade & Commerce:
a) Retail Trading
b) Wholesale Trading
c) Export Financing
d) Import Financing
e) Lease Finance
f) Others
(i) Secured by eligible securities
(ii) Secured by other than eligible securities
D Construction (commercial real estate, construction and land development loans):
a) Residential Real estate
b) Commercial Real estate
c) Infrastructure development
d) Others
(i) Secured by eligible securities
(ii) Secured by other than eligible securities
E Transport:
a) Road Transport
b) Water Transport
c) Air Transport
F Consumer financing
a) Loans for the purchase of flats or other single-family dwellings
b) Loans for the purchase of motorized personal transport
c) Loans for the purchase of durable consumption goods
d) Credit card loans
e) Other personal loans
G Loans to financial institutions
1) Loans to NBFIs
2) Loans to insurance companies
3) Loans to merchant banks and brokerage houses
4) Other, including loans to microfinance institutions and NGOs
H Miscellaneous
The above categorization, at its most disaggregated, contains 37 separate categories. Banks
should establish concentration limits, expressed in terms of CET1, for all categories, at the
lowest levels of disaggregation, and then rolling up to the highest.

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In addition, Category B in the above scheme, “Industrial Loans,” can be disaggregated in a
different way, focusing on the economic sectors rather than the type of enterprise and type
of loan. The following breakdown is preferred:

RMG
Textile
Food and allied industries
Pharmaceutical industries
Chemical, fertilizer, etc.
Cement and ceramic industries
Ship building industries
Ship breaking industries
Power and gas
Other manufacturing or extractive industries
Service industries
Others
The combination of the type of borrower/type of loan breakdown and the sectoral breakdown
of industrial loans would provide all the necessary data, plus allow the banks to monitor the
all important category of real estate lending and loans secured by real estate, the emphasis
on which by the banks in recent years is a source of concern for financial stability.

iii) Other necessary components of an adequate credit risk management policy

Credit Policies (CP) reflect the bank’s appetite for credit risk. ABL has to develop a credit
policy as a part of an overall credit risk management framework and get it approved by the
board. The CP clearly outline the bank's view of business development priorities and the
terms and conditions that should be applicable for credits to be approved. The CP will be
periodically (annually) updated, taking into account changing internal and external
circumstances. To make it effectual, CP will be communicated timely and implemented by all
levels of the bank through appropriate procedures. It will be distributed to all lending
authorities and credit officers. Significant deviations from the CP will be communicated to the
senior management or board and corrective measures will be taken.
The CP include:
1. Detailed and formalized credit evaluation/appraisal process;
2. Credit origination, administration and documentation procedures;
3. Formal credit approval process;
4. Approval procedure of credit extension beyond prescribed limits and other exceptions to the CP;
5. Risk identification, measurement, monitoring and control;
6. Internal rating (risk grading) systems including definition of each risk grade and clear
demarcation for each risk grade in line with BB regulations and policies;

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7. Risk acceptance criteria;
a. Credit approval authority at various levels including authority for approving exceptions
and responsibilities of staffs involved in credit operations;
8. Roles and responsibilities of staffs involved in origination and management of credit;
9. Acceptable and unacceptable types of credit. These types can be on the basis of credit
facilities, type of collateral security, types of borrowers, or geographic sectors on which the
bank may focus;
10. Clear and specific policies for each of the various types of credits, including maximum
loan-to-value (LTV) ratios where applicable;
11. Concentration limits on single party or group of connected parties, particular industries
or economic sectors, geographic regions and specific products. Banks are allowed to set their
own stringent internal exposure limits, as long as they are at least as strict as prudential limits
or restrictions set by BB;
12. Pricing of credits, including whether loans will be granted on a fixed-rate or a floating rate
basis, and if floating, the frequency of rate changes and the reference rates that will be
used for rate changes;
13. Policies for the frequency and thoroughness of collateral verification and valuation;
14. Review and approval authority of allowances for probable losses and write-offs;
15. Guidelines on regular monitoring and reporting systems, including borrower follow-up
and mechanisms to ensure that loan proceeds are used for the stated purpose;
16. Guidelines on management of problem loans;
17. Policies on loan rescheduling and restructuring;
18. The process to ensure appropriate reporting and
19. Tolerance level of exceptions.

Any exceptions to the credit policy shall be clearly documented on the loan offering sheet,
problem loan report and other MIS and approved by the Board or a committee thereof before
the loan is funded or renewed.

In order to be effective, credit policies will be communicated throughout the bank, implemented
through appropriate procedures, and periodically revised to take into account changing internal and
external circumstances. Any significant deviation/exception to these policies will be communicated to
the board/ senior management and corrective measures should be taken. It is the responsibility of
senior management to ensure effective implementation of these policies.Policy will be reviewed /
revised and updated at least annually or time to time taking into account external and internal
economic conditions / circumstances and regulatory guidelines by the board.

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 3. PRINCIPAL GUIDELINES
3.1 Eligibility Criteria

The Bank's criteria for loan and investment eligibility, which are to be strictly adhered to, are
the following:

3.1.1 If the borrower is an individual, a proprietary entity or otherwise a natural person,

he/she/it must be:

- a citizen of Bangladesh
- of legal age, and
- of sound mind

3.1.2 If the borrower is a corporation, a limited liability company, or similar entity, it must be:

- organized, formed or incorporated under the laws of Bangladesh

- in the case of foreign companies, authorized to borrow from local banks under
the guidelines of Bangladesh Bank and
- authorized to do so by a resolution from its Board of Directors

3.1.3 The individual or corporate entity must be engaged (or prospectively propose to
engage) in a productive enterprise, in the manufacturing, agrobased, extractive, Power
sector, export or service sectors

3.1.4 The Bank will not grant loans for re-financing purposes, nor shall facilities be approved
for the following types of entities or purposes:

- bankrupt companies
- companies listed on CIB black list or known chronic defaulters
- military equipment/weapons finance
- highly-leveraged transactions
- speculative investments
- logging, mineral extraction/mining or other activity that is ethically or
environmentally sensitive
- share lending
- equity stake in borrowers (except in the case of problem loan workouts, and
only by converting the non-principal portion of outstanding exposures), and
- bridging loans relying on equity/debt issuance as a source of repayment
In addition, exposures of a funded or non-funded nature to foreign entities that are known to
be politically unstable or economically problematic (e.g., Nigeria) are hereby restricted, in
order to prevent cross-border risks. For this purpose, the Bank shall refer to or maintain a
blacklist of foreign countries/entities for reference on a current basis.

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3.1.5 To avoid situations where conflicts of interest could arise, only fully secured loans shall
be considered for the following parties (or to entities owned or controlled by them):
- A director of the bank;
- A stockholder of the Bank; and
- Other related interests (wives, children, parents and relatives) as per Bank
Company Act. However, loan facilities may be granted under such other terms
and conditions that comply with Bangladesh Bank regulations.

3.2 Guidelines for Lending and Investments

The Bank may not be exposed to any single borrower or a group of related borrowers
beyond the following prudential limitations, as follows:
3.2.1 Lending and investment limits
The Bank is currently restricted in its lending activities under a Memorandum of
Understanding with the Bangladesh Bank. The adjusted loan growth of 2018 is fixed
at 20% of the outstanding adjusted loan of December,2017 with not more than 5%
growth in any quarter. Adjusted Loan Growth may change time to time as per MOU &
Banglaladesh Bank circular.
Exceptions to the maximum exposure limit are:
 loans to government organizations against which government guarantees
exist;
 loans extended under agricultural credit targets fixed by government;
 loans for government's food procurement program;

Unless and until these restrictions are lifted, the Bank may not operate under the
regular guidelines which are described in the next section.

3.2.2 Large loan concentration :

The policy relating to large loan concentration is determined in line with the MOU and
Bangladesh Bank's guidelines (which is subject to any change by the regulator).

In order to avoid concentration of large loans:

(a) The bank's exposure (total of funded and non-funded facilities) to a
single client or group shall not exceed 15% of the bank's total
capital.The exposure limit for infra-structural development projects, e..g.
gas exploration, may exceed 15% but shall remain within 25% of the
bank's total capital. But in the case of financing in the power sector, the
above exposure limit shall not be applicable.
(b) In case of financing in the power sector, BRPD Circular No. 02/2014
dated 16-01-2014 & BRPD Circular No. 04/2016 dated 10-05-2016 shall
be applicable instead of the above exposure limit.

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 (c) Funded and non-funded facilities favouring Government organization
and State-Owned Enterprises against which Government guarantees
exist, and loans extended under agricultural credit targets.
(d) Sanction of loans and advances exceeding 15% of the bank's total
capital will be subject to syndication through participation with other
commercial banks. The bank will prefer syndacation of big loans even
within 15% of the bank's capital.
(e) The bank shall not take over any non-performing loan from other banks.
While buying performing loans, if at all, due diligence will have to be
observed by the bank and prior approval of Bangladesh Bank is
required.
(f) Special care shall be taken while allowing non-funded facilities, so that
the allowed non-fund facilities do not turn into funded facilities and get
classified.
(g) While granting such facilities under the above mentioned exceptions,
immense care shall be taken such that all necessary formalities are
accomplished and the exposures remain within the prudent limit
decided by Board.

However, the borrowers exposure limits are changeable from time to time as per
Memorandum of Understanding (MOU) and BRPD circulars.

c. Exceptions
 Public limited companies, where 50% or more of the shareholdings are public,
shall not be considered as a single enterprise/group
 Credit facilities provided against government guarantees, to the extent of the
amount guaranteed
 For credit facilities against cash and encashable securities (e.g., FDR), where the
actual level of exposure shall be determined by deducting the amount of such
securities from the outstanding balance
d. The Bank shall submit to the Bangladesh Bank the attendant "L Form" in respect of all
actions taken on large loans as defined above (i.e., new loans, renewal and
rescheduling).

3.2.3 Basis for Approval of Loans and Investments

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 At the time of analysing a credit proposal the following information are to be collected
from the borrowers/guarantors in the prescribed format which is subject to change as
and when needed:

(a) Full particulars of the borrowers/KYC in details ;

(b) Nature of business/ Place of business
(c) Up to date CIB report;
(d) Three years audited financial statements;
(e) Statement of personal assets & liabilities;
(f) Certified Tax Return Statements regarding income, Expenses, Assets &
Liabilities;
(g) Transaction profile; ( Bank Statement last 5 years if any)
(h) Schedule of collateral offered and valuation thereof;
(i) Cash flow analysis;
(j) Detailed liability position with contingent liabilities;
(k) Credit Rating
(l) Detail data from Large Customer to prepare database

However a list of details information required for analysing of a proposal is attached

as (Appendix-9 ).

ABL will verify and confirm and will document the following in regards to the borrower:

a. Identity (KYC) in details

b. Physical Address
c. Place of Business
d. Nature of Business.
e. Web Address

The purpose of loan will always be mentioned in the loan application and loan sanction
memorandum.

~ 16 ~
Appraisal Analysis :
After getting all relevant information from the borrower & guarantor ABL Officials will verify
the data/information. After verification of the data a detail analysis is documented to arrive at
the following aspects :
a. Credit assessment;
b. Guarantor/Borrower's cash flow;
c. Debt service coverage ratio;
d. Benefit cost ratio;
e. IRR;
f. Break even analysis;
g. Margin /Liquidity;
Before appraisal ABL's officer will verify the invoice & contract with suppliers & customer and
will ensure genuineness as per applicable import policy order. During implementation period
disbursing official will verify the proper utilisation of the loan / fund and ensure utilization for
which loan is sanctioned.
Loan proposals will be appraised with updated market price, quality and other information of
the merchandise and product. The appraisal / updates will be checked by the concerned
higher authority to ensure that it was in order & reviewed time to time (at least annually).
All exceptions to the credit policy shall be clearly documented on the loan offering sheet,
problem loan report and other MIS; and to be approved by the ABL's Board or a committee
thereof before the loan is funded or renewed.
Any exceptions in lending policy will be effective after proper approval by the board within
their power/authority.
Any overdraft limit must have 1.5 time collateral in the form of land, building, FDR & other
eligible security as prescribed by Bangladesh Bank and will be documented in safe in and
safe out register and in Loan documentation check list.
Any exceptions in lending policy in any aspect including security coverage will be effective after
proper approval by the board. The responsibilities of apprisal of the proposed credit facility
including verification of information, authentics of under laying informations influences the
outcome of apprisal including competitiveness of capital machine would be on the initiating
branch.
Renewal and extension of credit :
Renewal or extension of credit is made only after obtaining and documenting the current
valuation of any supporting collateral as per Bangladesh Bank circulars, perfecting and
verifying the Bank's lien position, and that reasonable limits are established on credit
advances against collateral, based on a consideration of a realistic assessment of the value
of collateral, the ratio of loan to value, and overall debt service requirements. Moreover, the
credit officer will analyse the proposal on the following aspects;

Borrower's/ Guarantor's Cash Flow

Debt Service Coverage
Leverage
~ 17 ~
 Liquidity
Profitability
Coverage
Debt Equity Ratio
Turn Over
Ratio of Loan to value

To cover extended amount of credit required additional collateral will have be taken. Fresh
Charge document will have to be obtained in all cases of renewal or extension of credit.

At the time of any loan renewal accrued interest will not be capitalized with the principal
amount under any circumstances;
Excess over the credit limit must be adjusted before forwarding the proposal for renewal and
adjustment.

Any new Credit decision for over Taka 10.00 crore (outstanding principal balance) will be
required certification by the Head of ICC in regards to the following:

a. Consistency to the credit growth;

b. Compliance of restrictions;
c. Compliance of Credit Policy;
d. KYC;
e. CIB;
ABL will complete the analysis and approval process within the following time frame on
complete submission of the papers/documents by the borrower;

Steps Renewal New Propose

a. Branch 10 days 25 days
b. Zonal Office 7 days 12 days
c. Circle Office/Head Office Divisions 10 days 15 days

a. Viability
Financial assistance shall be granted only to those entities whose operations have
been evaluated as technically, commercially and financially viable. For this purpose,
the Bank requires the use of screening processes with strict pass-fail criteria, as well
as a scoring system to determine relative risks for the purpose of pricing and
subsequent guidance in the management of loan accounts.
(Refer to Appendix 1 of the Credit Guidelines governing the approved methodology
for credit assessment and scoring.)

b. Creditworthiness
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 In addition, applications for financial assistance may be granted only when the entities
and their principal proponents/management teams are deemed credit-worthy
(demonstrated by past repayment performance with the Bank or other financial
institutions, capability to absorb debt repayments from sources external to the main
business being applied for, and general credit consciousness and responsibility).
Credit proposals should not be unduly influenced by an over-reliance on the sponsor's
reputation, reported independent means, or their perceived willingness to inject funds
into various business enterprises in case of need. Credit proposals should be based
on sound fundamentals, supported by a thorough financial and risk analysis. CIB
reports are required for all loans, and should reflect and incorporate credit limit,
outstanding balances and name/s of lender/s regardless of new sanction, renewal,
extension or rescheduling.

c. Sufficiency
No funded or non-funded credit exposure may be granted unless it is sufficient,
together with the owners' equity, to fully finance the proposed project or business
requirements. Where the Bank's proposed assistance is insufficient, it may be
possible to fulfill the financing requirements through either of the following means:
- additional loans from other banks/financial institutions, preferably in a
syndicated arrangement, or
- an additional loan from the Bank, which is fully-secured by an
unconditional guarantee from an acceptable local or foreign bank or
financial institution, provided, however, that the over-all leverage of the
complete financial package does not exceed prudential limits or result in a
diminution of debt-service capacity (i.e. a debt service cover of less than 1
.Ox at any time during the tenor of the debt).
3.2.4 Leverage
The debt-to-equity ratio for organized business entities assisted by the Bank should not
exceed 60:40 (or 1.5:1) computed after the assistance. Exceptions to this guideline are
exposures to the retail segment (e.g., rural customers, employed individuals).
3.2.5 Security and Protective Requirements
a. In general, all forms of funded financial assistance shall be extended on a fully-
secured basis, where coverage of the Bank's exposure by acceptable tangible
assets shall not at any time be less than 1.5 times the principal exposure.
Exceptions to this policy may be granted only: i) in cases where loan products
are designed to be unsecured; or ii) by the Board of Directors upon the
recommendation of the Crecom.
b. As a matter of principle, the Bank should not participate in credit transactions
where it shall have an inferior security position compared to any other pre- existing
or proposed new lenders
c. In the case of limited companies, all the directors must execute a joint and
several Deed of Guarantee towards the performance of the terms and conditions
of loan and other credit facilities.
d. The Bank shall require that its security is fully protected against risk whenever
applicable (e.g., fire, riot, strike, decoit) by a duly-accredited insurance firm.
~ 19 ~
 Furthermore, such risk coverage shall always be in force until all the
obligations shall have been fully discharged. Expenses for such coverage shall
be for the account of the borrower, except when these have been foreclosed and
judicially awarded to the Bank.
e. Regular inspections (i.e., monthly, quarterly, half-yearly, and yearly) are to be
conducted and such reports shall have to preserve for future reference by the
branch.
f. If value of securites found decreased at any time bank will take additional secruties
to cover the loan limit or will reduce the limit to the extend beyond the coverage.
Such condition will be incorporated in the credit sanction advice and bank will take
an undertaking will be taken from the borrowers/guarantors in this regards.

Types of Acceptable Security

Well-identified land and landed property located in city corporations, municipalities,
pourasava, district and upazila centers, commercial developments, industrial areas
and other developed areas, subject to the consent requirements applicable to the type
of property.

Verification
All landed property offered as security shall have an official search conducted by,
and a clean report obtained from, the Assistant Commissioner of Lands (ACL),
Sub-Registry Office. The purpose of this verification process is to ascertain the
existence or otherwise of encumbrances and/or breaks in the chain of title.
Consent Requirements
All liens on offered security shall be premised on the written consent of the owners
or primary lessors of private property as well as the concerned government
ministries in the case of public property.
 Buildings (Industrial, Commercial, and developed Residential)
 Machinery and Equipment, provided that the economic life thereof shall be
equal to or more than the life of the Bank's facility. In case of second hand or
reconditioned machinery the economic life of the machinery must be certified
by internationally reputed survey companies.
 Vehicles (Industrial, Commercial, and Private), provided that the economic
life thereof shall be equal to or more than the life of the facility.
Other acceptable forms of security:
 Raw Material or Merchandise Inventories (preferably of non-
perishable nature);
 Shares of Stock of Companies listed in the Stock Exchanges of
Bangladesh, provided these are electronically registered (demated)
under the Central Depository Bangladesh Ltd. (CDBL) in accordance
with Bangladesh Bank guidelines;

~ 20 ~
  Bank guarantee, provided that the issuing bank (whether local or
foreign) is considered to be acceptable (i.e., having the reputation
and capacity to absorb the amount of facility upon the Bank's
proper demand) by the Crecom or the Board;
 Government guarantee;
 Security instruments such as treasury bills, Bangladesh Bank bills, and
certificates of deposit, duly endorsed or assigned to the Bank. The
loan value of these instruments shall be derived by discounting the
redeemable value of the securities at the appropriate rate prescribed
by the Treasury Unit of the Bank.
 Fixed deposits, provided these are covered by lien or assignment as
per approved procedures
g. Valuation of Security
All types of real or tangible assets offered for security shall be valued by the respective
branch of the Bank at their forced sale value (FSV) for loan purposes. Internal valuations;
shall be conducted for all loans.
In connection with value of securities more than Tk. 50.00 Lacs valuation certificate must be
verified and counter-signed by the Zonal Head or Head of Corporate Branch.
For security more than 50.00 lacs valuation certificate of a Bank-approved chartered
surveyor or consultant shall be obtained by the Bank at the expense of the borrower. ABL
shall use the lower of the internal or external valuations for appraising credit.
Shares of exchange-listed stock shall be valued at fifty percent (50%) of their face value or
current market value whichever is lower by the bank manager and others officers jointly for
loan purposes.
If the value of security decreases then bank will obtain additional security to cover the loan
amount otherwise bank should reduce the loan limit.
3.2.6 Pricing of Financial Assistance
Funding for project loans may be sourced from either internally-generated funds or from external
institutions (both local and foreign). As a general rule, the Bank's lending charges should be
adequate to cover the cost of funds from these sources, as well as to provide a marginal spread
which shall take care of the Bank's administrative / overhead expenses and its profit (net of credit
risk premium).
When the Bank uses its own funds, the base cost of capital shall be determined through either
one of two methods:
-- the cost of capital as determined by the Treasury Division, or
- the opportunity rate foregone in alternative risk-free investment outlets (such as but
not limited to Treasury Bills)
(Refer to Section 5.5 1c governing risk grading and loan pricing, for details of pricing
methodology.)

3.2.7 Maturity

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 The usual tenor for working capital loans shall not be more than one (1) year, except in the
case of permanent working capital where a maximum of three (3) years shall be allowed.
Repayments for medium- and long-term loans shall (depending on the cash flow capability of
the project) be made over a period of between three (3) to ten (10) years inclusive of the grace
period, provided that the final maturity date shall not exceed the maximum period provided for
under the terms of external lines of credit when these are used.
3.3 Credit administration :
The credit administration function is basically a back office activity that supports and
controls extension and maintenance of credit. While developing credit administration
areas. The branch of ABL must ensure ;( The back office activity will be performed by
the branch from where the proposal was initiated or assined by the authority).

a. the efficiency and effectiveness of credit administration operations, including

monitoring documentation, contractual requirements, legal covenants,
collateral, etc
b. the accuracy and timeliness of information provided to management information
systems
c. the adequacy of control over all “back office” procedures and
d. compliance with prescribed management policies and procedures as well as
applicable laws and regulations. Bank will enunciate a system that enables them
to monitor quality of the credit portfolio on day to day basis and take remedial
measures as and when any deterioration occurs. Such a system would enable
the bank to ascertain whether loans are being serviced as per facility terms,
confirm the adequacy of provisions, and establish that the overall risk profile is
within limits established by management and compliance of regulatory limits.
Monitoring procedures and systems should be in place so as to provide an early
signal of the deteriorating financial health of a borrower.
ABL credit administration unit will perform the following functions:

a. Authorization
No officer or staff, or operating or non-operating unit of the Bank, shall approve or
otherwise commit the Bank to any credit, guarantee, or investment without prior written
authorization as specified in Section 5.6 of the Credit Guidelines. Furthermore, no officer
or staff may make or enter into any unauthorized arrangement/s that would result in the
rescheduling, restructuring of existing loan schedules or the postponement of the
recovery of the Bank's loans or investments without similar authorization. Any breach of
this policy shall be treated as a fraudulent and criminal act, and shall be dealt with
accordingly.

~ 22 ~
b. Documentation:
It is the responsibility of the branch management to ensure completeness of
documentation (loan agreements, guarantees, transfer of title of collaterals etc.) in
accordance with approved terms and conditions. Outstanding documents should be
tracked and followed up to ensure execution and receipt.
All forms of credit, investments or variations thereof, and the security to cover these,
require proper documentation in accordance with approved legal forms and formats.
Communications with customers concerning their approved facilities should incorporate
all standard as well as special conditions that may be imposed from time to time and, in
line with best practice, the customers should signify their written conformity thereto. No
modifications or deletions of approved terms and conditions will be allowed without
specific authorization from the Board of Directors or the appropriate committees (i.e.,
Crecom in the case of corporate and retail loans or Alcom in the case of inter-bank
accommodations and investments).
For monitoring and verification purposes, loan files for each borrower should incorporate
a duly-accomplished checklist of credit documents (Refer to Annexure 2 for the specimen
form.) This checklist should always be available for inspection by management and
auditors. The Bank shall maintain a system by which it will be alerted to the need to renew
charges and mortgages which expire during the life of the loans. Custodial responsibilities
for all original copies of documents evidencing transactions are specified in Section 5.9
below.

c. Credit disbursement:
The credit administration ensures that the credit application has proper approval
before entering facility limits into ledger/computer systems. Disbursement will be
effected only after completion of covenants, and receipt of collateral holdings. In case
of exceptions necessary approval shall be obtained from the sanctioning authorities.
It is the strict policy of the Bank to ensure that all documentation and formalities, and in
particular those related to large loans and loans to Directors/Officers/Shareholders/
Related Interests, should be executed in compliance with Bangladesh Bank guidelines
and the Bank Company Act PRIOR to disbursements and any other acts of exposing the
Bank to financial and other related obligations.
Moreover, all financial transactions should without exception be properly recorded for
accounting and monitoring purposes.
ABL will not convert any non funded loan to funded loan without approval of competent
authority and before completion of ducumentation formalities.

ABL will follow same procedures of documentation and disbursement policy for similar
category of loan.

ABL will strictly follow the disbursement schedule as per terms and condition of the
Sanction advise.

~ 23 ~
 During implementation period disbursing official will verify the proper utilisation of the
loan / fund and ensure utilization for which loan is sanctioned. The credit officer will
inspect the implementation site before disbursement of fund for next phase and will
only be disbursed on satisfactory implementation of the previous phase (where
applicable).

d. Credit monitoring and recovery:

After the credit is approved and draw down allowed, the credit shall be continuously
monitored by branch managers/ branch officials.
These include keeping track of borrowers’ compliance with credit terms, identifying
early signs of irregularity such as loan proceeds being used other than for the intended
purpose, conducting periodic physical verification, valuation of collateral and
monitoring timely repayments.
The disbursing branch bears the primary responsibility for monitoring and recovering the
Bank's credit exposures, in accordance with the Operating Rules and Procedures in
Section 5.11.1. Monitoring and follow-up activities should be intensified when the
perceived credit risk of borrowers deteriorate, based on the latest quarterly risk
grade/classification.
The Credit Operations and Administration Unit at Head Office, on the other hand, will
monitor the performance of the various credit portfolios by analyzing the data base which
it shall establish and maintain on a current basis. Individual exposures in the Bank's
portfolio will likewise be classified in accordance with Bangladesh Bank guidelines.
The Credit Risk Management unit will develop risk grading guidelines and procedures in
line with good practice. Together with the Internal Control unit of the Bank, this unit will
also validate whether or not these guidelines and procedures are working effectively and
reflect the actual positions indicated by the ratings.

e. Credit repayment:
The borrowers shall be communicated ahead of time as and when the
principal/markup installment becomes due. Any exceptions such as nonpayment or
late payment should be tagged and communicated to the management. Proper
records and updates shall also be made after receipt.

f. Maintenance of credit files:

ABL will devise procedural guidelines and standards for maintenance of credit files.
The credit files not only include all correspondence with the borrower but should also
contain sufficient information necessary to assess the financial health of the borrower
and its repayment performance. Information should be filed in an organized way so
that external/internal auditors or BB inspectors could review it easily.

~ 24 ~
g. Collateral and security documents:
The branch will ensure that all security documents are kept in a fireproof custody under dual
control. Proper records for security documents will be maintained to track their movement.
Procedures should also be established to track and review relevant insurance coverage for
certain facilities/collateral. Physical checks on security documents shall be conducted on a
regular basis.

4. Organizing Credit Risk Management

4.1 Role of the Board of Directors

The board has a vital role in granting credit as well as managing the credit risk of the bank. It
is the overall responsibility of bank’s board to approve credit risk strategies and significant
policies relating to credit risk and its management which should be based on the overall
business strategy. Overall strategies as well as significant policies have to be reviewed by
the board on regular basis.
The responsibilities of the board with regard to credit risk management shall include the
following:
Ensure that appropriate policies, plans and procedures for credit risk management are in
place. Ensure that bank implements sound fundamental policies;
Define the bank’s overall risk appetite in relation to credit risk;
Ensure that top management as well as staff responsible for credit risk management
possess sound expertise and knowledge to accomplish the risk management function;
Ensure that bank’s significant credit risk exposure is maintained at prudent levels and
consistent with the available capital.
Review trends in portfolio quality and the adequacy of bank’s provision for credit losses;
Ensure that internal audit reviews the credit operations to assess whether or not the bank’s
policies and procedures are adequate and properly implemented;
Review exposures to insiders and other related parties, including policies related thereto;
Limit involvement in individual credit decisions to those powers specifically reserved to the
Board by the bank’s articles of association, by-laws, and credit risk management policy.
Approval ratify exposures exceeding the level of the management authority delegated to
management and be aware of exposures; and
Outline the content and frequency of management reports to the board on credit risk
management.

~ 25 ~
4.2 Role of Senior Management
The responsibility of senior management is to transform strategic directions set by the board
in the shape of policies and procedures. Senior management has to ensure that the policies
are embedded in the culture of the bank. Senior management is responsible for implementing
the bank’s credit risk management strategies and policies and ensuring that procedures are
put in place to manage and control credit risk and the quality of credit portfolio in accordance
with these policies.
The responsibilities of senior management with regard to credit risk management shall
include:
Developing credit policies and credit administration procedures for board approval;
Implementing credit risk management policies to ensure an effective credit risk
management process;
Ensuring the development and implementation of appropriate reporting system;
Monitoring and controlling the nature and composition of the bank’s credit portfolio;
Monitoring the quality of credit portfolio and ensuring that the portfolio is thoroughly and
conservatively valued and probable losses are adequately provided for;
Establishing internal controls and setting clear lines of accountability and authority; and
Building lines of communication for the timely dissemination of credit risk management
policies, procedures and other credit risk management information to all the credit staffs.

4.4 Credit Risk Management Committee (CRMC)

Agrani Bank Limited has a Credit Risk Management Committee (CRMC) comprising the following
heads of divisions:

Chairman : General Manager (Risk Management Division)

Member : General Manager (Credit Policy and Credit Risk Management
Division)
Member : Deputy General Manager (Industrial Credit Division-1)
Member : Deputy General Manager (Recovery and NPA Management
Division)
Member : Deputy General Manager (Risk Management Division)
Member : Deputy General Manager (Treasury Division)
Member Secretary : Deputy General Manager (Credit Policy and Credit Risk
Management Division)

4.5 Roles and Responsibilities of the Credit Risk Management Committee:

The Credit Risk Management Committee reports to the bank’s Risk Management Committee
and will be empowered to oversee credit risk taking activities and overall credit risk
management function.
The CRMC should be mainly responsible for:
~ 26 ~
a) Implementing the credit risk policy/strategy approved by the board.
b) Monitoring credit risk on a bank-wide basis and ensure compliance with limits approved by
the board.
c) Making recommendations to the board, for its approval, clear policies on standards for
presentation of credit proposals, financial covenants, rating standards and benchmarks.
d) Deciding delegation of credit approving powers, prudential limits on large credit exposures,
standards for loan collateral, portfolio management, loan review mechanism, risk
concentrations, risk monitoring and evaluation, pricing of loans, provisioning,
regulatory/legal compliance, etc.
e) Ensuring that Bank must follow All circulars issued by Bangladesh Bank, Ministry and
instruction given by the Board issued & to be issued from time to time.
4.6 Systems and procedures
4.6.1 Credit strategy
The primary purpose of the bank’s credit strategy is to determine the risk appetite.
Once it is determined, the bank shall develop a plan to optimize return while keeping
credit risk within predetermined limits. The credit risk strategy covers:
a. The bank’s plan to grant credit based on various client segments and
products, economic sectors, geographical location, currency and maturity

b. Target market within each lending segment and level of diversification /

concentration

c. Pricing strategy

Credit risk strategy has been developed on the basis of the bank's target market and
its internal strength. The strategy takes into account the cyclical aspect of the country’s
economy and the resulting shifts in composition and quality of the overall credit
portfolio. The strategy will be reviewed periodically and amended, as deemed
necessary. The strategy will be viable in the long term and through various economic
cycles.

4.7.1 Credit Processing:

The principal tasks of this middle office are to determine the creditworthiness based
on credit scoring criteria, exposure limits, optimal financial package, risk-based pricing
and terms & conditions of all forms of financial assistance. This extends to the grant
of counterparty limits for treasury customers as well.

~ 27 ~
Its structure and reporting lines are shown below:

Board

MD-CEO

Credit Committee

GM Credit/
Circle Office

Zonal office/
Corporate Br

Branch
4.7.2 Credit Operations & Administration:

The principal tasks of this branches are to provide efficient, common credit-based services,
namely: security appraisal, credit checking, documentation & safekeeping, disbursements,
loan accounting, and data base management.

4.7.3 NPL Recovery

This is a specialized unit whose principal task is to maximize recovery and / or
minimize losses on non-performing assets through extra-judicial workouts, or through
litigation and the subsequent sale/operations of physical assets.

Agrani Bank Limited has a Non Performing Loan management committee (NPLMC)
comprising the following member:
Chairman : Deputy Managing Director-01
Member : Deputy Managing Director-02
Member : Deputy Managing Director-03
Member : Deputy Managing Director-04
Member : All General Manager Head Office
Member : Deputy General Manager ( Recovery & Non Performing Loan
Secretary management Division)

~ 28 ~
Roles and Responsibilities of the Non-Performing Loan Management Committee:
The committee has been formed to formulate and recommend a set of strategies and policies
pertaining to the management of non-performing loan for approval of the Board of Directors of
the bank and to play a pivotal role in informing and implementing the same on getting approval
from the Board across the bank.
Following are the terms to be included in the strategies and policies:
- To formulate and recommend strategies and policies for maximization of the recovery of
non-performing loan;
- To formulate and implement policies on remission of interest of non-performing loan to
be aligned with Government policy based on the qualitative judgment of each loan;
- To formulate and implement policies on loans to be written-off based on Bangladesh
Bank directives;
- To formulate and recommend strategies and policies for maximization of the recovery of
written –off loan;
- To formulate and recommend strategies and policies for settlement of law suits through
extra-judicial workouts and to give instructions for speedy disposal of law suits;
- To put in place a standard on non-performing loan analysis, appropriate evaluation,
determining doings and not doings, outlining strategies, assigning duties and
responsibilities for recovery of top 20(twenty) and top 50(fifty) obligors;
- To approve, disregard, recommend and ratify the loan remission proposal all within the
jurisdiction of delegation of powers as approved by the Board;
- To take other decisions concerning non-performing loans;
- To review and discuss the bank’s overall recovery position of non-performing loan on
timely basis and place it before the Board of Directors for their information, instructions,
guidance etc.;
- To place before any issue/matter relating to non-performing loan before the Board
beyond the approved delegation of powers.
- To formulate and implement policies on disposal of loan collaterals;
- To create an environment and set a standard on enforcing early warning signal on
monthly basis across the bank;
- To ensure regulatory/ legal compliance, etc. relating to non-performing loans;
- To reassess/reevaluate the effectiveness and appropriateness of the policies,
procedures, strategies etc. in order to manage non-performing loan effectively and
efficiently across the bank;
- To ensure that the all policies, procedures and strategies are in place and be effective
across the bank at all times.
- To decide on the proposal of interest waiver and to place before the CEO & the Board
for consideration.

~ 29 ~
4.7.4 Credit Committee ( CRECOM)
This is a specialized unit whose principal tasks are to evaluate the magnitude, direction
and distribution of risks in credit operations and portfolios, and to recommend to the MD-
CEO (through the Credit Committee) the appropriate structures, processes and
procedures to control these.
Convener & other member will discuss all the proposals. After discussing with the
members, convener will disclose the decision & the member secretary will note down the
decision . Here Member Secretary will present only the proposals of outside Dhaka in
absence of the respective member to the Credit Committee . The member secretary will
never produce any recommendation /opinion regarding the proposals/ memos.
Credit Committee is formed as follow :
Convener : Deputy Managing Director-01
Member : Deputy Managing Director-02
Member : Deputy Managing Director-03
Member : Deputy Managing Director-04
Member : All General Manager
Member : Deputy General Manager ( Credit Policy & Credit Risk
Secretary Management Division)

Roles of the Credit Committee:

The principal task of the committee is to formulate and recommend policy pertaining to
Credit Risk Management for approval of the Board of Directors of the bank and to play an
important role in informing and implementing the same on getting approval from the Board
across the bank.
Following are the terms to be included in the policy:
- To formulate and recommend delegation of credit approving powers among the
credit approving authority based on an evaluation of competency;
- To promote/determine the loan strategy in consideration of the businesses, obligors
and the type/kind of loan;
- To formulate policies on standards for presentation of credit proposals; pricing of
loans, documentation, risk grading, and provisioning;
- To put in place a standard on loan analysis, appropriate evaluation, scoring,
documentation, reporting, auditing, classification, risk grading and provisioning;
- To approve, disregard, recommend and ratify for new loan facility, renewal,
reconsideration, and changes in financial covenants;
- To take other decisions concerning loans;
- To approve loan application all within the jurisdiction of delegation of powers as
approved by the Board.
- To place before any issue/matter before the Board beyond the approved delegation
of powers.
- To formulate policies on loan collateral, portfolio management, loan review
mechanism, risk concentrations, risk monitoring and evaluation and regulatory/ legal
compliance, etc.

~ 30 ~
 - To reassess/reevaluate the effectiveness and appropriateness of the Credit Risk
Management structure in order to manage the credit risk across the bank, especially
in a changed scenario.
- To ensure that the credit policy and procedures are in place and be effective across
the bank at all times.
- Ensuring that Bank must follow All circulars issued by Bangladesh Bank, Ministry
and instruction given by the Board issued & to be issued from time to time.

Responsibilities of the Credit Committee:

Credit Committee will examine cash flow statement, ratio analysis, different risks, repayment
capacities, securities, KYC in details, due diligence, recommendation of Branch, Zonal Office
, Circle Office with their comments & particularly recommendation of Head of ICC. Then
Credit Committee will produce a specific recommendation to Board.

05: Managing Credit Risk in the Origination Process

Many avoidable mistakes are made in the origination process, leading to higher credit risk.
In addition to the following analysis, an inventory of the most common mistakes that banks
must avoid is contained in Annexure.

5.1 Borrower evaluation

The first step in the management of credit risks happens when the borrower walks through
the door and goes through the application process. The basic question that any bank has to
ask is: does the credit history (if any) and repayment capacity of the borrower provide
sufficient probability of repayment, so that the bank will earn an adequate risk-adjusted rate
of return on the loan, without charging an excessive interest rate that may be unacceptable
to the borrower or requiring credit enhancements that may be impossible for the borrower to
provide?

i) Internal credit risk rating system

An internal credit risk rating system (ICRRS) should categorize all credits into various classes
on the basis of underlying credit quality. Agrani Bank should develop an internal credit risk
rating system in line with regulatory authority’s prescription for its credits in consistent with
the nature, size and complexity of the bank’s activities. All credit facilities should be assigned
a risk grade. If any deterioration in risk is observed, the risk grade assigned to a borrower
and its facilities should be immediately changed. The rating system must be endorsed by the
board and should have at least the following parameters:
covers a broad range of the bank’s credit exposure, including off-balance sheet exposures;
covers both performing and non-performing assets;
has several grades covering exposures, with the lowest rating accorded to those where
losses are expected;
has risk ratings for “performing” credits with several grades (including the grade
corresponding to “special mention”);

~ 31 ~
 has regulatory classifications (standard, special mention, sub-standard, doubtful &
bad/loss) should be incorporated within the risk rating systems; and
has the credit risk rating system detailed in the credit policy and procedures developed for
the determination and periodic review of the credit grades.

ii) The role of external credit assessment institutions (ECAIs)

The analysis of a potential borrower’s creditworthiness by an ECAI may provide useful input
and assist the bank’s credit analysts in organizing thinking and forming an opinion about the
potential borrower in question. Agrani Bank may make reference to ECAI ratings (registered
by Bangladesh Securities and Exchange Commission as well as recognized by Bangladesh
Bank) in their credit risk management policies and loan underwriting practices, but they must
rely on their own assessments of the creditworthiness of their borrowers as the primary
determinants of the decision.
iii) Analysis of specific borrower repayment capacity
In order to make good credit decisions, lenders must know how to analyze financial
statements submitted by loan applicants. Lenders are expected to follow sound risk
management practices in the context of commercial credit analysis activities. A review of the
company's current position with respect to the existing authorized level of commercial
lending activities, capital adequacy position and compliance with commercial credit analysis
regulations, guidelines and rulings is essential in determining the creditworthiness of an
applicant.

Analyzing the Financial Statements

There is no substitute for thorough and rigorous analysis of a borrower’s financial statements
when attempting to determine a borrower’s creditworthiness. The balance sheet, income
statement, cash flow statement, and financial projections all provide critical information about
the borrower’s creditworthiness and capacity to repay.
However, despite the importance of financial statement analysis in determining
creditworthiness, the final credit decision is subjective because the most important factor in
the decision is management of the borrower. An evaluation of management is based on both
objective and subjective factors but is, in the end, subjective because there is no ratio or
number that will inform the banker of management’s intention or willingness to repay a loan.
Therefore, the credit officer should make a serious effort to determine the competence,
honesty and integrity of borrower management in each case. This effort should include what
is called “due diligence,” that is, the attempt to “know your customer” through contacting
customers, suppliers and others in the industry who have experience with the borrower and
its management.
Where possible and legal, in the case of smaller companies with single owners where
personal guarantees will be required, a credit history should be obtained to determine the
owner’s record of fulfilling his/her financial obligations. Court records should be reviewed to
determine if there have been any court proceedings against the borrower and/or borrower
management. The question is whether or not borrower management, or the business owner,
will honor its obligations to the lender in the best case and worst case. If the borrower
encounters difficulties in repaying its obligation(s) to the bank, will management, or the owner,
be willing to collaborate with the bank to “work out” repayment, however long it requires.
~ 32 ~
Limits on total exposure should be set for each individual borrower or group of related
borrowers (related to each other, not to the bank), that are at least as stringent as those set
by law or BB regulation. The size of credit limits should be based on the credit strength of the
borrower, genuine purpose of credit, economic conditions and the bank’s risk appetite. Limits
should also be set for respective products, activities, specific industry, economic sectors
and/or geographic regions to avoid concentration risk. Credit limits should be reviewed
periodically at least semi-annually or more frequently if borrower’s credit quality deteriorates.
All requests for increase in credit limits should be authenticated by appropriate authority.
Sometimes, the borrower may want to share its facility limits with its related companies.
Banks should review such arrangements and impose necessary limits if the transactions are
frequent and significant.
Five Key Components of Financial Analysis
The lender should always use five key components of analysis. These are;
Income statement,
Balance sheet,
Net worth and fixed asset reconciliation,
Key ratios, and
Cash flow statement.
When using accrual basis financial statements, cash flow analysis ties together the income
statement and balance sheet to provide the analyst with a more complete financial picture of
the borrower. Cash flow analysis “looks behind” the accrual basis numbers to identify the
actual cash inflows and outflows over a certain period of time. Since cash flow is the first
source of repayment, this exercise is critical.

iv) Required loan documentation- (See Annexure 2.)

5.2 Risk-based loan pricing

i) Building blocks of loan pricing

Banks must price loans to cover all costs, including a certain number of basis points over the
life of the loan to account for each of the following:

Cost of funds- The rate at which the bank is able to attract funds of equivalent tenor to the
loan in question. In banks that apply funds transfer pricing, this rate is a wholesale rate,
usually the swap rate (fixed or floating, depending on whether the loan is fixed or floating)
of an equivalent tenor.

Expected loss- The number of basis points that corresponds to the expected loss on the
loan, which will be higher on loans with more credit risk and lower on loans with less credit
risk. Although banks do not make loans with the expectation of suffering any loss, this
amount is not zero for any loan, no matter how well collateralized or guaranteed.
Cost of allocated capital- The cost of allocated capital is the amount of capital the bank has
allocated to the loan as coverage for unexpected loss, multiplied by the target return on
equity for the bank as a whole, and expressed in terms of basis points. As a simplification,
banks often use the risk-based capital requirement as a proxy for the amount of capital
that should be allocated to the loan.
Term cost of liquidity- The number of basis points that captures the cost arising from the
fact that loans of longer and longer tenor require stable funding of longer and longer tenor,

~ 33 ~
 which will be costly for the bank above and beyond any interest-rate risk considerations
(which will be captured in the swap rate).
Cost of liquid asset buffer- Banks rarely “maturity-match” a loan with a specific source of
funding of equivalent tenor. They rightly know that a mix of current accounts, savings
accounts, and fixed deposits will render a stable source of funds under most
circumstances. However, in extremely adverse and rare circumstances, a run on deposits
may occur and the bank may be forced to sell assets quickly at low prices or seek additional
deposits or other funds at high rates. For this reason, a liquid asset buffer must be held for
these unexpected situations. Since these assets either earn no interest at all, or very little
interest for the bank, there is an opportunity cost for holding the assets that must be
expressed in terms of basis points and included in the determination of the loan rate.
Loan administration costs- For any loan, big or small, there are staff costs involved in
origination and monitoring. Some of these costs are up-front and some are ongoing, but
they all must be expressed in terms of basis points over the life of the loan.
Competitive margin- Finally, after all other costs have been included in the rate, the bank
will add on a certain number of basis points to earn a margin. This component is the only
one that is fully at the discretion of the bank, given its funding and expense structure. This
margin may even be negative, if the bank desires to gain a temporary competitive
advantage. However, it should not be negative on any kind of loan product for an extended
period of time. Banks should be able to show to BB at all times that they have priced their
recently-originated loans to cover all of these costs.
As per Bangladesh Bank Circular the rate of interest of any loan product can not increase
or decrease 1.50 % of declared rate of interest.
ii) Determination of selected components of risk-based loan pricing
Some of the various components like swap rate, wholesale rate, liquidity premium, senior
debts issued by banks may be difficult to estimate in practice. However, the bank’s is
expected to exert every effort in estimating these necessary components and documenting
their assumptions and results.

5.3 Portfolio Directives

ABL will analyze its portfolio before starting a new year and determine its industry / sectoral
credit growth and will set limit on the basis of the following strategy: This information will be
communicated to all concerned.
a. Industry / Sector where loan will grow;
b. Industry / Sector where status quo will be maintained;
c. Industry / Sector where loan will be reduced;
The thrust of the Bank is to diversify its portfolio of loans and investments to avoid undue
concentration. Annual plans should be geared to select those healthy borrowing segments
of the economy that are projected to contribute to the Bank's business growth and profit
objectives. The Bank will maintain an array of appropriate lending and investment products
to meet the needs of these borrowing segments.
A specification of allowable economic sector together with limits for lending to each sector or
industry is shown below which is consistent with overall growth limits as per revised MOU.
However, the above sectoral limit will remain subject to change as an when situation demand
due to change of economy, regulatory guide lines etc. and or risk appetite policy guidelines
of the bank.

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5.4 Product Manuals

The Agrani Bank shall maintain up-to-date manuals on all credit products and services the
following credit products were being offered by the Bank:
 Commercial Loans
 Industrial Loans
 Residential and Commercial House Building Loans
 Rural and Agro-based Loans
 Freedom Fighter Loans
 Loan against shop possession
 SME Loans and Micro-credit
 Consumer Loans
 Vehicle Loans
 SOD (secured overdraft)
 Personal Loan, Any purpose Loan
 Staff Loans

SOD (overdraft) against lien of FDR, DPS A/C, ABS A/C, Wage Earners Bond will be
allowed to the holder of the instruments duly authorised nominated
customer.Transaction will be made through the benificiaries bank account mantained
with the bank.

Maximum amount / limit will be allowed upto 80% of the instruments value / balance.
The tenure of the SOD will not exceed the maturity date of the instruments in anyway.

This OD recoverable in due time. If any borrower fails to repay the dues then the loan
will be adjusted by encashment of the instrument or closing the concerned account with
the bank.

Before disbursement of the loan all necessary papers and documents shall have to be
completed accordingly as per loan documents checklist. Importantly the instrument must
be duly discharged by the owner marked "lien" before allowing withdrawal.

5.5 Credit Process and Procedures

5.5.1 Due Diligence Procedures
a. Large Loan/Investment Analysis
Applications for facilities in the amount of BDT1 crore and above (or representing
10% of the Bank's capital, whichever is lower), will be processed in Head Office/
Circle Office and in a limited number of branches as follows:

Head Office 1
Corporate Branches 34
(including Principal Branch)
AD Branches (excluding 8
corporate branches)
Zonal Offices 53

~ 35 ~
 Circle Offices 11
Total 107
b. Large Exposure Assessment Framework
These applications will require assessments in line with the revised Credit Risk
Grading System (CRGS) framework. This is a comprehensive analytical process that
examines the following areas for potential risks:
 Borrower - ownership, ownership structure, past financial performance,
management capability and depth, credit history & deposit account performance.
 Industry-vitality and prospects (sales volume trends in relation to demand
levels), level of competition, buyer-supplier leverages and threats, cost and pricing
structure, entry barriers and threats of new entries/substitution
 Financial Projections-profitability (e.g., RoE, RoA), leverage (e.g., D/E), cash
flow/liquidity and debt-service coverage
 Financial Package-type and purpose of assistance required, tenor, terms and
conditions
 Security-quality and quantity
Clear statements should be made in the evaluation format as to whether or not
proposed applications comply with the Bank's guidelines and banking regulations.
Furthermore, potential risk exposures and any mitigating factors must be disclosed in
the analysis. These risks will invariably fall into the following categories:

 Borrower:
Any issues regarding lack of management depth, complicated ownership structure or
inter-group transactions should be addressed and risk should be mitigated.
 Industry:
The key risk factors of the borrower's industry should be assessed. Any issues
regarding the borrower's position in the industry, overall industry concerns or
competitive forces should be addressed and strengths and weaknesses of the
borrower relative to its competition should be identified.
 Supplier/Buyer Leverages:
Any customer or supplier concentration should be addressed, as these could have a
significant impact on the future viability of the borrower.
 Historical Financial Analysis:
An analysis of a minimum of 3 years historical financial statement of the borrower
should be presented. Cash flow, profitability and leverage trends should be analyzed.

 Projected Financial Performances:

A projection of the borrower's future financial performance should be provided,
indicating the sufficiency or lack thereof of cash flow to service debt repayment. Loans
should not be granted if projected cash flow is insufficient to repay debts. The underlying
basis of transactions must be realistic.
 Account Conduct:
For existing borrowers, the historic performance in meeting repayment obligations
(trade payments, cheques, interest and principal payments, etc.) should be assessed.

~ 36 ~
 Loan Structure:
The amount and tenors of financing proposed should be justified based on the
projected repayment ability and loan purpose. Excessive tenor or amount relative to
business needs increases the risk of fund diversion and may adversely impact the
borrower's repayment ability.
 Security:
A current valuation of collateral should be obtained and the quality and priority of security
being proposed should be assessed. Loans should not be granted based solely on security.
 Mitigating Factors:
Risk factors (margin, sustainability, leverage /gearing, over-stocking, rapid
growth/acquisition/expansion, management changes or succession issues, customer or
supplier concentration, lack of transparency or industry issues) should be identified in the
credit assessment.
c. Credit Scoring
Credit scoring of large loan applications will be based primarily on the credit risk grading
guidelines of Bangladesh Bank. This is a system with weighted scores assigned to five risk
dimensions, namely:

Financial 50%

Business and industry 18%

Management 12%

Security 10%

Relationship 10%

The resulting aggregate score will determine whether or not a particular application should
be approved. For this purpose, the cut-off score of 75 has been set as the minimum
acceptable score, i.e., no applications may be considered if the aggregate score for a
particular application is below 75.

d. SWOT analysis :

Industrial loan proposals are now processed through Circle Offices/Corporate Branches with
SWOT analysis as per instruction circular no. mvFwe/08 ZvwiLt 04/02/2009 and wkFwe-89/09
ZvwiLt 24/12/2009 respectively. SWOT analysis considers the following points:

S = Strength : Required educational qualification of entrepreneurs,

experience about the project, skill for marketing the product,

~ 37 ~
 financial soundness, age, status of spiritual descendent of
the later time etc.

W = Weakness: Overall barrier, fewer knowledge of people about the project and
product, marketing problem of the product, seasonal product,
limited technical knowledge of entrepreneurs and other
weaknesses, if any, etc.

O = Opportunity: Widen market of the product and its extensive demand,

competent manpower, environment friendly project etc.
T =Threat : Socio-economic condition of the country, scarcity of skilled
manpower, natural calamity etc.

While analyzing the project if any Weaknesses or Threats are identified the
Mitigating Factors should be mentioned side by side in the proposal.

5.5.2 Credit origination/extension:

In case of new relationships, consideration has been given to the integrity and reputation of
the borrower as well as its legal capacity to assume the liability. Prior to entering into any new
credit relationship the banks must become familiar with the borrower and be confident that
they are dealing with an individual or organization of sound reputation and credit worthiness.
Bank will not grant credit simply on the basis of the fact that the borrower is a highly reputed
individual or company (i.e. name, status, social and national recognition etc.). Credits will be
extended within the target markets as per the lending strategy of the bank itself. Before
allowing a new or extended credit facility, ABL will assess the risk profile of the customer.
This assessment includes:

a. Credit assessment of the borrower’s industry, macro economic factors, and firm specific
analysis;
b. The purpose of credit and source of repayment;
c. The repayment history of borrower;
d. Repayment capacity and other sources of income of the borrower;
e. Expected future cash flows from the borrower in consistent with past history;
f. Terms, conditions and covenants for the credit agreement;
g. Adequacy, enforceability and liquidity status of collaterals; and
h. Approval from appropriate authority.
If the borrower has utilized funds for the purposes not shown in the original proposal, banks
shall take steps to determine the negative implications on credit worthiness. In case of
corporate credits where the borrower is a group of companies, banks will classify such
connected companies and conduct credit assessment on a consolidated/ group basis.
In case of credit syndication, all syndicate participants will perform their own independent
assessment, analysis and review of syndicate terms.
Banks utilize collaterals and guarantees to help mitigate risks inherent in individual credits.
However, the primary focus will on the strength of the borrower’s repayment capacity and
reputation in the market. Collaterals cannot be a substitute for a comprehensive assessment

~ 38 ~
of the borrower, nor can they compensate for insufficient information. These will be
considered as a buffer providing protection in case of default.
In case of structuring credit facilities bank will appraise the amount and timing of the cash
flows as well as the financial position of the borrower. It is extremely important that due
consideration will be given to the risk reward trade–off in granting a credit facility and credit
should be priced to cover all embedded costs. Relevant terms and conditions shall be laid
down to protect the bank’s interest.
Bank has policies covering the acceptability of various forms of collateral, procedures for the
ongoing valuation of such collateral and process to ensure that collateral is, and continues
to be, enforceable and realizable. With regard to guarantees, bank evaluate the level of
coverage being provided in relation to the credit quality and legal capacity of the guarantor.
Banks’ credit-granting approval process has been established accountability for decisions
taken and designate who has the authority to approve credits or changes in credit terms. A
potential area of exploitation arises from granting credit to connected and related parties,
(sometimes called “insiders”) whether companies or individuals. Related parties typically
include a bank’s promoters, major shareholders, subsidiaries, affiliate companies, directors,
and executives. The relationship includes the ability to exert control over or influence the
bank’s policies and decision making, especially concerning credit decisions. It is crucial for a
bank to systematically identify and track extensions of credit to insiders. The issue is whether
credit granting decisions are made rationally and according to approved policies and
procedures. In no case a loan will be granted to a related party with terms and conditions
more favorable to the borrower than on a similar loan to an unrelated party. Terms and
conditions include amount of the loan, interest rate, amount and type of collateral required,
repayment schedule, origination fee, and the possibility of extension or rescheduling.

5.6 Approval authority

i) Basic approval authority principles
The authority to sanction/approve loans must be clearly delegated to senior credit executives
by the Board, based on the executive’s knowledge and experience. Approval authority should
be delegated to individual executives and not to committees to ensure accountability in the
approval process by way of deligating the approval power by the Board of Directors.
Banks are expected to develop credit risk officers who have adequate and proper experience,
knowledge and background to exercise prudent judgment in assessing, approving and
managing credit risks. A bank’s credit-granting approval process should also establish
accountability for decisions taken and designate who has the absolute authority to approve
credits or changes in credit terms. Approval authorities should be commensurate with the
expertise of the individuals involved. A preferred approach is to develop a risk-based authority
structure where lending power is tied to the risk ratings of the obligor (that is, progressively
higher levels of credit risk, holding constant the loan amount, should be approved by
progressively higher levels of authority). The following guidelines should apply in the
approval/sanctioning of loans:
of Directors,
acknowledged by recipients, and records of all delegation retained in the CRM.

~ 39 ~
 al function should be separate from the marketing/relationship
management (RM) function. Credit approval authority cannot be delegated to a person
assigned with marketing functions.
proposals and
making recommendations to the Managing Director/ CEO or the Board of Directors within
the context of the bank’s overall loan portfolios. They may also review the compliance with
regulatory requirements.
ng, or by electronic signature. Approval records must
be kept on file with the Credit Applications.

The “pooling” or combining of authority limits should not be permitted.

the volume of operations, Regional Credit Centers may be necessary. However, all large
loans must be recommended by the Credit Committee and Managing Director and
approved by the Board.

the approval authority required.

amount, should be referred to Board of Directors for approval

risks.

Control. There should be consequences for such breaches, to determine future violations.

training and experience to carry out their responsibilities effectively. As a minimum,

approving executives should have:
- At least 5 years’ experience working in corporate/commercial banking as a relationship
manager or as a credit analyst or account executive.
- Training and experience in financial statement, cash flow and risk analysis with a critical
eye.
- A thorough working knowledge of the fundamentals of accounting, finance and risk
management.
- A good understanding of the local industry/market dynamics.
- Successful completion of an assessment test demonstrating adequate knowledge in areas
including introduction of accrual accounting, industry/business risk assessment, borrowing
causes, financial reporting and full disclosure, financial statement analysis, asset
conversion/trade cycle, cash flow analysis, projections, loan structure and documentation,
loan management etc.

~ 40 ~
A separate register (hard copy/electronic copy) is to be maintained for proposals received,
approvals accorded, and proposals declined. A monthly summary of all new facilities
approved, renewed, or enhanced; and a list of proposals declined, stating reasons thereof,
should be reported by the CRM to the MD and related Senior Management.

Credit delegations are to be as specific as possible in terms of amount, tenor, deal, business
segment etc. The following areas may be considered as a guide for credit delegation.

a. New/fresh limits (secured and unsecured)

b. Renewal of credit limits
c. Renewal, renewal of enhancement, renewal with reduction, restructuring and rescheduling
of limits
d. Compromise Settlement under Alternate Dispute Resolution (ADR) [Sec 24 of Money Loan
Court Act – 2003]
e. Consumer/Retail and Personal Advance to each individual :
f. Emergency Short-Term Enhancements
g. Documentation deferrals
h. Change of terms and conditions
i. Collateral exceptions
j. Pricing, policy, exceptions

The bank’s internal audit department must review the functioning of the authority delegations
at least annually, to ensure that there are no breaches.

ii) Approval authority for large or complex exposures

The approval level for large loans and loans to be restructured must be escalated to the
Board. It is also best practice for any complex or unusually high-risk loan to be escalated to
the Board for approval.

iii) Exceptions

In certain, limited circumstances, exceptions may be granted to the approval authority policy
on a case-by-case basis. However, such exceptions should be rare, and the reason for the
exception should be stated in the loan file. A compilation of the exceptions should be provided
to the Audit Committee of the Board on a regular basis.

5.7 Disbursement
The credit administration should ensure that the credit application has proper approval before
entering facility limits into computer systems. Disbursement should be effected only after
execution of charge documents and completion of covenants and creating charge on primary
securities and collaterals (an indicative documentation checklist is given in Annexure 2). In
case of exceptions, necessary approval should be obtained from competent authorities. In
no case should any of the loan proceeds be disbursed before all necessary approvals have
been granted.
In disbursing the loan, it is imperative that the borrower understand and acknowledge the
purpose of the loan. It is also imperative for the bank to design and implement checks, such
as the submission of invoices, to ensure that the proceeds are spent on the designated

~ 41 ~
purpose and for no other purpose, and for the borrower to understand and comply with these
checks.

5.8 Special case of related person lending

Banks must exercise a heightened level of caution in lending to bank-related persons, as that
term is defined in section 26 (Ga) of Bank Company Act as well as BRPD Circular No. 4 of
23 February 2014 and any amendment thereafter. A potential area of exploitation arises from
granting credit to related persons, whether companies or individuals. Related parties typically
include a bank’s promoters, major shareholders, subsidiaries, affiliate companies, directors,
and executives. The relationship includes the ability to exert control over or influence a bank’s
policies and decision-making, especially concerning credit decisions. It is crucial for a bank
to systematically identify and track extensions of credit to related persons. The issue is
whether credit granting decisions are made rationally and according to approved policies and
procedures.
Under no circumstances should a loan be made to a related person on terms and conditions
more favorable to that person than to any unrelated client. In this context, “more favorable”
means a lower interest rate, lower upfront fee, less collateral, lower-quality collateral, longer
tenor, or less frequent interest payment. Any loan or other extension of credit to a related
person must be approved by the Board, and the aggregate amount of all loans and other
extensions of credit to bank-related persons cannot exceed 10% of the bank’s Tier 1 capital.

i) Avoidance of undue influence on credit decision

The Board and senior management must set the proper “tone from the top” in not pushing
through loans to related persons that violate laws, BB guidelines and circulars, the bank’s
own credit risk management policy, and best banking practice. Ability to repay must be the
primary criterion for approval. Banks must have policies and processes to prevent related
persons from participating in the proposal and approval discussions.

ii) Avoidance of “daisy chains” and other devices to evade rules and sound practices
in related person lending
The Board and senior management will be held responsible for ensuring that the bank does
not enter into so-called “daisy chains” or other reciprocal arrangements that are designed to
evade the rules, aggregate limits, and sound practices in lending to related persons. A daisy
chain is created when Bank A lends to a related person or persons of Bank B, Bank B lends
to a related person or persons of Bank C, and Bank C lends to a related person or persons
of Bank A. (Chains often have even more than three links, to further disguise the coordinated
violation.) A reciprocal arrangement is created when Bank A lends to a related person or
persons of Bank B, and Bank B lends to a related person or persons of Bank A.
BB will closely inspect and monitor for the existence of these daisy chains and reciprocal
arrangements, and those that are entered into without any independent business justification
except for the purpose of evading the rules, limitations, and sound practices, shall be
considered as violations of the relevant laws, guidelines, and circulars, and subject the
bank(s) to measures to take corrective action.

~ 42 ~
5.9 Documentation Procedures
The Bank shall maintain a standard set of approved documentation forms and formats for
all its facilities. While the branches will continue to initiate documentation, these should be
checked one level higher than the originating branch stations, zones, and corporate
branches, as in the approval procedures above.
Custody & Safekeeping of Documents
Custodial responsibility for original transaction documents shall be the responsibility of the
branch. These shall be retained in a secure manner, preferably stored within fire- and
burglar-proof premises (e.g., vaults).
Document Checklist
The approved document checklist (refer to Annexure 2) must be maintained for every credit
facility, which contains:

a. details of all general and specific requirements;

b. the dates on which these were submitted and complied with; and
c. the location of these documents.

Said checklist must be incorporated as an integral part of the credit folders, and sho uld
be available for inspection at all times. Since the original documents are to be held in
safekeeping, copies thereof should be appended to the checklist.

5.10 Commitment and Disbursement Procedures

 Releases of funds, and the issuance of instruments (e.g. LCs, Letters of Guarantee)
that bind the Bank to potential financial and legal obligations, are the final and critical
control stage of the credit and investment process. Accordingly, these may not be
undertaken unless and until the following are accomplished:
 Documentation clearances have been issued;

 Treasury has been advised of impending disbursements ahead of time 24 hours

notice in case of BDT 1 up to BDT 10.00 crore and 5 working days in case of
amounts of BDT above 10.00 crore.

5.11 Account Management Procedures

This stage in the credit process has the longest duration, and key components of the Bank's
credit risk infrastructure have responsibilities to ensure that risk assets are properly
monitored and handled.

~ 43 ~
5.11.1 Relationship Management

Front offices (i.e., the branch stations and corporate branches) shall have over -all
responsibility for account relationships and customer interface. They have the obligation to
monitor the accounts' business and performance of credit obligations through client calls
(evidenced by call reports) and obtaining periodic financial reports. They have the primary
task to recover the Bank's exposures, and to have a proper accounting of all credit-related
transactions aside from the normal banking routines related to their deposit business.

a. Pro-active monitoring of accounts is underscored with the introduction of an early alert

process under which identification and prompt reporting of deteriorating credit must be
reported by the branch to the immediately higher level of supervising authorities.
The format for reporting accounts that have been downgraded to "Watchiist" is shown
in Annexure 4 and covers the following:
For accounts undergoing project implementation :
 Slippage in over-all implementation schedules
 Timely and correct installation of imported components
 Changes in the scope and cost of project plans
 Repayment schedule

For all other aspects of credit (common to all operating accounts):

 Deterioration in general business environment

 Decline in sales and/or operating margins
 Delays in payment of interest during grace period
 Delays in principal repayment
 Non-compliance with terms and conditions, e.g., non-submission of required
operating reports and financial statements

b. Loan Recovery

Loan recovery efforts should be undertaken using a tickler system (until a

computerized information system is in place) that will alert the front office stations in
advance of amounts falling due for collection. Follow-up of missed payments should
be in writing, with increasing frequency and seriousness of tone with the passing of time
until payment is received.

c. Reports
Periodic submission of internal and external reports should be made on time and with
accuracy of information. For this purpose, all reports must be signed off by the Heads
of branches, zones, and credit divisions as needed.

~ 44 ~
5.12 Credit risk monitoring and control :

Bank has developed and implemented comprehensive procedures and information systems
to monitor the condition of each individual credit across various portfolios. Bank has
enunciated a system that enables to monitor quality of the credit portfolio on a day to day
basis and take remedial measures as and when any deterioration occurs. These procedures
will define criteria for identifying and reporting potential problem credits and other
transactions to ensure that they are subject to more frequent monitoring as well as possible
corrective action, classification and/or provisioning. Establishing an efficient and effective
credit monitoring system would help senior management to monitor the overall quality of the
total credit portfolio and its trends and helps to reassess credit strategy/policy accordingly
before encountering any major setback. The banks credit policy explicitly provides procedural
guideline relating to credit risk monitoring. At the minimum it should lay down procedure
relating to:
a. The roles and responsibilities of individuals responsible for credit risk monitoring;
b. The assessment procedures and analysis techniques (for individual loans & overall
portfolio)
c. The frequency of monitoring;
d. The periodic examination of collaterals and credit covenants;
e. The frequency of site visits;
f. The identification of deterioration in any credit;
An effective credit monitoring system includes measures to:
i. ensure that the bank understands the current financial condition of the borrowers;
ii. ensure that all credits are in compliance with existing covenants;
iii. follow the use customers make of approved credit lines;
iv. ensure that projected cash flows on major credits meet debt servicing requirements;
v. ensure that, where applicable, collateral provides adequate coverage relative to the
obligor’s current condition; and
vi. identify and classify potential problem credits on a timely basis. Given below are some
key indicators that depict the credit quality of an exposure:
1. Banks need to watch carefully the financial standing of the borrowers. The key
financial performance indicators namely profitability, equity, leverage and liquidity
should be analyzed. While making such analysis due consideration should be given

to business/industry risk, borrowers' position within the industry and external factors
such as economic condition, government policies and regulations. For companies
whose financial position is dependent on key management personnel and/or
shareholders, for example, in small and medium enterprises, institutions would need
to pay particular attention to the assessment of the capability and capacity of the
management/shareholder(s).
2. In case of an existing borrower, banks should monitor the borrower’s account activity,
repayment history and instances of excesses over credit limits. For trade financing,
banks should monitor cases of repeat in extensions of due dates for trust receipts and
bills.

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 3. Bank should regularly review the credit in terms of the borrower’s ability to adhere to
financial covenants stated in the credit agreement, and any breach detected should
be addressed promptly.
4. Banks need to reassess the value of collaterals on a periodic basis. Appropriate
inspection should be conducted to verify the existence and valuation of the collateral.
The frequency of such valuation is very subjective and depends upon nature of
collaterals. For instance, credits granted against shares need revaluation on almost
daily basis whereas if there is mortgage of a residential property the revaluation may
not be necessary as frequently. In case of credit facilities secured against inventory or
goods at the obligor’s premises, appropriate inspection should be conducted to verify
the existence and valuation of the collateral. If such inventory or goods are perishable
or such that their value diminishes rapidly (e.g. electronic equipment/computers),
additional precautionary measures should be taken.

# Stages/Levels of Monitoring Loans

Lending is one of the most important functions of a commercial bank and with the
modern concept of social order and participation of commercial banks in various
phases of commercial, industrial, agricultural and other economic activities of the
country, it is of paramount importance that banks have to be very careful while
choosing a borrower. The other and equally important responsibility of the lending
banker is to follow-up and supervises the use of the credit. Supervision and follow-up
are closely related. Supervision gives more emphasis on proper end-use and follow-
up gives more emphasis on timely recovery of advances.

After completion sanction & disbursement of a loan , Loan Monitoring is the most
important part of a loan. If Loan monitoring system is poor, then the loan will be
classified easily. For this the Bank Management have to ensure proper loan monitoring
system. Loan Monitoring system should be as follows:

There should be four monitoring stages/levels, such as

• Central/ Head Office Level
• Circle/ GM office Level
• Zonal Office Level
• Concerned Branch Level.

# Techniques of loan monitoring

Following are the plans/techniques to be taken by the Head Office to monitor /

supervise in different stages to monitor loan :

• First Top 10 loans among the top 50 loans will be monitored directly by the Managing
Director & CEO.
• Next top 40 loans will be monitored / supervised by the 4(four) Deputy Managing
Directors each 10.
• Besides, the above each circle General Manager will directly monitor /supervise top
10 loans of his circle.
• Next top 10 loans of the branches will be monitored / supervised by the respective
Zonal Heads.
• All loans will be monitored / supervised by respective branch head/ managers
& Zonal Heads.
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 • Officers engaged in the recovery process will contact Managing Director &
CEO, Deputy Managing Director every week on Sunday (who should be tagged
with Managing Director & CEO, Deputy Managing Director according to office order).
• Formulating policy by the authority so that the Managing Director & CEO and
Deputy Managing Directors may come into terms with the defaulters through
negotiation considering mortgaged property, amount of loan, current condition of
the business and ability to repay and finally approved by the proper authority.

Loan Monitoring for different types of Loan:

In case of Project Loan, the loan is processed at Head Office level & sanctioned by Board.
After Sanctioning, Branch will disburse loan to the Borrower as per sanction advice.
At pre-sanctioning stage the team formed by the officials mentioned in below must physically
visit the project site and establishment of the project , communication system, collateral (
land, building), & verify the viablity of the project etc. They will produce a detail feasiblity
report & submit with the proposal.
At the time of sanctioning stage CRECOM will analyze cash flow statement, ratio analysis,
different risks, repayment capacity, condition & coverage of securities, marketablity of the
product, KYC in details & then will produce a specific recommendation to Board. Then the
sanctioning authority i.e. Board/ Line Management will review the recommendation of
CRECOM & confirm whether the proposal is consistent with Agrani Bank’s guidelines &
policy, Bangladesh Bank’s guidelines & policy.
At the post sanction stage the team formed by the officials mentioned in below will confirm
whether the terms & conditions of sanction advice is maintained.They will confirm about the
security mortgage, other legal documentation & then allow disbursement phase by phase as
per condition of sanction advice. They will visit the project repeatedly upto commercial
production submit report which will have to preserve in loan file.
Borrower will have to report after 30 days about the utilization of fund after taking
disbursement of Loan.
Branch must monitor a Loan from the first draw down to the recovery of entire outstanding
liablities. An additional Loan monitoring Committee can be formed comprising the following
members:

Head of Project DGM, Industrial Credit Division(1/2)

Loan monitoring

Member Circle DGM (If any)

Member DGM, IT & FCMD(If there is Trade Finance included)

Member Zonal Head (If any)

Member Branch Head/ Corporate Branch Head

Member Concerned Credit officer

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The committee will submit a detail report regarding documentation, fund utilization,
Project implementation etc. to the GM Credit monthly basis. GM Credit will report to
Risk management Committee.
Other than Project Loan in case of Large Loan sanctioned by Board, Branch will
disburse loan to the Borrower as per sanction advice. Branch must monitor a Loan
from the first drawdown to the recovery of entire outstanding liablities. An additional
Loan monitoring Committee can be formed comprising the following members:
Head of Loan Circle DGM / Head of Corporate Br.
monitoring
Member DGM, IT & FCMD (If there is Trade Finance
included)
Member Zonal Head (If any)
Member Branch Head
Member Concerned Credit officer

The committee will physically visit the site of business & submit a detail report
regarding documentation, fund utilization, overall business condition etc. to the Circle
GM / concerned GM monthly basis. GM will report to Risk management Committee
on quarterly basis.
Borrower will have to report after 30 days about the utilization of fund after taking
disbursement of Loan.

All other Loans which is sanctioned as per Delegation Power, after Sanctioning,
Branch will disburse loan to the Borrower as per sanction advice. Branch must
monitor a Loan from the first drawdown to the recovery of entire outstanding liablities.
An additional Loan monitoring Committee can be formed comprising the following
members:

Head of Loan Circle DGM / Head of Corporate Br.

monitoring
Member Zonal Head (If any)
Member Branch Head
Member Concerned Credit officer

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The committee will submit a detail report regarding documentation, fund utilization etc.
to the Circle GM / concerned GM on monthly basis. GM will report to Risk
management Committee.
In all cases, if any deviation is found then the report will have to place to Board.
Detail monitoring mechanism is to be developed by the management.
5.13 Monitoring of Credit Portfolio
The Credit Administration Division will oversee the credit and investment activities of the
Bank with a broader portfolio-based outlook (regional dispersal, industry and customer-type
segmentation, product performance, portfolio classification, etc.).
5.13.1 The Loan Administration unit of the division will establish and maintain a
comprehensive database on all credit exposures, and monitor consolidated
movements as these are reported through copies of transaction sheets and
summaries. It will conduct portfolio analyses for the purpose of evaluating portfolio
performance and detecting any deterioration in the risk exposures. Summary
reports and recommendations will be submitted to the Credit Committee for
appropriate action or policy decisions.
5.13.2 The credit review unit of the division is responsible for reviewing the credit process
to ensure that approved policies and procedures are being effectively being
implemented throughout the Bank.
In addition, the unit will independently classify accounts on a monthly basis through the use
the Bank's internal risk rating system. The unit will rely on recovery information from the
loan administration unit, as well as copies of the early alert reports from the front offices.
These independent internal ratings are intended to alert management concerning material
changes in the credit and investment risk profiles of the Bank, thereby providing the basis
for reviewing account pricing policy and determining the potential impact of risk
deterioration on the balance sheet ratios, particularly capital adequacy. Finally, the
recommendations of the- unit will be used to determine whether accounts should be
transferred to the Non-Performing Loans (NPL) Recovery Unit.

5.14 Measuring credit risk :

The measurement of credit risk is a vital part of credit risk management. To start with, banks
should establish a credit risk rating framework across all type of credit activities. Among other
things, the rating framework may, incorporate:

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Business risk
i. Industry characteristics
ii. Competitive position (e.g. marketing/ technological edge)
iii. Management Financial risk
i. Financial condition
ii. Profitability
iii. Capital structure
iv. Present and future cash flows
5.15 Credit risk review and stress testing:
The bank must develop a mechanism of independent, ongoing assessment of the credit risk
management process. All facilities except those managed on a portfolio basis should be
subjected to individual risk review at least twice in a year. More frequent review should be
conducted for new accounts where banks may not be familiar with the borrower, and for
classified or adversely rated accounts that have a higher probability of default. The results of
such review should be properly documented and reported directly to the board or its sub-
committee or senior management evading the lending authority. The purpose of such reviews
is to assess the credit administration process, the accuracy of credit rating and overall quality
of loan portfolio independent of relationship with the obligor. Banks should conduct the credit
review with updated information on the borrower’s financial and business conditions, as well
as conduct of account. Exceptions noted in the credit monitoring process should also be
evaluated for impact on the borrower’s creditworthiness. Credit review should also be
conducted on a consolidated group basis to factor in the business connections among
entities in a borrowing group. An important element of sound credit risk management is
analyzing what could potentially go wrong with individual credits and the overall credit
portfolio if conditions/environment, in which borrowers operate, change significantly. The
results of this analysis should then be factored into the assessment of the adequacy of
provisioning and capital of the bank. Such stress analysis can reveal previously undetected
areas of potential credit risk exposure that could arise in times of crisis. Possible scenarios
that banks should consider in carrying out stress testing include:

a. Significant economic or industry sector downturns

b. Adverse market-risk events and
c. Unfavorable liquidity conditions. Banks should have industry profiles in respect of all
industries where they have significant exposures. Such profiles must be
reviewed/updated on a regular basis. Each stress test should be followed by a
contingency plan as regards recommended corrective actions. Senior management
must regularly review the results of stress tests and contingency plans. The results must
serve as an important input into a review of credit risk management framework and setting
limits and provisioning levels. Banks have to follow the instructions cited in the "Revised
Guidelines on Stress Testing" issued by BB on 23 February 2011.

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5.16 Managing credit concentration risk :
Concentration risk generally designates the risk arising from an uneven distribution of
counterparties in credit or any other business relationships or from a concentration in
business sectors or geographical regions which is capable of generating losses large enough
to jeopardize an institution’s solvency.
Credit concentrations of a bank may be pre-planned and part of its business philosophy.
However, banks should make greater efforts to identify and limit concentration risk or to
demand appropriate risk premiums. Each bank should have effective internal policies,
systems and controls to identify, measure, monitor and control credit risk concentrations
(CCR). Banks should minimize concentration risk possibilities rather than providing capital
cover.
Concentration risk can be considered from either a macro (systemic) or a micro (idiosyncratic)
perspective. From the point of view of financial stability (macro perspective), the focus is on
risks for groups of banks which, for example, emerge from a joint concentration in certain
business lines or a joint regional concentration in lending.
5.17.1 Single-name concentration risk
Single-name concentration risk, i.e., the firm-specific (idiosyncratic) risk in a credit portfolio
arises from the credit risk of large borrowers. Firm-specific risk comprises the risks resulting
from the potential default of a single borrower or a legally or financially connected group of
borrowers. By contrast, systematic risk – the second risk component of a credit portfolio –
comprises all of the risks affecting several legally independent borrowers or the entire
portfolio, for example, the state of the economy or industry- sector-dependent risks.
5.17.2 Sectoral credit concentrations
Sectoral concentration in credit portfolios can be broken down into concentration in certain
sectors of industry and concentration in individual regions. While commercial credit risk
models, used widely in the financial sector, usually measure both kinds of sectoral
concentration using a similar methodology, there are many differences from a theoretical
point of view. By contrast, concentration risk from exposures to industry sectors arises from
credit dependencies between enterprises, resulting from a common sector affiliation and the
prevailing economic environment in that sector.

5.17.3 Concentrations of micro contagion

Interdependencies between enterprises owing to bilateral business relations also contribute
to the emergence of risks. Concentration in firms which are connected through business
relations is more risky than lending to enterprises without such ties. This is also referred to
as micro contagion. This kind of concentration risk at the micro level is, in terms of the
strength of dependencies, positioned between single-name concentration and sectoral
concentration.

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5.17.4 Concentration in liabilities
Concentration in liabilities, such as a concentration of certain refinancing instruments or of
investors or depositors, may also play an important role. These concentrations belong more
to a bank’s general liquidity risk, however.
5.17.5 Concentration in IT System
Concentration risk is also inherent in the area of operational risk, for example, through
dependence on a particular IT system.

5.17.6 Measuring concentration risk

Commonly used heuristic methods for measuring credit concentration risk in industrial
finance are:
5.17.7 Single borrower/group exposure concentration

Single borrower and group exposure concentration can be derived in the following ways:
1. Exposure to top 10/20/50/100 borrowers (single counterparties or group of connected
counterparties) to percentage of total loans and advances
2. Other concentration risk indicators
a. Geographical distribution
- Divisionwise
b. Exposures to sensitive sectors (as percentage of total exposures/credit portfolio)
- Capital market
- Real estate
- Other sectors with high intrinsic risk
c. Unsecured exposure to total credit exposure
d. Residual maturity-wise concentration
-Percentage of term loans with residual maturity of more than 3 years to total credit
portfolio
-Correlation with deposit/funds maturity pattern
e. Off-balance sheet exposure to total credit exposure
f. Rating-wise distribution
-Total exposures below- for example,
'BBB' to total credit exposure
-Unrated exposures to total credit exposure
5.18 Risk Grading & Risk Rating :
The Bank will rate its individual risk exposures continuously until these have been discharged
through full payment or otherwise written off. The process is similar to that undertaken during the
screening stage, i.e., credit scoring as described in Section 5.5.1c above. However, actual account

~ 52 ~
performance will be an additional consideration in classifying the exposures into one of the
following eight categories:

o Superior - Low Risk (AAA):

Industry/Business & Financials: Strong industry and business performance is indicated on the
basis of volume trends and operating margins; the account may be a dominant player in the
industry.
Account Performance: Account is cooperative, pays on time, and provides non-loan
business.
Security: Facilities are fully secured by cash deposits, government bonds or an unconditional
guarantee from a top-tier international bank or financial institution.

o Good-Satisfactory Risk (AA):

Industry/Business & Financials: The account's performance is strong, having consistently
strong earnings within a vibrant industry, good liquidity and low leverage.
Account Performance: Account is cooperative, pays on time and provides non-loan business.
Security: Security is sub-prime but solid real estate. Aggregate score would be 85 or above.

o Acceptable - Fair risk (A):

Industry/Business & Financials: Financial condition is currently strong but may be unable to
sustain any major or continued setbacks. This classification indicates strengths below that of the
previous category, but shows consistent earnings and positive cash flow.

Account Performance: Account is paying, but may be delayed by less than one month from time
to time.

Security: Security position is satisfactory. Aggregate score would be 75-84.

o Marginal -Watch list (BBB) :

Industry/Business & Financials: These borrower have an above-average risk due to strained
liquidity, higher than normal leverage, thin cash flow and/or inconsistent earnings.
Account Performance: Account is paying, but may be delayed by less than one month from time
to time.
Security: Security position could be less than satisfactory if default occurs longer than 3
months.
An aggregate score would be 65-74.

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o Special mention (BB):
Industry/Business & Financials: These borrowers deserve management's close attention
because of consecutive losses over two years with the potential to have negative net worth,
excessive leverage.
Account Performance: Account is paying, but may be delayed by less than three months from
time to time.
Security: Security position could be less than satisfactory if default occurs longer than 3 months.
An aggregate score would be 55-64.
o Substandard (B):
Financial condition is weak, and capacity or inclination to repay is in doubt. These
weaknesses jeopardize the full settlement of loans.
An aggregate score would be 45-54.

o Doubtful and Bad (Non-performing):

Full repayment of principal and interest is unlikely, and the possibility of loss is extre mely high.
The adequacy of provisions must be reviewed at least quarterly and the Bank should pursue a
loan workout arrangement (e.g., restructuring), failing which legal options should be explored to
enforce security to obtain repayment.

An aggregate score would be 35-44.

o Loss ( Non - Performing ):
The prospect of recovery is poor after exploring all options. Legal procedures have been
initiated. In accordance with Bangladesh Bank guidelines, these accounts should be written off.

An aggregate score would be below 35 .

The deterioration of any loan account is regarded as a serious development that requires the
attention of the Credit Committee. For this purpose, any account which is downgraded to
"Substandard" should be the subject of a Classified Loan Report, the format for which is attached
as Annexure 5.

Any loan limit of taka 1.00(one) crore and above will be rated by External Rating Agency. Agrani Bank
Limited will not disburse any fund to the client having credit rating less than BBB or equivalent or
unrated.

06: Credit Risk Mitigation Strategies

6.1 Credit Risk Mitigation
Banks may use different strategies such as collateral and guarantees etc. to mitigate credit
risks. Credit Risk Mitigation strategies can be of agreements made between the bank and the
borrower, or between the bank and a third party, which lower the credit risk to the bank. The
existence of credit risk mitigation is no substitute for proper loan underwriting and loan
administration. They are correctly viewed only as secondary sources of loan repayment,
never primary sources.

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Given the often lengthy, arduous, and costly process of realizing the collateral or invoking the
guarantee, banks are strongly cautioned against making their loans collateral- or guarantee
dependent. A loan is considered collateral-dependent when repayment is expected to be
provided solely by the seizure and sale of the collateral, the continued operation of the
collateral, or, sometimes, both together.
6.2 Collateral
For proper credit risk management, banks must keep track of which loans are collateralized
by which types of collateral. “Concentrations of collateral” are nearly as dangerous as
concentrations by type of loan or industry. The following scheme for categorizing loans by
collateral type is recommended:
1) Shares and securities
2) Commodities/export documents
a) Export documents
b) Commodities
i) Export commodities
ii) Import commodities
iii) Other commodities pledged or hypothecated
3) Machinery/fixed assets (excluding land, building/flat)
4) Real estate
a) Residential Real estate
b) Commercial Real estate
5) Financial obligations
6) Guarantee of individuals (personal guarantee)
7) Guarantee of institutions (corporate guarantee)
a) Guarantee of bank or NBFI
b) Other corporate guarantee
8) Miscellaneous
a) Hypothecation of crops
b) Other
9) Unsecured loans

i) Amount and type required

It is imperative that the bank, when extending credit, demand the type and amount of
collateral as stated in its credit risk management policy. The loan-to-value ratio must be low
enough to absorb declines in the value of the collateral that may occur with a small, though
not insignificant probability.
The most valuable collateral is cash and easily en-cashable financial collateral stipulated in
Risk Based Capital Adequacy Guidelines (in line with Basel III). Other collateral in order of
its quality and marketability would be marketable securities, real estate and a personal
guarantee. The order of collateral mentioned is the same as the operating cycle of the
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company. The farther away from cash, the more tenuous the value becomes. Real estate,
taken as collateral, is less liquid and marketable in the short run but is controllable and
dependable in value.
ii) Initial and ongoing valuation
Collateral is only as good as the lender’s ability to locate, identify, and legally claim the
collateral and eventually sell the collateral for enough to recover the principal, interest, plus
all liquidation costs. When collateral is taken as security, consideration must be given to the
dependability of the value, its marketability, the liquidity and the ability of the bank to control
the collateral when in the possession of the debtor and when the bank must liquidate.
Cash flow is the primary source of repayment and the collateral taken should be valued on
a liquidation basis. The bank is unlikely to be more successful with the collateral than the
borrower has been.
Determining value of collateral at the time of the inception of the loan is essential. Continuous
updated valuations are needed, depending on the length of the loan, particularly if the loan
becomes a problem loan. The techniques of valuing include the cost, or replacement value,
market, income as a going concern or liquidation, and the liquidation value. It is essential the
bank uses outside appraisers or companies familiar with auctions and liquidation experience.
If a borrower gets into trouble, the good collateral will be the first to be used by the borrower
to satisfy other debtors or suppliers. The bank should consider the costs to liquidate, which
includes foreclosure, holding the collateral for sale, and the costs of selling.
To reiterate, banks need to reassess the value of collateral on a periodic basis. Appropriate
inspection should be conducted to verify the existence and valuation of the collateral. The
frequency of such valuation is very subjective and depends upon the nature of the collateral.
For instance, credits granted against shares need revaluation on almost a daily basis,
whereas if there is mortgage of a residential property the revaluation may not be needed as
frequently

6.3 Third-party guarantees.

The bank must understand that the credit risk on a loan is not eliminated by the existence of
a third-party guarantee. The bank merely substitutes the credit risk of the guarantor for that
of its own client. With regard to guarantees, banks should evaluate the level of coverage
being provided in relation to the credit-quality and legal capacity of the guarantor. Additional
credit enhancing steps are the following:
The corporate guarantee must be supported by a Memorandum of Association (MoA) and
Articles of Association (AoA) of the company giving the corporate guarantee. Additionally,
the corporate guarantee to be approved in the board meeting of the corporate guarantor.
The guarantor company must be rated in any of the investment grade categories by at least
one ECAI.
The balance sheet of the third party giving a corporate guarantee is to be analyzed. Net
worth, total assets, profitability, existing credit lines, and security arrangements of the
company giving the corporate guarantee to be analyzed to ensure that the company is not
exposed to financial obligation beyond its capability.
Once the financial stability of the corporate guarantor has deteriorated in terms of the
above, the bank shall ask for remedial measures from the borrower (replacement/new
collateral).

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 Reciprocal guarantee arrangements between two banks will be disregarded. For example,
if Bank A guarantees loans made by Bank B to certain client(s), and Bank B guarantees
loans made by Bank A to certain client(s), only the difference between the two guaranteed
amounts will be considered as a credit enhancement for the purposes of determining the
overall level of credit risk at the bank whose borrowers benefitted from the higher amount.
Corporate Guarantee:
Bank invest against Corporate Guarantee. In case of Loan against Corporate Guarantee
Bank must follow the instruction Circular no. 138/18 Dt. 25.10.2018 which is approved By
Board (Annexure-12). Bank must ensure whether the group/company has ability to give
Corporate Guarantee as well as whether the group/company has ability to take Corporate
Guarantee as per Bangladesh Bank guidelines.

07: Managing Credit Risk in the Administration Process

7.1 Borrower follow-up and corrective action
Conducting customer calls and site visits to obtain key data is a critical and continuous
process. For this reason it is important for the lender to be out in the field as often as possible
because:
Problems are often evident here first.
Problems are often disguised in financial statements.
The loan proceeds may have been diverted to some other purpose.
Depending on the size of loan and risk rating of the customer the lender should conduct a
customer call quarterly. To do this the lender should:
Develop a call schedule plan.
Plan other necessary data gathering.
Determine the frequency of site visits by utilizing the loan classification. The less
favorable the classification, the more frequent the visits should be.
In addition, banks need to watch carefully the financial standing of the borrowers. The key
financial performance indicators on profitability, equity, leverage and liquidity should be
analyzed. While making such analysis due consideration should be given to
business/industry risk, borrowers' position within the industry and external factors such as
economic condition, government policies and regulations. For companies whose financial
position is dependent on key management personnel and/or shareholders, for example, in
small and medium enterprises, institutions would need to pay particular attention to the
assessment of the capability and capacity of the management/ shareholder(s).
In case of an existing borrower, banks should monitor the borrower’s account activity,
repayment history and instances of excesses over credit limits. For trade financing, banks
should monitor cases of repeat in extensions of due dates for trust receipts and bills.
Banks should regularly review the credit in terms of the borrower’s ability to adhere to financial
covenants stated in the credit agreement, and any breach detected should be addressed
promptly.

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7.2 Independent internal loan review and changes to the credit risk rating
The concept of an independent, internal loan review is absolutely critical to proper credit
risk management.
a) Loan Review vs. Loan Monitoring
Loan Review is a strategic process, a staff function:
Accomplished by an objective third party (not the loan officer)
Includes assessment and evaluation of individual loans, loan portfolio components
Attempts to assess the loan portfolio as a whole
May make recommendations for achieving corporate strategic objectives through
the loan portfolio
Loan Monitoring is a tactical process, a line function:
Accomplished by loan officer

repayment

b) Objectives of Loan Review

risk ratings assigned to individual loans

Assess adequacy of the loan loss reserve with conclusions based on:
Historical loan loss and recovery experience,
Projected loan losses and recoveries,
Review of problem loans,
Overall portfolio quality,
Current and anticipated economic conditions, and
Ability of the bank to replenish (loan loss) reserves through earnings.
Perspective adopted by loan review should be that of a potential purchaser of the loan
portfolio on a non-recourse basis.
Determine Trends
e trends and identify potential
problem areas and/or unique opportunities, after examination of such factors
as the quality of loan administration and personnel, credit concentrations, and
vulnerability to economic conditions.
A review of current conditions alone is not sufficient because banking is a
dynamic business, never static.
Identify Problems
Credit concentrations may pose a problem, e.g.
Once identified, examination of the source of the problem is important.
Perhaps loan administration/monitoring is weak, e.g.
Evaluate adherence to loan policy, laws, and regulations
Are individual loans in compliance with policy, laws and regulations?
Why are the violations occurring?
Is there a pattern to non-compliance?
Perhaps the bank’s loan policy is unrealistic or should be altered
~ 58 ~
 Perhaps additional training of loan officers is needed
Assess portfolio in relation to profitability and funds management objectives
Evaluate profitability of individual credits.
Evaluate the profitability of the portfolio as a whole.
Evaluate effectiveness of loan administration and personnel by focusing on the
effectiveness of:
Loan policy,
Loan approval systems,
Ongoing loan monitoring,
Problem loan administration, and
Loan review itself.
If warranted, make recommendations for improvement.
Loan review should assess the loan management process, credit quality, and the results/
profitability of the loan portfolio, not credit quality alone. External inspection by BB is not a
substitute for a strong loan review function within the bank.
c) Chief Elements of Loan Review

Senior Management Support

Loan review should report to the board of directors and receive strong support from senior
management.
Objectivity is critical. Senior management sets the example; it must be willing to accept
unfavorable/undesired information without recriminations.
Credibility is vital. A good loan review team acts as a consultant, identifying problems and
recommending solutions. Loan review staff should be competent and experienced. Loan
review can provide excellent training for potential loan managers.
d) Organizational and Reporting Considerations
Loan review is usually an independent function or part of the overall independent
auditing function of the bank. Ideally, it reports to a committee of the board of directors
of the bank. The purpose of an independent loan review function is the pursuit of
objectivity. It is of critical importance, however, that loan review personnel be
competent and have lending experience, in order to maintain credibility and
communication with the lending function. If the loan review department has no
credibility and/or poor communication with the lending function, it cannot perform its
function well.
e) How Loan Review Performs Its Function
Determine what is to be reviewed and when, given time and resource limitations.
Loans reviewed should be representative of the portfolio as a whole.
Establish a minimum loan amount for review.
Employ random sampling on a statistical basis.
(Suspected) Industry concentrations must be detected and examined.
Borrowers with certain financial characteristics should be scrutinized, e.g., erratic
earnings, interest-sensitive leverage which exceeds industry standards.
Examine credits of a particular branch or officer where weakness or incompetence
is suspected.
~ 59 ~
 Frequency of loan review is based on risk rating – the higher the risk the more
frequent the review.
Monitor situations where corrective action has been recommended.
Be present at loan department meetings to review loan activity for conformity with
original repayment programs, pricing, funds management goals, appropriate
monitoring.

f) Content of Loan Review

Five specific issues should be addressed when examining individual credits:
Credit Quality
Documentation
Liquidation of Collateral
Pricing and Funds Management Objectives
Compliance With Loan Policy, Laws and Regulations
g) Credit Quality
Three fundamental questions:
Is the risk different from that perceived by the lender?
What is the probability of repayment in accordance with terms?
Is current monitoring adequate?
Use of a risk rating system, as described in 3)1)i)2 above, is essential in order to
reduce the element of subjectivity as much as possible. In examining a credit, loan
review must either confirm the risk rating assigned by the lender or change it and
substantiate the change.

h) Documentation
Documentation is either correct or incorrect. Loan review should point out errors with
the aim of improving protection for the bank, strengthening the position of the bank in
the event of a problem. Additional protection may well be recommended in the case of
deteriorating credits. Loan review should be concerned both with identifying existing
problems and eliminating future problems.

i) Liquidation Value of Collateral

The only relevant value to apply to collateral is its liquidation value, because collateral
is needed only in the event that it must be liquidated to repay a loan. Book values are
meaningless.
Loan review personnel must be experienced in working with collateral, in identifying
liquidation values, in knowing what is involved in liquidations. It is the responsibility of loan
review to provide an objective third-party opinion so that realistic loan-to-collateral
relationships are maintained by lenders.

Loan review:

Loan review is an important tool which can help to identify the Credit risk. A loan review
provides an assessment of the overall quality of a loan portfolio.
Zonal Office, Circle Office will review every Loan file of a branch periodically. Audit Division
at the time of audit of a branch will review every Loan file. If any deviation/ discrepancy is

~ 60 ~
found they will report to the Head of ICC. Head of ICC will report to Audit Committee & Board
on monthly basis.

7.3 Timely identification of problem assets

The standard practice of “looking back” at past due status, presence or absence of collateral,
and other factors resulted in provisions that turned out to be grossly inadequate on both an
aggregate and individual credit basis. A more “forward-looking” approach to the identification
of problem loans and the establishment of adequate provisions was clearly needed, and
international standards such as International Financial Reporting Standard 9 on the
classification and measurement of financial assets are being adopted to provide this forward-
looking approach. The independent, internal loan review described in the previous section is
the appropriate framework through which to apply this forward-looking approach.

As mentioned in the previous section on loan review, banks, in reviewing and classifying their
loans, should be on the alert for developments in the macroeconomic, industry, and
competitive environment that could lead to financial problems for those borrowers in the
future. The subjective factors given in BRPD’s Circular No. 14 of 23 September 2012, “Master
Circular: Loan Classification and Provisioning” and any change thereafter must be taken into
account in determining the classification category, and banks must avoid taking a mechanistic
approach to identifying and classifying their problem loans.
More specifically, the following warning signs are to be considered by banks in predicting
that a loan will become a problem loan:

a) Documentation Weakness

departments

ner signatures

b) Collateral Deterioration

sters

c) Extended Credit and High Use of Lines of Credit

ts/low balances in current account

~ 61 ~
 d) Other Indications of Problem Loans

nagement
7.4 The role of provisioning in managing credit risk
Provisions for loan losses (alternatively known as loan loss reserves, loan loss allowances,
valuation allowances, etc.) are more than just an accounting entry on the liability side of a
bank’s balance sheet. In the aggregate, the level of provisions must reflect the expected loss
on each loan. General provisions are applied to portions of the portfolio (currently, on
unclassified loans and loans in the Special Mention Account) on a portfolio basis, based on
the expectation that some of the loans (without knowing which) will be downgraded in the
future and require specific provisions. Specific provisions are applied to individual classified
loans as an estimation of expected losses on these individual loans.

These balance sheet provisions, formed by debiting expense accounts on the profit and loss
statement also known as “provisions,” play an essential role in managing credit risk. Without
accurate provisions, the Board and senior management do not know completely whether or
not certain types of lending are profitable on a risk-adjusted basis. Funds could then flow to
these unprofitable lending activities at the expense of more profitable activities. Moreover, if
loans are overvalued on the balance sheet, then capital will also be overvalued, leading to
misallocation of the bank’s scarce financial resources and interfering with all activities of risk
management that are tied to the level of capital.

The Board and senior management should recognize that loan losses are inherent in their
portfolios, and provisioning policy does not alter the timing and magnitude of these losses.
Higher or lower provisions only alter the timing of recognition of these losses. Accordingly,
the bank’s long-run profitability is unaffected by the bank’s stance on provisioning.

08: Managing Credit Risk with Appropriate

Management Information Systems (MIS)
A Management Information System (MIS) must provide quality data to the Board and senior
management on the segmented portfolio on a timely basis that will enable the analysis of the
current and future risk, and exposure by both the business areas responsible for its
management. The business must have and maintain an accurate database containing all
application information for both approved and declined applications, collateral and security
information. Data retention specifications must be incorporated in the Credit Instruction
Manual. Data archiving procedures and MIS must be adequate to facilitate the development
of credit scores and models when required.

The following indicators (both number and amount where relevant) must be traced and
tracked on a monthly basis at the each business level for Single Products and Multi products:

8.1 Booking MIS

Applications received, Processed
Applications Approved, Declined
~ 62 ~
 Approval rate, Average credit score of approved limits
High side overrides/ Low side overrides, Policy Overrides
New Business Booked in ‘Amount’ and ‘Number’
Bank Directors’ Loan Information
Rejection Reason Analysis

8.2 Portfolio MIS

Limit Increases, Limit Decreases, Renewals
Unutilized and Undrawn amounts
Attrition (voluntary and involuntary)
Net Interest Income (NII) %, Net Fees Income (NFI) %, Operating Profit %, Trading
Profit (TP)%, Risk Adjusted Return (RAR) % [Note: These ratios and percentages
seem to apply to the entire bank, not to the credit function or individual portfolios
of credits.]
Delinquency (30+DPD, 60+DPD, 90+DPD, 120+ DPD, 150+ DPD, 180+ DPD or
more)
First Installment Default (FID) or First Payment Defaults
Risk grading of customer exposures
Early Alert Reporting (EA Code wise), Classified Account Reporting, Loss Given
Default, Collateral Values, Deviations.
Overdue Annual Reviews (aged) and Extended Accounts
Gross Write-offs, New Provisions, Releases, Recoveries, Net Bad Debt,
Provisioning Balance
Repossessions/foreclosures - initiated, in progress, Inventory
Expenses associated with foreclosure process
Foreclosure Assets sold, Write-downs taken periodic and on sale
Expenses incurred in maintaining and selling repossessed property
Database of Non-Performing Loans (NPLs) that are due to environmental reasons
Clients’ Classification based on Environmental and Social Risk Rating (ESRR)
Environmental and Social Risk Rating (ESRR) wise portfolio MIS
Monthly Loan Set off data and reason analysis report
DLA wise loan performance report
8.3 Segmentation MIS
The business must have the ability to generate reports for the above indictors for single and
multiple products (on an as needed basis and, where relevant) by:
Original loan amount or credit line
Debt burden
Risk Score range
Customer profile
Collateral Profile (fully secured/ partly secured etc), Breakdown of collaterals held
Loan purpose
Loan Size and Tenor
LTV and geographic location
Customer Relationship based on Turnover
~ 63 ~
 Industry according to SBS code.
Segment/industry-wise/product-wise loan sanctioned vs. utilization vs. outstanding
Utilization of approved limits (TL / WC)
Risk based pricing performance monitoring
Loans under “different customer group” performance report
Credit Test report if any test is undertaken
Product wise campaign reports

All indicators must be compared and reviewed with historical performance, expected results
and competitive benchmarks where available. Forecasts for future periods must be updated
based on actual performance and revised expectations.

8.4 Sufficient data to disaggregate loan portfolio by loan type, borrower type,
rating grade, industry or sector, type of collateral, etc.; with concentrations
highlighted
If they have not already done so, banks must begin immediately to disaggregate their loan
portfolios according to the schemes shown above in 2.7-ii. Portfolios must also be
disaggregated by collateral type, as shown in 6.2 above.

8.5 Sufficient data to track loss experience on loans disaggregated by above

factors
Once the disaggregation of the loan portfolio is in place, banks must begin immediately to
record loss experience by type of loan, disaggregated across all the categories. The reason
for this database development and maintenance is threefold: first, to provide, over time, better
estimates of “expected loss” to be used in the setting of loan-loss provisions and loan pricing;
second, to steer the Board and senior management away from types of lending that have
historically been unprofitable; and third, to allow the eventual construction of probability
distributions, both at the level of the individual bank and the banking system as a whole, that
are used in the calculation of economic capital and in the Internal Ratings Based approach
to the determination of risk weights in the Basel III capital requirement calculation.

For each type of loan (disaggregated data) and for the breakdown of industrial loans, the
bank must collect the following data on a quarterly basis:

Outstanding principal balance of loans written off during the quarter (excluding
accrued interest receivable)
Estimated market value of collateral related to loans written off during the quarter,
subdivided into:
Collateral already repossessed by the bank
Collateral not yet repossessed by the bank
Specific provisions related to loans written off, debited at the time of write-off
Cash recoveries related to loans written off during the quarter
Gain or loss on sale of collateral repossessed by the bank

The net credit loss related to these write-offs, then, would be the outstanding principal
balance minus the value of collateral already repossessed, minus specific provisions, minus
any cash recoveries on these loans, minus or plus any gain or loss on the sale of the
~ 64 ~
repossessed collateral. (It is to be understood that as the quarters proceed, the quarterly net
credit losses on various types of loans will not be a smooth data set, but will be subject to
sharp fluctuations. Over time, however, the quarterly figures can be smoothed into a measure
of “typical” quarterly losses on each segment of the portfolio.)

8.6 Sufficient data to quantify embedded losses in the loan portfolio that have
not yet been recognized
Particularly on loans that have been rescheduled or restructured, there may be a degree of
regulatory forbearance concerning provisioning of problem loans from time to time.
Notwithstanding any such regulatory or accounting forbearance, it is imperative that
management quantify “embedded” losses in the loan portfolio that have not yet been
recognized in the audited financial statements or in regulatory reports to BB.

8.7 Periodic stress testing

An important element of sound credit risk management is analyzing what could potentially go
wrong with individual credits and the overall credit portfolio if conditions/environment, in which
borrowers operate, change significantly. The results of this analysis should then be factored
into the assessment of the adequacy of provisioning and capital of the bank. Such stress
analysis can reveal previously undetected areas of potential credit risk exposure that could
arise in times of crisis.
Possible scenarios that banks should consider in carrying out stress testing include:
Significant economic or industry sector downturns;
Adverse market-risk events; and
Unfavorable liquidity conditions.
Banks should have industry profiles in respect of all industries where they have significant
exposures. Such profiles must be reviewed/updated on a regular basis. Each stress test
should be followed by a contingency plan as regards recommended corrective actions. Senior
management must regularly review the results of stress tests and contingency plans. The
results must serve as an important input into a review of credit risk management framework
and setting limits and provisioning levels.

8.8 The role of loss control limits (“management action triggers”) in adjusting
credit policies, authorities, limits, required credit enhancements, etc.
Although they were developed primarily to manage market risk, loss control limits (also known
as management action triggers) are usefully applied to credit risk management as well. A
loss control limit is a type of limit that requires specific management action if it is approached
or breached. When tracking the loss experience on the disaggregated portfolio, the MIS
should warn the Board and senior management when the loss experience on a particular
type of loan is approaching the established limit (which must also be clearly indicated in the
documentation) so that management can make an informed decision about whether or not to
cease or scale back on that type of lending.

09: Managing Credit Risk of Problem Assets

Problem loans are an inevitable consequence of lending. Any time a loan is funded,
unforeseen events could arise and make it difficult for the borrower to live up to the terms of
the loan agreement. Problem loans often begin with commercial loan officer errors – for

~ 65 ~
example, inaccurately assessing the character of the borrower, misinterpreting the figures on
a spread sheet, or simply not saying no to the loan request. These causes of problem loans
should and can be minimized.

9.1 Interaction with borrower

Once a potential problem loan has been identified, the banker needs to follow following steps:

 Meet borrower by any means.

 Discuss the problem, explore available alternatives to solve the problem, and
establish what actions are acceptable and not acceptable.
 The lender decides what additional information, such as monthly financial
statements, the borrower should supply, so that the bank can more closely
track the situation.
 The borrowers also outline interim steps to resolve the problem.

It is not enough to send a letter pointing out how the borrower is in violation of various terms
of the loan documents. The response, if one comes at all, likely will be unsatisfactory; most
borrowers deny the problem or believe that if anything is wrong it will correct itself over time.
Instead, call the borrower, inform him of the bank’s concerns, and schedule a meeting. The
lender thus impresses on the borrower the bank’s desire to cooperate, without downplaying
the bank’s resolve to get to the bottom of the problem quickly. A meeting helps to further
define the best course of action – whether to continue working with the borrower, ask for
repayment, or move to liquidate the collateral. For example, an evasive or extremely
uncooperative borrower quickly enables the lender to narrow the bank’s options.

What action a lender takes depends on a thorough analysis of the causes of the problem loan
and the likelihood of their resolution. However, regardless of whether the bank ultimately
decides to continue working with the borrower or to liquidate, a cooperative effort is important.
Avoiding unnecessary animosity is good customer relations and helps resolve the problem
with a minimum of stress for both the bank and borrower. If the borrower is made to feel that
the situation is hopeless, he or she may act precipitously. It is important, therefore, that the
lender understands the borrower’s emotional state and knows how to deal with him so that
the bank’s objective of debt repayment is realized.

9.2 Appropriateness of rescheduling as a means to manage credit risk

In certain rare situations, the borrower may find itself in a period of temporary financial
distress. Loan rescheduling – the stretching out over a longer time period of required
payments of principal and/or interest – may be an appropriate way of handling the problem
loan situation, but only if the bank is fairly certain that the borrower can fulfill the rescheduled
terms of the contract. In no way must rescheduling be used if the bank has significant doubt
concerning the borrower’s willingness or ability to repay over the long term.

~ 66 ~
9.3 Appropriateness of restructuring as a means to manage credit risk

If the borrower’s financial distress is more permanent rather than temporary, restructuring
may be appropriate in order to maximize the present value of the future cash flows that can
reasonably be expected from the borrower.

As with rescheduling, banks should not restructure any loan unless the bank is fairly certain
that the borrower can fulfill the restructured terms. In all cases, restructuring must be
conducted only in accordance with BB directives from time to time, including the formation of
necessary provisions. (Additional provisions to capture all expected losses from the
restructuring activity may also be established, and, at the very least, the tracking of these
embedded losses should be part of MIS reports to the Board and senior management.)

9.4 Credit Recovery

Banks will put in place systems to ensure that management is kept advised on a regular basis
on all developments in the recovery process. The following issues shall be addressed while
conducts credit recovery functions:

receivership or liquidation as appropriate.

expected losses.

The management of problem loans (NPLs) must be a dynamic process, and the associated
strategy together with the adequacy of provisions must be regularly reviewed. A process
should be established to share the lessons learned from the experience of credit losses in
order to update the lending guidelines.

9.5 Write-off, repossession, and disposition of collateral

When the bank considers an account to be no longer collectable, it will "write off' the account
(i.e. the amount is removed from the asset portion of a balance sheet and recorded as an
expense item on the income statement or adjusted against provision). Depending on the
product, the point at which this occurs may vary, but at a minimum, banks are to follow the
loan write off policies issued by BB from time to time..

When all security has been realized and all recovery possibility have been exhausted, a
decision may be made to write off, applying the provision in place for this purpose or debiting
profit & loss account. This shall be approved by the Board of Directors.

It is not an appropriate policy for a bank to "nurse" or warehouse repossessed properties until
the market picks up, but to dispose them into the market quickly and at the best price.
Disposal methods should be reviewed continuously to ensure the most effective method is
being used. The asset disposal policy must conform to the Transfer of Property Act, and all
other applicable laws related thereto. A Designated Division shall be responsible for

~ 67 ~
repossessed asset disposal with assistance of Legal Division and other concerned divisions
of the bank.

While repossessed assets are awaiting disposal, the bank should make sure that proper
administration is undertaken on these assets to protect their value. Asset disposal should
start immediately when the asset becomes ready for sale. This is specifically defined as the
time when:

The client surrenders voluntarily the asset or has agreed for the bank to sell the
property.

bank is awarded possession of the property by legal or other means. As the

case may be, titles and ownership documents have been transferred to the bank's
name and registered with the appropriate Land Registry.
Basic principles to guide the bank in its efforts for asset disposal include:

reasonable time frame from acquisition / repossession.

upkeep and maintenance of the assets to a minimum.

possible date is a lower-risk strategy than holding the assets for a projected upturn in
market prices in the future, which often do not materialize, and in the meantime the
Bank is saddled with a nonearning asset.

Banks are not in the business of asset and property trading or management, and thus are ill-
equipped to take positions on the market trends.

~ 68 ~
 10. ROLES AND RESPONSIBILITIES OF CREDIT OFFICERS & STAFF

10.1 Officers and staff involved in origination and management of credit

The foregoing policies and guidelines can only be effective with the deployment of highly-
motivated and skilled officers and staff at all levels of the organization. Accordingly, the Bank
shall rigorously apply stringent screening processes in selecting personnel for all its
lending and investment functions. In addition, these personnel must undergo training in
both basic and advanced courses in order to develop a well-rounded knowledge-skills set.
For this purpose, the Bank's Training Institute shall develop certificate programs in
accordance with the syllabus shown in Annexure 6.

10.2 Officers involved in recommendation, sanction, disbursement and recovery of

credits

Accepting loan proposals, scrutiny, determining demand, supervising, sanctioning and

recovery related circulated rules, procedures and prevailing regulations and conditions of
sanction advice should be carried out properly. Due to inefficient decision of loan sanctioning
officer if a disbursed loan becomes overdue he/she would be responsible for that. The
disbursing officer will be responsible for quality of securities, quantity and overall quality of
loan. He/she will also be responsible for completing loan documentation before disbursing
loan. When the loan is disbursed it will be assumed that the rules and procedures given from
time to time by different circulars/instruction circulars of bank and also the conditions of
sanction advice are followed properly. The recommender, supervisor and recovery officers
will be responsible for their respective roles. Branch managers and Zonal Heads will take
necessary steps for recovery of loans. At any cost no loan can be allowed to be time bared.

~ 69 ~
 Annexure -1
Page 1

Agrani Bank Limited

........................... Branch
.......................................

RISK SCORING AND CREDIT RISK GRADING SCORE CARD Page : 1 of 2

Reference No: Date:

Borrower
Group Name (if any) Aggregate Score:
Branch:
Industry/Sector
Substandard
Date of Financials Risk
Completed by Grading

Approved by
Number Grading Short Score
Fully cash secured, Secured
1 Superior SUP
by Government
2 Good GD 85+
3 Acceptable ACCPT 75-84
4 Marginal/Watch list MG/WL 65-74
5 Special Mention SM 55-64
6 Substandard SS 45-54
7 Doubtful DF 35-44
8 Bad/Loss BL <35

Note: the figures shown in the following template are given for example purposes only

~ 70 ~
 Annexure -1
Page 2
Criteria Weight Parameter Score Actual Score
Parameter Obtained
A. Financial Risk 50%
1. Leverage: (15%) Less than 0.25 x 15 100.01 0
Debt Equity Ratio (x)-Times 0.26 x to 0.35 x 14
Total Liabilities to Tangible Net worth. 0.36 x to 0.50 x 13
All calculations should be based on 0.51 x to 0.75 x 12
annual financial statements of the 0.76 x to 1.25 x 11
borrower (audited preferred). 1.26 x to 2.00 x 10
2.01 x to 2.50 x 8
2.51 x to 2.75 x 7
More than 2.75 x 0
2. Liquidity : (15%) Greater than 2.74x 15 0.79 7
Current Ratio (x) -Times 2.50 x to 2.74 x 14
Current Assets to Current Liabilities 2.00 x to 2.49 x 13
1.50 x to 1.99 x 12
1.10 x to 1.49 x 11
0.90 x to 1.09 x 10
0.80 x to 0.89 x 8
0.70 x to 0.79 x 7
Less that 0.70x 0
3. Profitability : (15%) Greater than 25% 15 22.27% 14
Operating Profit Margin (%) 20% to 24% 14
(*EBITDA/Net Sales) multiply (X)100 15% to 19% 13
* EBITDA = Earning before Interest, 10% to 14% 12
Tax, Depreciation and Amortization. 7% to 9% 10
4% to 6% 9
1% to 3% 7
Less than 1% 0
4. Coverage: (5%) More than 2.00x 5 0
Interest Coverage Ratio (x) - Times More than 1.51 x Less than 4
*EBIT 2.00x 3 0.65
Interest on debt More than 1.25 x Less than 2
*EBIT = Earning before Interest and Tax. 1.50x 0
More than 1.00 x Less than
1.24 x
Less than 1.00x
Total Score- Financial Risk 50 21

B. Business/Industry Risk 18%

1. Size of Business >60.00 5 10.00 3
(Net Sales in BDT crore) 30.00 -59.99 4
10.00 -29.99 3
The size of the borrower's business measured by the most 5.00 - 9.99 2
recent year's total sales, Preferably audited financial 2.50 - 4.99 1
statements. < 2.50 0

2. Age of Business > 10 Years 3 1 0

The number of years the borrower has been engaged in > 5 -10 Years
the primary line of business. 2 - 5 Years
< 2 Years.
3. Business Outlook Favorable 3 Stable 2
A Critical assessment of medium term prospects of the Stable 2
borrower, taking into account the industry, market share Slightly Uncertain 1
and economic factors. Cause for Concern 0
4. Industry Growth Strong (10%+) 3 Strong (10%+) 3
Good (>5%-10%) 2
Moderate (1%-5%) 1
No Growth (<1%) 0
5. Market Competition Dominant Player 2 Moderately 1
Moderately Competitive 1 Competitive
Highly Competitive 0

6. Entry/Exit Barriers Difficult 2 Difficult 2

Average 1
Easy 0

Total Score-Business/Industry Risk 18

~ 71 ~
 Annexure -1 Page 3
Borrower Name:
C. Management Risk 12%
1. Experience More than 10 years in the related line of business 5 More than 10 5
Quality of management based on the 5-10 years in the related line of business years in the related
aggregate number of years that the 1-5 years in the related line of business 3 line of business
Senior Management Team has been No experience 2
in the industry. 0
2. Second Line/Succession Ready Succession 4 Ready Succession 4
Succession within 1-2 years 3
Succession within 2-3 years 2
Succession in question 0
3. Term Work Very Good 3 Regular Confect 0
Moderate 2
Poor 1
Regular Confect 0

Total Score- Management Risk 12 9

D. Security Risk 10%
1. Security Coverage 4 2nd 2
3 charge/inferior
2 charge
(Primary) 1
0

2. Collateral Coverage Registered Mortgage on Municipal 4 Negative lien on 1

corporation/Prime Area property collateral
(Property Location) Registered Mortgage on Pourashava/Semi-Urban 3
area property
Equitable Mortgage or No property but Plant and 2
Machinery as collateral Negative lien on collateral
Negative lien on collateral 1
No collateral
Plant 0
3. Support Personal Guarantee with high net worth or Strong 2 Personal 2
Corporate Guarantee Personal Guarantees or Guarantee with
(Guarantee) Corporate Guarantee with average financial 1 high net worth or
strength Strong Corporate
No support/guarantee 0 Guarantee

Total Score-Security Risk 10 5

E. Relationship Risk More than 3 years Accounts with faultless record 5 More than 3 years 5
1. Account Conduct Less than 3 years Accounts with faultless record Accounts with
Accounts having satisfactory dealings with some 4 faultless record
late payments.
Frequent Past dues & Irregular dealings in 2
account
0
2. Utilization of Limit More than 60% 2 61.00% 2
(actual/projection) 40%- 60% 1
Less than 40% 0

3. Compliance of Full Compliance 2 No Compliance 0

Covenants/conditions Some Non-Compliance 1
No Compliance 0

4. Personal Deposits. Personal accounts of the key business 1 Personal accounts 1

The extent to which the bank Sponsors/Principals are maintained in the bank, of the key
maintains a personal banking with significant deposits business
relationship with the key business 0 Sponsors/Principa
sponsors/Principal. No depository relationship ls are maintained
in the bank, with
significant
deposits

Total Score- Relationship Risk 10 8

Grand Total All Risk 100 54

~ 72 ~
 Annexure -2

Credit Documentation Checklist

“Documentation” should be viewed as a process of ensuring shield against risk of non-repayment of

loan comprehensively in 03 (three) dimensions:
i) The Type of Borrower
ii) The Type of Loan or credit facilities &
iii) The Type of Security Arrangement
General Documents: In General, required papers and documents to be obtained/ maintained
irrespective of type of borrower, loan and security are:
1. Demand Promissory Note
2. Letter of Authority
3. Letter of Arrangement
4. Letter of Disbursement
5. Letter of Revival
6. Personal Networth statement
7. Copy of National ID
8. Credit Approach in Business Pad of the Borrower
9. Credit Application in prescribed format duly filled in
10. Photograph of the Borrower
11. Photograph of the Business/Inventory
12. Photograph of the Mortgaged Property
13. Up to date CIB Report
14. Credit report of the Borrower/Supplier
15. Liability Declaration of the borrower along with an Undertaking that they have no liability with
any bank or financial institution excepting as declared.
16. Undertaking stating that, they will not avail any credit facility from any other bank or financial
institution without prior consent of the bank.
17. Undertaking stating that customer does not have any relationship as Director or Sponsor with
the bank.
18. Undertaking stating that customer shall not sell or transfer the ownership of the
business/factory/shop until bank dues are fully paid or without NOC of the bank.
19. Credit Risk Grading Score Sheet (CRGS)
20. Post-dated cheque covering the credit facility
21. Acceptance of the Borrower to the Sanction Letter
22. Proper Stamping

~ 73 ~
 (Page No-2)
Specific Charge Documents and Papers to be obtained:

SL Type of Borrower Document

1. Individual : •Letter of Guarantee of a Third Person
Borrower •Personal Net-Worth Statement (PNS) of Guarantor
•Personal Net-Worth Statement (PNS) of the Borrower
• Letter of Guarantee of the Spouse of the Borrower

Proprietorship Firm : •Trade License (up to date)

2. • Personal Net-Worth Statement (PNS) of Proprietor

3. Partnership Firm : •Trade License (up to date)

•Partnership Deed (Registered)
•Letter of Guarantee of the partners
•Personal Net-Worth Statement (PNS) of Partners
•Letter of Partnership.
• Partnership Account Agreement.

Limited Company : •Trade License (up to date)

4. •Memorandum & Articles of Association (Certified by
RJSC)
•List/Personal profile of the Directors
•Certificate of Incorporation
•Form XII Certified by RJSC (Particulars of Directors)
•Board Resolution in respect of availing loans & execution
of document with Bank
•Letter of Guarantee of the Directors
•Personal Net-Worth Statement (PNS) of Directors
•Deed of Mortgage & Hypothecation for creation of Charge
on fixed & floating assets (existing & future) with
RJSC
•Modification of charge with RJSC through form 19.
•Certified copy of charge creation certificate from RJSC
•Undertaking stating that the borrower shall not make any
amendment or alteration in Memorandum & Article
of Association without prior approval of Bank.
•Approval of the Bank for any inclusion or exclusion of
Directors in & from the company
•Certificate of Commencement (In case of Public Limited
Company)
•Joint venture Agreement (In case of Joint Venture
company)
• BOI Permission (In case of Joint venture company)

~ 74 ~
 (Page No-3)
As per type of Loan / Credit facility:

SL Type of Loan Document

1. CC (Hypo) : •Letter of Hypothecation of stock in Trade
•Supplementary Letter of Hypothecation
•IGPA to sale Hypothecated goods
•Letter of Continuity
•Periodical Stock Report
•Letter of Disclaimer form the owner of rented
warehouse
• Insurance Policy cover note

2. CC (Pledge) : •Letter of Pledge

•IGPA to sale Pledged goods
•Letter of Continuity
•Periodical Stock Report
•Letter of Disclaimer form the owner of rented
Warehouse
• Insurance Policy cover note

3. Overdraft : •Letter of Continuity

(General) • Insurance Policy cover note

4. SOD (Work : •Bid Document/ Tender Notice

Order) •Letter of Awarding
• Assignment of Bills against work order

5. SOD (FO) : •The Financial Instrument duly discharged on the Back

•Lien on the Financial Instrument
•Letter of Continuity

6. SOD (Scheme •Lien on the Scheme Deposit

Deposit) • Letter of Continuity

7. Term Loan : •Term Loan Agreement

•Letter of Installment
•Letter of Undertaking
•Amortization Schedule
• Insurance Policy cover note

~ 75 ~
 (Page No-4)

8. Home Loan for : •Power of attorney for developing the property

purchase of Flat or •Letter of Installment
Floor Space •Letter of Undertaking
•Amortization Schedule
•Letter of Allotment of Flat or Floor Space
•Tripartite Agreement among Purchaser, Developer and
Bank (If under construction)
•Undertaking of the borrower to the effect that he will
mortgage the flat/floor space favg the Bank at the
moment the same is registered in his name by the
seller.(If Under construction)
•Agreement between Land Owner & Developer
•Sharing Agreement between Land Owner & Developer
• Copy of approved plan of construction from concerned
authority.

9. Consumers’ : • PNS of the Borrower

loan/Personal Loan •PNS of the Guarantor
•Letter of Guarantee of the Guarantor
• Letter of Guarantee of the Spouse of the Borrower
• Insurance Policy cover note

10. SME/Small Loan : • As per type of borrower & nature of security

11. Lease Finance : •Lease Agreement

•Lease Execution Certificate
•Quotation / Price Offer duly accepted by borrower
•BRTA Registration Slip (In case of Motor Vehicle)
•Insurance Policy cover note

12. Hire Purchase Loan : •Hire Purchase Agreement

•Quotation / Price Offer duly accepted by borrower
•BRTA Registration Slip (In case of Motor Vehicle)
• Insurance Policy cover note
13. House Building Loan : •Letter of Installment
•Letter of Undertaking
•Amortization Schedule
• Approved Plan form the competent authority

~ 76 ~
 (Page No-5)

14. House Building : •Power of Attorney for development of property

Loan(To Developer) •Agreement between Land owner & Developer
•Sharing Agreement between Land owner & Developer
•Copy of approved plan of construction from concerned authority
•Letter of Installment
•Letter of Undertaking
•Amortization schedule
•Copy of Title deed of the property on which construction will be
made
•Copy of Bia deed (previous deed in support of Title deed)

15. IDBP : •Acceptance of L/C issuing Bank (duly verified)

• Letter of Indemnity

16. Guarantee Facility : •Counter Guarantee

•Bid Document or the document where requirement of
Guarantee stated

17. Syndicated Loan : •Facility Agreement

•Escrow Account Agreement
•Creation of Paripassu Sharing charge with RJSC
•Participation Letter
•Subordination Agreement
•Deed of Floating charge on the Balance for Escrow Account
•Accepted Mandate Letter
•Information Memorandum
• Participant’s Commitment Letter

18. LTR : •Letter of Trust Receipt

• Insurance Policy Cover note

~ 77 ~
 (Page No-6)

SL Type of Security Document

Corporate Guarantee : •Corporate Guarantee of Guarantor Company on
1. Non-Judicial Stamp
•Resolution of the Board of the Guarantor Company
(Memorandum of the Guarantor company must permit
to do so.) regarding Guarantee.
Hypothecation of : •Letter of Hypothecation
2. Stock/Receivables •IGPA to sale hypothecated Stock / Receivables
• Letter of disclaimer form the owner of Rented
Warehouse
Pledge of goods in : •Letterof Pledge
3. Trade •IGPA to sell pledged goods
• Letter of disclaimer form the owner of rented
Warehouse
Assignment of Bill : •Assignment of Bill by the beneficiary through IGPA
4. •Letter of Acceptance of Assignment by the work
giving authority
• Original Work Order
5. Lien on Financial : •The Instrument duly discharged on the back of it.
Instrument like FDR •Letter of Lien (‘1st Party Lien’ - if the Borrower is
etc. the owner of the Instrument, ‘3rd Party Lien’- if the
Owner of the Instrument is one other than Borrower)
•Letter of Authority to encash the instrument as &
when needed by the Bank
• Confirmation of Lien (Marking of Lien) from the
issuing Bank.

Lien on Demated •NOC of the Company in case of Sponsor’s Share

6. Stock/Shares •Confiscate Request Form (Form19-1) duly
signed by the pledgor.
•Pledge Request form (Bye Law 11.9.3) duly
signed by the holder of the share.
•Pledge setup Acknowledgement from Brokerage
House
• CDBL generated copy of Pledge Setup
7. Pari-Passu Security : •Pari Passu Security Sharing Agreement among
7 lenders.
. •NOC from existing lenders if the property/assets
are already under pari pasu sharing.
•Certificate of RJSC on creation of charge on
Fixed & floating assets of the company.
•Form XIX for modification of charge on Fixed &
floating assets with RJSC

~ 78 ~
 (Page No-7)

Mortgage of Landed :
8 Property •Original Title Deed of the property
. •Certified copy of Purchase Deed along with Deed -
Delivery receipt duly endorsed (In absence of
original Title Deed)
•Registered Partition Deed among the Co-owners (if
required)
•Mortgage Deed duly Registered along with
Registration Receipt duly discharged
•Registered IGPA favoring Bank to sale the
property
•Bia Deeds of the mortgaged property
•Certified Mutation Khatian alongwith DCR
• Record of Rights i.e. CS, SA, RS Parcha,
Mohanagar Jorip

parcha (if within Mohannagar Area)

•B.S. Khatian
•Affidavit to be sworn by the owner of the property
before 1stclass Magistrate that he has valid title
in the property and not encumbered otherwise
•Upto date Rent Receipt
•Uptodate Municipal Tax Payment Receipt (if
property within Municipal Area)
•Upto date Union Parishad Tax Payment Receipt (if
property within UP)
•Approved Plan of Construction from concerned
authority (if there is any construction upon the
land)
•Original Lease Deed (In case of Lease hold
property)
•Allotment Letter favoring Lessee (in case of Leasehold
Property)
•Mutation letter favoring Lessee (in case of
Leasehold Property)
•NOC of the competent Authority for Mortgage.
•NEC along with search fee paid receipt
•Board Resolution of the Mortgagor company duly
supported by the provision of Memorandum &
Article of Association (when one company
Mortgage for the loan of other company)

~ 79 ~
 (Page No-8)

•Photograph of the Mortgaged Property

•Location Map
•Survey Report from professional Surveyors
•Physical Visit Report by Bank Officials
•Lawyer’s opinion in respect of acceptability of the
property as collateral security
•Lawyer’s satisfaction certificate regarding
appropriateness of mortgage formalities

Documentation relating to Bank to Bank Loan take over process :

1. Photo copies of security documents like mortgaged property documents, Corporate Guarantee
etc.
2. Lawyers Opinion regarding acceptance of the securities
3. Liability position of the borrower from the existing bank
4. Confirmation Letter of disposing bank about redemption of mortgage and handing over of all
original security deeds & documents directly after adjustment of loan through Pay Order.
5. Undertaking of the owner of the property that they will mortgage the property after being
redeemed by disposing bank.

~ 80 ~
 Appendix-2
Page 1

CREDIT DOCUMENTATION CHECKLIST

BORROWER :
REGISTERED ADDRESS :

STATUS : Individual / Proprietor /Limited Company A/C No---------------------------------

First obtain general documents. Then identify the collateral, facility and obtain specific document listed hereunder. Leave out documents
not called for by the terms of the credit approval and facilities advice letter (Sanction letter).

Located in
Received

Original

Amount
Date of

Date of

Expiry
Reqd.
)

Taka
Doc.

Doc.
SN Verifying Items

(
A GENERAL DOCUMENTS
1 Letter of Borrower requesting for new
facilities/renewal
2 Authority to Borrow (Letter of authority from
partners in case of partnership concern and
resolution in case of limited company/-with list of
Partners/Directors.
3 Form Xll certified by RJSC regarding lis of
existing Directors for limited company
4 Letter of acceptance
5 Demand Promissory Note 6 Letter of
Arrangement
6 Letter of Continuity
7 Letter of Disbursement
8 Deed of Partnership (for Partnership,
Borrower/third party), By-Laws etc.
9 Memorandum and Articles of association (for
limited company Borrower/third party) with
Certificate of Incorporation
10 Revival Report (Form 1 & 11)
11 CIB Report
12 Letter of Installment (for term loans)
13 Memorandum of Deposit of Cheque
14 Letter of Guarantee

B LIEN OF ACCOUNT
1 Resolution to lien account proceeds (for Third
Party partnership and limited cos.)
2 Letter of Lien and Set-Off (Pledge Agreement)

C PLEDGE OF DEPOSIT
1 Resolution to lien account proceeds (for Third
Party partnership and limited cos.)
2 Fixed Deposit Receipts / W.E.S Bonds endorsed
by holder(s)
3 Letter of Lien and Set-Off (Pledge Agreement)

4 Letter of Guarantee by depositor (if the deposit

stands in the name of Third Party)

5 Letter of Authority for encashment of Fixed

Deposit

~ 81 ~
 Appendix-2
Page 2

Located in
Received

Original

Amount
Date of

Date of

Expiry
Reqd.
)

Taka
Doc.

Doc.
SN Verifying Items

(
D PLEDGE OF SHARES
1 Resolution to deposit (for Third Party
partnerships and limited company)
2 Share certificates
3 Blank transfer forms for each share certificate
(form 117)
4 Memorandum of Deposit of Shares
5 Irrevocable letter of authority for collection of
dividends, bonus etc. addressed by the
shareholder to the relative company.
6 Notice of pledge by the shareholder to the
relative companies.

E. PLEDGE OF INVENTORY
1 Letter of Pledge /Pledge Agreement
2 Letter of Disclaimer (in case of rented Godown)
3 RJSC Search Report (for limited company
partnership, borrower /third party) form 18, and
receipt of filling with RJSC
4 RJSC form 18, and receipt of filling with RJSC
5 Certificate of registration from RJSC
6 Modification of Letter of pledge/Pledge
Agreement of Inventory
7 RJSC form 19, and receipt of filling with RJSC
8 Insurance Policy with Agrani Bank as jointly
insured
9 Stock Report
10 Hire Agreement
11 Trade License
12 Fire Service Certificate

F HYPOTHECATION OF INVENTORY
1 Resolution to hypothecate inventory (for Third
Party partnership and limited cos.)
2 Letter of Hypothecation of
Inventory/Hypothecation Agreement
3 RJSC Search Report (for limited company
partnership, borrower /third party)
4 RJSC form 18, and receipt of filling with RJSC
5 Modification of Letter of Hypothecation of
Inventory
6 Certificate of registration from RJSC
7 RJSC form 19, and receipt of filling with RJSC
8 Insurance Policy with Agrani Bank as jointly
insured
9 Letter of Disclaimer (in case of rented Godown)
10 Insurance Policy with Agrani Bank as jointly
insured
11 Stock Report
12 Hire Agreement
13 Trade License

~ 82 ~
 Appendix-2
Page 3

Located in
Received

Original

Amount
Date of

Date of

Expiry
Reqd.
)

Taka
Doc.

Doc.
SN Verifying Items

(
G TRUST RECEIPT
1 Trust Receipt Agreement

H HYPOTHECATION OF RECEIVABLE /
BOOK DEBTS
1 Resolution to hypothecate receivables/book debts
(for Third Party partnerships and limited cos.)
2 Letter of hypothecation of receivables/book
debts (Hypothecation Agreement.)
3 RJSC Search Report (for limited company
partnership, borrower /third party)
4 RJSC form 18, and receipt of filling with RJSC
5 Modification of Letter of Hypothecation of
receivables/book debts
6 Certificate of registration from RJSC
7 RJSC form 19, and receipt of filling with RJSC

I HYPOTHECATION OF MACHINERY AND

EQUIPMENT
1 Resolution to hypothecate Machinery and
Equipment (for Third Party partnerships and
limited cos.)
2 Letter of hypothecation of Machinery and
Equipment Hypothecation Agreement.
3 RJSC Search Report (for limited company
partnership, borrower /third party)
4 RJSC form 18, and receipt of filling with RJSC
5 Modification of Letter of Hypothecation of
Machinery and Equipment
6 Certificate of registration from RJSC
7 RJSC form 19, and receipt of filling with RJSC
8 Latest list of Machinery and Equipment
9 Insurance Policy with Agrani Bank as jointly
insured.

J ASSIGNMENT OF RECEIVABLES
1 Resolution to assign receivables (for Third Party
partnership and limited cos.)
2 Deed of Assignment of receivables
3 Notification and acknowledgement of
assignment and confirmation of receivables from
the debtor

~ 83 ~
 Appendix-2
Page 4

Located in
Received

Original

Amount
Date of

Date of

Expiry
Reqd.
)

Taka
Doc.

Doc.
SN Verifying Items

(
K MORTGAGE
1 Letter of nomination of third party mortgagor
form Borrower with attested specimen signature
of mortgagor
2 Resolution to mortgage and guarantee (for Third
party partnership and limited company)
3 Copy of valid ID (for Third party individual
mortgagor)
4 Personal Guarantee from Third Party mortgagor
5 Original title deed of mortgagor and previous
owners (Bia-deed)
6 Site map of land
7 Approved plan of title
8 C.S., S.A., R.S, B.S. Parcgas
9 Mutual Parches in mortgagor's name ,
certified by Assistant Commissioner of Land
10 Duplicate carbon receipt for mutation case.
11 Letter of no objection of leaser for mortgage (for
leasehold property).
12 Land development tax receipts of the
immediately preceding Bengali year.
13 Municipal holding tax receipts for property in
municipalities
14 Building/ Factory Plan with letter of approval.
15 Real Estate Appraisal /Valuation Report
16 RJSC Search Report (for limited company
partnership, borrower /third party)
17 Memorandum of deposit of title deeds (for
equitable mortgages) with legal counsel's
approved draft.
18 Mortgage deed and registration receipt endorsed
by mortgagor (for legal /Registered mortgage)
along with Power of Attorney.
19 RJSC form 18, and receipt of filling with RJSC if
property in the name of ltd. cos.
20 Certificate of registration from RJSC
21 Modification of Memorandum of deposit of title
deeds.
22 RJSC form 19, and receipt of filling with RJSC
23 Income Tax Clearance Certificate as required for
Registration
24 Non Encumbrance Certificate from Land
Registrar
25 Lawyer's Opinion
26 Registered Irrevocable General Power of Atom.
~ 84 ~
 Appendix-2
Page 5

Located in
Received

Original

Amount
Date of

Date of

Expiry
Reqd.

Taka
Doc.

Doc.
(
SN Verifying Items

L GUARANTEE
1 List of Directors/Partners with specimen
signatures, certified by company secretary or
chairman or managing partner (for limited
company and partnership)
2 Resolution to Guarantee (for limited company
and partnership)
3 Net Worth statements (NWS) for individual
/guarantors
4 Letter of Guarantee
5 Letter of Counter Indemnity

M TERM LOAN AGREEMENT

1 Term Loan Agreement between Borrower and
Agrani Bank
2 Draft Term Loan Agreement approved by Head
of Credit Risk Management Division and Legal
Counsel.

N SECURITY SHARING AGREEMENT

1 Security Sharing Agreement
2 Draft Security Sharing Agreement approved by
Head of Credit Risk Management Division and
Legal Counsel.

K SYNDICATION
1 Accepted Mandate letter
2 Accepted Term Sheet
3 Information Memorandum
4 Participation letters
5 Facilities Agreement
6 Power of Attorney of participants
7 Accepted Fee Letter
8 Legal counsel's opinion
9 Management Approval
10 Pari-Passu Charge on Security

L OTHER DOCUMENTS

DEPARTMENT / UNIT NAME DATE SIGNATURE

:
RELATIONSHIP MANAGER

:
CREDIT ADMINISTRATION

~ 85 ~
 cwiwkó - 2
cvZv 1

F‡Yi `wjjvw`i †PKwjó

CREDIT DOCUMENTATION CHECKLIST

FYMÖnxZv t
wbewÜZ wVKvbv t
FYMÖnxZvi aiY t e¨w³/gvwjKvbvaxb cÖwZôvb/Askx`vi/wjwg‡UW †Kv¤úvbx| wnmve b¤^it

cÖ_‡gB mvaviY/cÖv_wgK `wjjvw` MÖnY| ZrcieZ©x‡Z mn‡hvMx RvgvbZ mbv³iYc~ •e©K wb‡gœ D‡j­ wLZ `wjjvw` MÖnY
wbwðZ Ki‡Z n‡e| FY gÄyixc‡Î †h mKj `wjjvw`i D‡j­ L †bB †m mKj `wjjvw` †bqvi cÖ‡qvRb †bB|

µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~•j UvKvi

bs m¤úv`‡bi MÖn‡Yi `wjj cwigvY
ZvwiL ZvwiL msi¶‡Yi
¯’vb

(K) mvaviY `wjjvw` (GENERAL DOCUMENTS) :

1| F‡Yi Av‡e`bcÎ (bZzb/bevqb)
2| Askx`vi/cwiPvjK‡`i ZvwjKvmn FY
MÖn‡Yi wel‡q ¶gZvc©Y cÎ (Askx`vix
Kvievix †¶‡Î Askx`vi‡`i m¤§wZcÎ Ges
†Kv¤úvbxi †¶‡Î †Kv¤úvbxi cwiPvjbv
cl©‡`i mfvi wm×všÍcÎ)
3| wjwg‡UW †Kv¤úvbxi †¶‡Î †iwRóvW© Ae
R‡q›U óK †Kv¤úvvbx GÛ dvg©m KZ©„K
cÖZ¨vwqZ †Kv¤úvbxi we`¨gvb cwiPvjK‡`i
ZvwjKvmn dig XII
4| m¤§wZcÎ|
5| wWgvÛ cÖwgmwi †bvU (wWwc †bvU)|
6| e‡›`ve¯Í cÎ
7| †jUvi Ae KbwUwbDwU
8| weZiYcÎ
9| Askx`vix Pzw³cÎ
(Askx`vix Kvievi-FYMÖnxZv/Z…Zxq c¶ Gi
Rb¨) Dc-wewa BZ¨vw`
10| wjwg‡UW †Kv¤úvbxi †¶‡Î mvwU©wd‡KU Ae
BbKi‡cv‡ikbmn †g‡gv‡iÛvg I
AvwU©‡KAe
G¨v‡mvwm‡qkb(FYMÖnxZv/Z…Zxqc¶)
11| wifvB‡ej wi‡cvU© (dig I Ges II)
12| wmAvBwe wi‡cvU©
13| wKw¯Í cwi‡kvacÎ
(†gqv`x F‡Yi †¶‡Î)
14| †PK RgvKiY ¯§viK (†g‡gv‡iÛvg Ae
wW‡cvwRU Ae †PK)
15| wbðqZv cÎ (†jUvi Ae M¨vivw›U)
~ 86 ~
 cwiwkó - 2
cvZv 2
µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~j `wjj UvKvi
bs m¤úv`‡bi MÖn‡Yi msi¶‡Yi cwigvY
ZvwiL ZvwiL ¯’vb
(L) wnmv‡ei Dci c•e© kZ© Av‡ivc (LIEN OF ACCOUNT) :
1| wnmve w¯’wZi Dci c–•e© k‡Z©i wel‡q
wm×všÍ cÎ (Z…Zxq c¶ Askx`vix cÖwZôvb
I wjwg‡UW †Kv¤úvbx)
2| c–e© kZ© cÎ I †mU Ae (eÜKx /†c­ R
AsMxKvi)
(M) AvgvbZ eÜK (Pledge of Deposit) t
1| wnmv‡ei Rgv w¯’wZi Dci cye© kZ©
Av‡iv‡ci wm×všÍ •cÎ (Z…Zxq c¶,
Askx`vi I wjwg‡UW †Kv¤úvbxi Rb¨)
2| †gqv`x AvgvbZ iwm`/aviK KZ©„K
Aby‡gvw`Z I‡qR eÛ
3| c–•e© kZ©cÎ I †mU Ae (eÜKx /†cR
Pzw³)
4| AvgvbZ KZ©„K cÖ`Ë wbðqZvcÎ (Z…Zxq
c¶xq AvgvbZKvixi †¶‡Î)
5| †gqv`x RvgvbZ iwk` bM`vqb Kivi Rb¨
¶gZvc©Y cÎ
(N) †kqvi eÜK (Pledge of Shares) :
1| †kqvi Rgv cÖ`v‡bi wm×všÍcÎ (Z…Zxq
c¶, Askx`vix cÖwZôvb Ges wjwg‡UW
†Kv¤úvbxi Rb¨)
2| †kqvi mvwU©wd‡KUm
3| cÖ‡Z¨K †kqvi mvwU©wd‡K‡Ui wecix‡Z
n¯ÍvšÍ‡hvM¨ AcyiYxq dig (dig 117)
4| †kqvi RgvKiY m¥viK
5| mswk­ ó †Kv¤úvbx‡K †kqvi †nvìvi KZ©„K
m‡¤^vab K‡i †Kv¤úvbxi jf¨vsk /†evbvm
BZ¨vw` msMÖ‡ni wel‡q AcÖZ¨vnvi‡hvM¨
¶gZvc©Y cÎ|
6| †kqvi †nvìvi KZ©„K mswk­ ó †Kv¤úvbx‡K
†kqvi eÜKxi wel‡q cÖ`Ë †bvwUk

~ 87 ~
 cwiwkó - 2
cvZv 3
µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~j `wjj UvKvi
bs m¤úv`‡bi MÖn‡Yi msi¶‡Yi cwigvY
ZvwiL ZvwiL ¯’vb
(O) gRy` gvjvgvj eÜK (Pledge of Inventory) :
1| eÜKxcÎ/eÜKx Pzw³cÎ
2| bv `vexcÎ (fvovK…Z ¸`v‡gi †¶‡Î)
3| †iwRóªvi Ae R‡qb óK †Kv¤úvbx Gi
Z_¨vbymÜvb wi‡cvU© (wjwg‡UW †Kv¤úvbx,
Askx`vix FYMÖnxZv/Z…Zxq c¶ Gi Rb¨)
4| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_f‚³KiY iwm`mn dig-18
5| †iwRóªvi Ae R‡q›U óK †Kv¤úvbxi
wbeÜb mvwU©wd‡KU
6| gRy` gvjvgv‡ji cwigvwR©b eÜKxcÎ/
eÜKx Pzw³cÎ
7| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_fz³KiY iwm`mn dig-19
8| AMÖYx e¨vsK wjwg‡UW Gi mv‡_ †hŠ_fv‡e
exgvKi‡Yi wel‡q exgv cwjwm
9| gRy` gvjvgv‡ji weeiYx (óK wi‡cvU©)
10| fvovi Pzw³bvgv
11| †UªW jvB‡mÝ
12| AwMœ wbe©vcK KZ©„c‡¶i mb`cÎ
(P) gRy` gvjvgvj `vqe×KiY (HYPOTHECATION OF INVENTORY) :
1| gvjvgvj `vqe×Ki‡Yi wel‡q wm×všÍ•
c‡Îi Kwc (Z…Zxqc¶, Askx`vixZ¡ I
wjwg‡UW †Kv¤úvbxi Rb¨)
2| gRy` gvjvgv‡ji `vqe×KiYcÎ/
`vqe×KiY Pzw³cÎ
3| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi AbymÜvb wi‡cvU© (Z…Zxqc¶,
Askx`vixZ¡ I wjwg‡UW †Kv¤úvbxi Rb¨)
4| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_f‚³KiY iwm`mn dig-18
5| gRy` gvjvgv‡ji cwigvwR©Z `vqe×KiY
cÎ
6| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi wbeÜb mb`cÎ
7| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_fz³KiY iwm` mn dig-19
8| AMÖYx e¨vsK wjwg‡UW Gi mv‡_ †hŠ_fv‡e
exgvKi‡Yi wel‡q exgv cwjwm
9| bv `vexcÎ (fvovK…Z ¸`v‡gi †¶‡Î)
10| gRy` gvjvgv‡ji weeiY
11| fvovi Pzw³cÎ
12| †UªW jvB‡mÝ

~ 88 ~
 cwiwkó - 2 cvZv 4
µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~j `wjj UvKvi
bs m¤úv`‡bi MÖn‡Yi msi¶‡Yi cwigvY
ZvwiL ZvwiL ¯’vb
(Q) Uªvó wiwmU (TRUST RECIEPT) :
1| Uªvó wiwmU Pzw³cÎ
(R) cÖvc¨ wej/eyK †WU `vqe×KiY (HYPOTHECATION OF RECIEVABLES/BOOK DEBTS) :
1| cÖvß wej /eyK †WUm `vqe×Ki‡Yi
wm×všÍcÎ (Z…Zxq c¶, Askx`vi Ges
wjwg‡UW †Kv¤•vbxi Rb¨ )
2| cÖvß wej/eyK †WUm `vqe×KiYcÎ
(`vqe×KiY Pzw³cÎ)
3| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi AbymÜvb wi‡cvU©
(wjwg‡UW †Kv¤úvbx, Askx`vix
FYMÖnxZv/Z…Zxq c‡¶i Rb¨)
4| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi †iwRóªvi Gi
Kvh©vj‡q bw_f‚³KiY iwm`mn dig-18
5| cÖvß wej/eyK †WUm Gi cwigvwR©Z
`vqe×KYcÎ
6| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi wbeÜb mb`cÎ
7| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_fz³KiY iwm` mn dig-19
(S) hš¿•cvwZ/miÄvgvw` `vqe×KiY (HYPOTHECATION OF MACHINERY/EQUIPMENTS) :
1| hš¿•cvwZ `vqe×Ki‡Yi wm×všÍcÎ
(Z…Zxq c¶, Askx`vi Ges wjwg‡UW
†Kv¤úvbxi Rb¨ cÖ‡hvR¨)
2| hš¿•cvwZ `vqe×KiYcÎ/ `vqe×KiY
Pzw³cÎ
3| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi AbymÜvb wi‡cvU©
(wjwg‡UW †Kv¤úvbx, Askx`vix FYMÖnxZv
/Z…Zxq c‡¶i Rb¨)
4| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi †iwRóªvi Gi
Kvh©vj‡q bw_f‚³KiY iwm`mn dig-18
5| hš¿cvwZ miÄvgvw`i cwigvwR©Z
`vqe×KiYcÎ
6| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi wbeÜb mb`cÎ
7| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_f‚³KiY iwm`mn dig-19
8| hš¿•cvwZ/miÄvgvw`i me©‡kl ZvwjKv
9| AMÖYx e¨vsK wjwg‡UW Gi mv‡_ †hŠ_fv‡e
exgvKi‡Yi wel‡q exgv cwjwm

~ 89 ~
 cwiwkó - 2 cvZv 5
µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~j `wjj UvKvi
bs m¤úv`‡bi MÖn‡Yi msi¶‡Yi cwigvY
ZvwiL ZvwiL ¯’vb
(T) cÖvß we‡ji Dci AwaKvi t ASSIGNMENT OF RECEIVABLES
1| cÖvß we‡ji Dci AwaKvi cÖwZôvb
m¤úwK©Z wm×všÍcÎ
2| cÖvß we‡ji Dci AwaKvi cÖwZôv m¤úwK©Z
Pzw³cÎ (wjwg‡UW †Kv¤úvbx, Askx`vix
FYMÖnxZv/Z…Zxq c‡¶i Rb¨)
3| FYMÖnxZvi wbKU n‡Z cÖvß we‡ji Dci
AwaKvi cÖwZôv wbwðZKiY wel‡q
cÖÁvcb Ges ¯^xKvicÎ
(U) eÜK (MORTGAGE) :
1| FYMÖnxZvi wbKU †_‡K Z…Zxq c¶xq
eÜK`vZvi mZ¨vwqZ ¯^v¶imn
g‡bvbqbcÎ
2| eÜK cÖ`vb Ges wbðqZv cÖ`vb welqK
wm×všÍcÎ (Z…Zxq c¶xq, Askx`vix Ges
wjwg‡UW †Kv¤úvbxi Rb¨ cÖ‡hvR¨)
3| ˆea mbv³KiYc‡Îi (AvBwW) Kwc
(Z…Zxq c¶xq e¨w³MZ eÜK`vZvi †¶‡Î
cÖ‡hvR¨)
4| Z…Zxq c¶xq eÜK`vZvi e¨w³MZ
wbðqZvcÎ
5| eÜK`vZvi m¤úwËi g~•j `wjj Ges
c•e©eZ©x gvwjK‡`i m¤úwËi `wjj (evqv
`wjj)
6| Rwgi Ae¯’vb b·v (mvBU g¨vc)
7| m¤úwËi Aby‡gvw`Z b·v
8| wmGm, GmG, AviGm Ges weGm cP©v
9| mnKvix f‚wg Kwgkbvi KZ©„K cÖZ¨vwqZ
eÜK`vZvi bv‡g bvgRvix cP©v
10| bvgRvix cP©v msµvšÍ Wzcwj‡KU Kve©b
iwm` (wWwm Avi)
11| eÜK cÖ`v‡bi wel‡q eÜK`vZvi AbyK‚‡j
jxR cÖ`vbKvixi AbvcwËcÎ (jxRK…Z
m¤úwËi †¶‡Î)
12| •c–•e©eZ©x evsjv m‡b cÖ`Ë f‚wg Dbœqb
Ki iwm`
13| †cŠi GjvKvq Aew¯’Z m¤úwËi †¶‡Î
wgDwbwmc¨vj †nvwìs U¨v· cÖ`v‡bi iwm`
14| Aby‡gv`bcÎmn `vjvb/KviLvbv fe‡bi
b·v
15| m¤úwËi m¤¢ve¨ g–•j¨vqb cÖwZ‡e`b
16| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi AbymÜvb wi‡cvU©(wjwg‡UW
†Kv¤úvbx, Askx`vix FYMÖnxZv/Z…Zxq c¶
Gi Rb¨)

~ 90 ~
 cwiwkó - 2
cvZv 5
µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~•j UvKvi
bs m¤úv`‡bi MÖn‡Yi `wjj cwigvY
ZvwiL ZvwiL msi¶‡Yi
¯’vb
17| BKz¨B‡Uej eÜKxi †¶‡Î AvBb
civgk©‡Ki (AvBbRxwe) Aby‡gvw`Z
gymvwe`vmn m¤úwËi gvwjKvbv `wjj
Rgvi ¯§viK
18| eÜKx `wjj Ges eÜK`vZvi
wm×všÍ•mn wbeÜb iwm` I cvIqvi Ae
GU©bx (AvBbMZ eÜKx `wj‡ji †¶‡Î)
19| wjwg‡UW †Kv¤úvbxi bv‡gi m¤•wËi
†¶‡Î †iwRóªvi Ae R‡q›U óK †Kv¤úvbx
GÛ dvg©m Gi †iwRóªvi Gi Kvh©vj‡qi
bw_f‚³KiY iwm`mn dig b¤^i -18
20| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡qi eÜK
msµvšÍ• cÖZ¨qbcÎ
21| m¤úwËi gvwjKvbv `wjj Rgv cÖ`vb
m¤úwK©Z ¯§viK Gi cwigvR©b welqK
cÎ
22| †iwRóªvi Ae R‡q›U óK †Kv¤úvbx GÛ
dvg©m Gi †iwRóªvi Gi Kvh©vj‡q
bw_f‚³KiY iwm`mn dig-19
23| wbe܇bi Rb¨ AvqKi cwi‡kva
cÖZ¨qbcÎ
24| fzwg wbeÜK Kg©KZ©v KZ©„K cÖ`Ë wb`©vq
mb`cÎ
25| ZvwjKvf‚³ AvBbRxei gZvgZ

26| wbeÜbK…Z AcÖZvnvi‡hvM¨ mvaviY

Avg‡gv³vibvgv
(V) Rvwgbbvgv/wbwðqZvcÎ (GUARANTEE) :

1| e¨e¯’vcbv Askx`vi A_ev †Kv¤úvbxi

mwPe A_ev †Pqvig¨vb KZ©„K cÖZ¨vwqZ
cwiPvjK/Askx`v‡ii bgybv ¯^v¶i
m¤^wjZ ZvwjKv
2| Rvwgbbvgv/wbðqZv cÖ`v‡bi wm×všÍcÎ
(wjwg‡UW †Kv¤úvbx ev Askx`vix
cÖwZôv‡bi †¶‡Î)
3| e¨w³ /Rvwgb`vZvi bxU cwim¤ú‡`i
weeiYx
4| Rvwgbbvgv/wbðqZvcÎ
5| cÖwZ c¶xq ¶wZc•iY A½xKvicÎ
(Letter of counter Indemnity)

~ 91 ~
 cwiwkó - 2
cvZv 6
µt `wjjvw`i weeiY cÖ‡qvRb `wjj `wjjvw` †gqv` •g~•j UvKvi
bs m¤úv`‡bi MÖn‡Yi `wjj cwigvY
ZvwiL ZvwiL msi¶‡Yi
¯’vb
(W) †gqv`x F‡Yi Pzw³cÎ (TERM LOAN AGREEMENT) :
1| FYMÖnxZv I AMÖYx e¨vsK wjwg‡UW Gi
g‡a¨ m¤úvw`Z †gqv`x FY Pzw³cÎ

2| FY SuywK e¨e¯’vcbv-cÖavb I AvBbRxwei

gZvgZmn Aby‡gvw`Z †gqv`x FY
Pzw³c‡Îi Lmov

(X) Rvgvb‡Zi Askx`vix Pzw³cÎ (SECURITY SHARING AGREEMENT):

1| Rvgvb‡Zi Askx`vix Pzw³cÎ
2| FY Pzw³ e¨e¯’vcbv-cÖavb I AvBbRxwei
gZvgZmn Aby‡gvw`Z Rvgvb‡Zi
Askx`vix Pzw³c‡Îi Lmov
(Y) wmwÛ‡Kkb (SYNDICATION) :
1| M„nxZ m¤§wZcÎ
2| M„nxZ kZ©vejxi ZvwjKv
3| Z_¨ m¤^wjZ ¯§viK (I.M.)
4| AskMÖnYKvix‡`i m¤§wZcÎ
5| FY Pzw³cÎ
6| AskMÖnYKvix KZ©„K cÖ`Ë Avg-
†gv³vibvgv
7| M„nxZ wd msµvšÍ cÎ
8| AvBbRxwei gZvgZ
9| e¨e¯’vcbv KZ©„c‡¶i Aby‡gv`bcÎ
10| Rvgvb‡Zi c¨vwic¨vmy PvR© `wjj
(Z) Ab¨vb¨ `wjjvw` t OTHER DOCUMENT
1| wefvM/BDwbU t bvg ZvwiL ¯^v¶i
2| wi‡jmbkxc g¨v‡bRvi t
3| †µwWU GWwgwbm‡óªkb t

~ 92 ~
 Annexure -3
AUTHORIZATION & RESPONSIBILITY FOR CREDIT APPROVALS
(New Loans, Renewals, Restructuring And Rescheduling)

Deligation of power 2017 will be followed for New Loans, Renewals, Restructuring
and Rescheduling:

 For write-off Bad and Loss accounts, only Board is authorized to approve these
upon the recommendation of the Non Performing Loan Management Committee
(NPLMC).

 As Authorization & Responsibility are not given Credit Product wise and Credit
Retailing, approvals are done as per Delegation of Discretionary Powers-2017
approved by the Board of the Bank which is reviewed and approved in 2017.

 Interest waiver of classified loan will be approved by the Board/Management as per

instruction circular No. RNPAMD/113/2016 dated : 03.10.2016 & instruction circular
No. RNPAMD(recovery)/47/2018 dated : 17.04.2018 and as per guidelines issued by
Ministry of Finance/Bangladesh Bank time to time.

~ 93 ~
 Annexure -4

Early Alert Report

Borrower / Group : Current Date :

Branch : Last Review Date :
Total Limits : Strategy :
Total Outstanding : (Hold/Reduce /Restructure / exit)

Existing Risk Grade ----------------- Proposed Risk Grade -------------------

Facility :
Limit Purpose Outstanding Security

Is security complete ? Y / N : ..................... Externally checked ? Y / N : ...........................

Details of any deficiencies :

Symptom requiring Early /Alert Reporting :

-- Industry concerns -- Cash Flow Weakness

-- Ownership /Management concerns -- poor Account Conduct
-- Balance Sheet Weakness -- Expired limits /pending docs.

Provide details of symptoms indicated above:

Account strategy to regularize account :

Have these been agreed with the customer? Y / N

Has the customer breached any conditions since the most recent agreement? Y / N ........................

When will these deficiencies be rectified?

Update since last Early Alert Report :

Branch Comments :

Zonal Head Comments :

GM's Comment (Recovery & NPL):

Approved by :

--------------------------
CRM Committee
~ 94 ~
 Annexure -5

CLASSIFIED LOAN REVIEW FORM (CLRF)

1. Borrower & Loan Account :
a. Borrower Name & Address :

b. Loan Account No. :

2. Loan Amount : : .
a. Principal :
b. Interest :
c. Interest Suspense Balance :
d. Up to.................Outstanding Balance
3. Recovery :
Total Recovery : ..................................................Period of Recovery : ........................................

4. Security & Value :

a. Particulars of Security
:
b. Value of Securities
:
5. Causes of non-adjustment or non-renewal of the Loan :
account

6. It the mortgaged property is sold out, What will be the :

Forced Sale Value ?

7. Whether the loan limit has become irregular because of :

non co-operation of Bankers ?

8. Detailed description of Personal follow-up : (No. of Visits :

& Correspondence etc.)

9. What are the steps to be taken for declassification of the :

Loan ?

10. Branch Comments :

~ 95 ~
 Annexure -6
Page 1

Syllabus of Training Courses for Credit Officers (Page 1)

Title Overall Objective Course Summary

A 1. Maintain a Simple set of accounts. 1. Principle and concepts of accounts.

2. "T" accounts and the format of profit & Loss
Basic Accounting 2. Extract a simple trial balance. and Balance sheets.
3. Books of Accounts.
3. Prepare a simple profit & loss
4. P & L accounts for manufacturing, trading,
statement and balance sheet. partnerships, etc.
5. Balance sheet value Assets& Liabilities.
6. Inventory accounting, intangibles.
7. Provisions, deprecation, sinking funds.
8. Taxes, capital loss, appropriation accounts.
9. Holding and operating companies.
10. Sources and uses of cash.
B 1 Spread a set of customer financial 1 Financial statement interpretation.
statements on standard spread sheets. 2 Accounting rules and conventions.
Spread Sheet 2 Analyze basic income statement and 3 Financial and operating ratio analysis.
balance sheet relationships including cash 4 Reconciliation and cash flow
Analysis flow and ratio. (with cases and exercises).
3 Express an opinion on the financial health 5 Cash flow projections
of a company. (with cases and exercises).
6 Repayment Analysis.
7 Statement Validation.
8 Credit Analysis Form.
C 1 Prepare a high quality credit analysis package 1 Credit analysis package overview.
for corporate and middle market customer. 2 Describing the company and the industry
Credit Analysis 2 Recommend credit structures that meet 3 Assessing specific risks (Risk Grading)
Bank credit policies, contain risks and meet 4 Recommending credit structures to
return targets. reduce risk
3. Establish monitoring requirements that control
risk and serve as an "Early Warning System"

D 1 Complete and evaluate a customer 1 Credit Applications

credit application 2 Verifying Credit Data
Credit Procedures 2 Verify the information submitted on a 3 Using the credit Bureau
credit application 4 Pricing a loan
3 Know the approval process for a loan 5 Approval Process
4 Price a loan using risk adjusted pricing methods 6 Processing Turnaround Time Standard
5 Process a loan within establish turnaround ties

E 1 Conduct credit process according to stated 1 Credit Sector and type of credit
policies of Bank
Credit Policies 2 Use the Bank credit policy and procedures 2 Credit needs and loan structuring
manual as a working reference to guide
3 Credit Policy manuals
daily credit related activities
3 Explain the primary justification for Bank policy
and procedures

F 1 Establish and maintain customer credit files 1 The Banks credit files,
2 Execute all standard credit administration customer documentation and account files
Credit activities within policies 2 Credit administration work flow
3 Establish and maintain "tickler" files for and procedures
Administration loan review, documentation and facility expiration 3 Special credit approval situation
4 Follow credit policy for special approval situations

~ 96 ~
 Annexure -6
Page 2

Syllabus of Training Courses for Credit Officers (Page 2)

Title Overall Objective Course Summary

G 1. Complete checklists for disbursing funds on a loan 1 Check lists

2. Organize credit and disbursement files 2 Operations Files
Credit 3. Know the documents required for loan disbursement 3 Credit Operations
Disbursement 4. Verify the use of funds disposal on a loan 4 Documentations
5. Structure and control disbursements on 5 Verifying Funds
a construction loan 6 Construction Disbursements
H 1 Value collateral and property for loan purposes 1 Collateral Valuation
Collateral Control 2 Know the documentation required 2 Property Valuation
for securing collateral 3 Collateral Assignment
4 Collateral Files
3 Know the process of collateral assignment 4 Godown Control
4 How to keep collateral files
5 Control collateral prepare required report
I 1 Analyze the causes of problems effecting borrower 1 Primary causes of loan problems
financial performance and the effect on repayment 2 Assessing the feasibility of recovery
Problem Loan 2 Determine the steps the bank should (can) 3 Working with management. Working against
take to reduce credit risk management
Identification
4 Establishing realistic restructuring strategies
3 Structure strategies and action plans to protect the bank
and action plans
and improve customer performance
J 1 Assess the probable market value of security 1 The bank's legal right and obligations
2 Determine the net present value of various alternative on debt collection and collateral liquidation
Credit Recovery recovery schemes 20 How to realize security value, how
3 Recommend Bank action based on a review of past to maximize present value
success and failures 3 The Bank's past experience and case studies
1 Determine when to bring in Insurance 4 Develop recovery strategies, action plans and
(and when not to) following-up

K 1 Identify the main legal issues confronted 1 Legal issues and standard documentation
in lending money and taking security 2 How to complete the Bank's standard
Legal Issues, documentation
2 Identify the best way to document a loan 3 Banker's right and obligations :
Documentation 3 Fill out the Bank's standard documentation Court experience to date
4 Explain the Bank's basic learn loan agreement
5 Refer non-standard or unusual documentation
and Security to the legal division

6 Explain the most effective way to take

and control security

7 Explain the risks and limitations of documentation

and security in repaying loan

L 1 1 Follow credit audit procedures 1 The Bank's audit procedures

2 Complete credit audit consistency with others 2 Portfolio analysis
Credit Audit 3 Conduct and in depth review of a credit file 3 In depth file review techniques
4 Rank individual lending officers on an absolute scale
M 1 Identify the reasons for classification process 1 Loan Classification Definition
2 Define the different classification of loans 2 Loan Classification Process
Loan 3 Know the procedures for classifying a loan 3 Provisioning Process
4 Understand the provisions required for classified loan 4 Declassifying a Loan
Classification 5 Know the process for declassifying a loan 5 Written off a Loan
6 Procedures and forms required for within off a loan
and Provisioning

~ 97 ~
 Annexure -7

Environmental Risk Management (ERM) ev¯Íevqb

wWcvU©‡g›U Ae wdb¨vwÝqvj Bbw÷wUDkbm GÛ gv‡K©Um, evsjv‡`k e¨vsK, XvKv Gi mvKzj© vi bs-04 ZvwiL GwcÖj 6, 2011 Gi
gva¨‡g GKwU MvBWjvBbm †cÖiY c~e©K 30†k Ryb,2011 Gi g†a¨ ev¯Íevq‡bi wb‡`©kbv †`qv n‡q‡Q| D³ MvBWjvBbm-Gi cÖ_g
Aa¨v‡q Introduction, wØZxq Aa¨v‡q Organizational Requirements, Z…Zxq Aa¨v‡q Technical Manual Ges 4_©
Aa¨v‡q Technical annexes AšÍf©y³ Kiv n‡q‡Q|

Introduction (Part-1) :

evsjv‡`‡k cwi‡e‡ki Ae¯’v `ªZ webó n‡”Q| Zvi Ab¨Zg KviY Rwg‡Z Amg ivmvqwbK mvi cÖ‡qvM, ¶wZKviK eR©¨ wbtmib, cvwb
`ywlZKiY, evqy `ywlZKiY, eb I grm¨ m¤•` aŸsmKiY Ges wewfbœ cÖvK…wZK `y‡h©v‡M ¶wZMÖ¯’Zv| cwi‡ekMZ cÖwZKzj Ae¯’vi
Kvi‡Y, cwi‡ekMZ SyuwK msNwUZ nq, hv FY SyuwK‡K evwo‡q †`q| GRb¨ A_©‰bwZK †jb‡`‡b AwbðqZv wKsev m¤¢ve¨ ¶wZi m¤§yLxb
nq| d‡j eZ©gvb we‡k¦ A_©vq‡bi †¶‡Î ERM e¨envi µgvMZ evo‡Q| evsjv‡`‡ki cwi‡ekMZ Ae¶q I Rjevqy cwieZ©‡bi
†cÖw¶‡Z wbivc` A_v©q‡bi Rb¨ ERM MÖnY ¸iZ¡c–Y©| cwi‡ekMZ SyuwK e¨e¯’vcbvi †¶‡Î wb‡gœv³ welq¸‡jv cÖwbavb‡hvM¨ t

(K) cwi‡ekMZ SyuwKi DrcwË t

 f‚wgi Ae¯’vb|
 cwi‡ekMZ wewa bv gvbv|
 kªwgK/mvgvwRK SzuwK|
 Rb‡Mvwôi we‡ivwaZv|
 cwieZ©bkxj evRvi Ae¯’v|
 Rjevqy cwieZ©‡bi cÖfve|
(L) SzuwKi cÖKvi‡f` t
 cÖZ¨¶ SyuwK t
 RvgvbZ SyuwK|
 AvBbMZ SyuwK|
 c‡iv¶ SyuwK t
 mybvg bó nIqvi SyuwK|
 e¨emv b‡ói SyuwK|
 e¨e¯’vcbv SyuwK|
(M) ERM Gi D‡Ïk¨ t

 A_©vq‡bi Rb¨ cÖ¯ÍvweZ m¤¢ve¨ e¨emvwqK Kg©Kv‡Ûi mv‡_ mswk­ ó cwi‡ekMZ welq I cÖwZôvb¸‡jv‡K
cix¶v Kiv|
 G mKj e¨emvwqK Kg©KvÛGes cÖwZôvb n‡Z m„ó cwi‡ekMZ SyuwK I mswkøó Avw_©K Dcj¶¨ wPwýZKiY,
g~j¨vqb Ges e¨e¯’v MÖnY|
 FY SyuwK GcÖvBRvj cÖwµqv‡K e„w× Kiv|

~ 98 ~
 Annexure -7
cvZv bs- 2
(N) ERM e¨env‡ii myweav t

 cwi‡ekMZ SzuwK wPwýZ Kiv hv‡e|

 cwi‡ekMZ mgm¨vi w`‡K `„wó wbewÜZ n‡e|
 m¤¢ve¨ FY MÖnxZv DcK…Z n‡eb| e¨vsK Ges m¤¢ve¨ FY MÖnxZvi g‡a¨ SzuwK †gvKv‡ejvq mn‡hvwMZvi
g‡bvfve m„wó n‡e|
 e¨vsKvi-MÖvnK m¤úK© kw³kvjx n‡e|
 FY cÖ`vb cwinvi wKsev wbi“rmvwnZ bv K‡i `vwqZ¡c–Y© A_v©q‡bi Af¨vm M‡o DV‡e| †h mKj e¨emv
cÖwZôv‡b `vwqZ¡nxbZvi Kvi‡Y SzuwK wbqš¿b Am¤¢e †m †¶‡Î A_v©qb cwinvi Kiv hv‡e|

(O) ERM Gi wewfbœ avcmg•n t

 SzuwK wPwýZKiY (Identifying Risks)|
 SzuwK g–j¨vqY (Rating Risks)|
 SzuwK DckwgZKiY (Mitigating Risks)|
 SzuwK KZ…©Z¡KiY I wbqš¿b (Minitoring & Controlling Risks)|

03| ERM †h mKj F‡Yi †¶‡Î cÖ‡hvR¨ n‡e (bZzb FY, bevqb I ewa©ZKiY) t
Av‡jvP¨ MvBWjvB‡bi wb‡`©kbvbyhvqx cwi‡ekMZ SyuwK e¨e¯’vcbv (ERM) FY SyuwK e¨e¯’vcbv (CRM) c×wZi mv‡_ A½xf‚Z n†e
Ges wb‡¤œ ewY©Z cÖwZwU MÖvnK/cÖwZôv‡bi (Corporate,Institutional, Personal, Small and Medium Enterprise)
†¶‡Î ERM cÖ‡qvM Kivi wb‡`©k †`qv n‡q‡Q t

 ¶z`ª I gvSvix wkí cÖwZôv‡b (Small and Medium Enterprise) A_v©q‡bi †¶‡Î FY mxgv 25.00
j¶ UvKvi †ekx n‡j|
 ms¯’vfy³ (Corporate) A_v©q‡bi †¶‡Î FY mxgv 1.00 †KvwU UvKvi †ekx n‡j|
 ¯’vei m¤úwËi (Real Estate) A_v©q‡bi †¶‡Î FY mxgv 1.00 †KvwU UvKvi †ekx n‡j|

04| fwel¨‡Zi Rb¨ mycvwik ev KiYxq t

(a) Updating :
ERM bxwZgvjv cwieZ©bkxj n‡e| cÖwZ 03 (wZb) eQ‡i AšÍZc‡¶ 01 (GK) evi Revise Kiv
†h‡Z cv‡i|

(b) Further Integration with CRM :

ERM Gi Rb¨ cÖYxZ MvBWjvBb-Gi KvVv‡gv CRM MvBWjvBb-Gi mv‡_ mvgÄm¨c~Y©| d‡j CRM
bxwZgvjv nvjbvMv` Kivi mgq ERM H bxwZgvjvi mv‡_ m¤ú~Y©fv‡e A½xf‚Z (Integrate) n‡e|

(c) Environmental Risk Rating :

eZ©gv‡b GKwU mnR ¸bMZ c×wZ (Qualitative Approach) Gi gva¨‡g D‡`¨vM Pvjy Kivi e¨e¯’v
MÖn‡Yi cÖ¯Íve Kiv n‡q‡Q| cieZ©x‡Z Numerical Approach Pvjy Kiv n‡e|

(d) Environmental Insurance :

e¨vsKmg~n A_©vq‡bi †¶‡Î cwi‡ekMZ SyuwK †gvKv‡ejvi Rb¨ exgv c×wZ cÖYqb Ges e¨vs‡K e¨env‡ii
D‡`¨vM MÖnY Kiv †h‡Z cv‡i|

~ 99 ~
 Annexure - 7
cvZv bs- 3

05| Organizational Requirements (Part-2) :

(K) g~jbxwZ (Principle) t

e¨vs‡Ki Rb¨ ERM ev¯Íevq‡b bxwZMZ A½xKvimn wb‡æv³ c`‡¶c MÖnY Kiv cÖ‡qvRb t

 FY bxwZ Ges c×wZ‡Z ERM AšÍfy©³ KiY|

 Kg©KZv© I Kg©Pvix‡`i g‡a¨ ERM m¤úwK©Z mZ©KZv m„wó, cÖ‡qvRbxq cÖwk¶Y cÖ`vb Ges m¶gZv
m„wóKiY|
 cwi‡ekMZ SzuwK †gvKv‡ejvq m¤¢ve¨ FY MÖnxZv‡K mnvqZv cÖ`vb|
(L) cwiPvjbv cwil` I DשZb KZ©„c¶‡K AewnZKiY t
Av‡jvP¨ MvBWjvBb cwiPvjbv cwil` I DשZb e¨e¯’vcbv KZ©„c¶/KwgwU‡Z Dc¯’vcb K‡i Zv
ev¯Ívq‡bi Rb¨ cwiPvjbv cwil‡`i m¤§wZ MÖn‡Yi civgk© †`qv n‡q‡Q Ges evrmwiK wfwˇZ GB
bxwZgvjv ev¯Ívq‡bi AMÖMwZ ch©v‡jvPbvi Rb¨ wb‡`©kbv cÖ`vb Kiv n‡q‡Q| GB bxwZgvjv Kvh©Kix Kivi
`vwqZ¡ e¨vs‡Ki cÖavb Kvh©vj‡hi Dci b¨¯Í• Kiv n‡q‡Q|
(M) c×wZ (Procedures) :
cwi‡ekMZ SyuwK e¨e¯’vcbv‡K Kvh©Kix Kivi Rb¨ FY SyuwK e¨e¯’vcbv c×wZ‡K ms‡kvab Kiv cÖ‡qvRb
n‡e| FY SyuwK e¨e¯’vcbv msµvšÍ• Kvh©vejx m¤úv`‡bi mgq cwi‡ekMZ SyuwK g~j¨vqb
(Environment Risk Rating) mwVKfv‡e m¤úv`b Kiv n‡q‡Q wKbv Zv ch©v‡jvPbv Ki‡Z n‡e|
hw` mwVKfv‡e m¤úv`b Kiv bv n‡q _v‡K †m‡¶‡Î Environment Due Diligence (EDD)
Check List cybivq hvPvB Ki‡Z n‡e| hw` Environment Risk Rating Gi djvdj High nq
†m‡¶‡Î FY cÖ¯Ív‡e wb‡¤œ ewY©Z kZ© Av‡ivc Kiv †h‡Z cv‡i t
 The borrower will conduct business and maintain property in compliance with all
environmental laws.
 The borrower will provide environmental clearance certificates as and when
obtained or renewed.
 The borrower will have emergency response procedures in place.
 The borrower will take immediate and necessary remedial action in the event of a
hazardous spill or release.
 The borrower will not use the property for disposing of, producing, treating, storing
or using containmants, pollutants, toxic substances or hazardous materials or
wastes.
 The borrower will employ a separate environmental manager with required
background and skills to address environmental problems.
 The borrower will ensure adequate preparedness to climate change induced
extreme events such as floods and cyclones.
Environment Risk Rating Gi djvdj High n‡j mswk­ ó FY cÖ¯Íve Aby‡gv`‡bi Rb¨ cwiPvjbv
cwil‡` †ck Ki‡Z n‡e|
(N) evsjv‡`k e¨vs‡Ki cwi`k©b t
evsjv‡`k e¨vsK KZ©„K evrmwiK wfwˇZ e¨vsKmgy•n wbix¶v/cwi`k©bKv‡j ERM ev¯Í•evq‡bi
AMÖMwZ ch©v‡jvPbv Kiv n‡e|
(O) e¨vs‡Ki evwl©K cÖwZ‡e`‡b AšÍfz©w³KiY t
ERM Gi ev¯Íevqb m¤úwK©Z Z_¨vw` e¨vs‡Ki evwl©K cÖwZ‡e`‡b AšÍfy©³ Ki‡Z n‡e|

~ 100 ~
 Annexure -7
cvZv bs-4

06| Technical Manual & Technical Annexes (Part-3 & 4) :

(K) cwi‡ek myi¶vi Rb¨ evsjv‡`‡k Environment Conservation Act (ECA)' 1995 cÖYxZ n‡q‡Q| D³
AvBb/wewa Gi msw¶ß weeiY wbæiƒc t
†h †Kvb wkí cÖwZôvb ev cÖKí cÖwZôvi †¶‡Î Environmental Conservation Act(ECA)1995 Ges
Environmental Conservation Rules(ECR) 1997 cvjb Ki‡Z n‡e Ges Department of
Environment(DOE)-Gi gnvcwiPvjK Gi wbKU n‡Z Environmental Clearance Certificate
wb‡Z n‡e| wkí BDwbU Ges cÖKímgyn‡K Zv‡`i Ae¯’vb I cwi‡e‡ki Dci cÖfve we‡ePbvq Green, Orange-
A, Orange-B Ges Red G Pvi †kÖYx‡Z fvM Kiv n‡q‡Q| Z¤§‡a¨ Green n‡jv me‡P‡q Kg cwi‡ek `–lK
Ges Red n‡jv me‡P‡q †ekx|
(L) cwi‡ekMZ SyuwK wbiƒcb c×wZ t

1g avc t

FY cÖ¯Íve cÖvwßi ci Environment Due Diligenice (EDD) Check List Gi gva¨‡g cÖv_wgKfv‡e/
mvaviYfv‡e (General) cwi‡ekMZ SyuwK wbiƒc‡bi c`‡¶c wb‡Z n‡e| Giƒc Kvh©µ‡gi Rb¨ General
EDD Check List e¨envi Ki‡Z n‡e|

2q avc t

†h mg¯Í FY cÖ¯Ív‡ei †¶‡Î (Specific) wbw`©ófv‡e cwi‡e‡ki QvocÎ cÖ‡qvRb †m‡¶‡Î cwi‡ekMZ SyuwK
wbiƒc‡bi c•‡e©B QvocÎ MÖnY Ki‡Z n‡e| AZtci †m±i wfwËK EDD Check List e¨envi Ki‡Z n‡e|
Av‡jvP¨ MvBWjvB‡b 10wU †m±‡ii Rb¨ 10wU †m±i wfwËK EDD Check List Gi bgybv cÖ`vb Kiv n‡q‡Q|
†m±i¸wj wbæiƒc t

(1) Poultry & Dairy.

(2) Cement.

(3) Chemicals : Fertilizers, Pesticides and Pharmaceuticals.

(4) Engineering and basic metal.

(5) Housing.

(6) Pulp & Paper.

(7) Sugar & distilleries.

(8) Tannery.

(9) Textile and apparels.

(10) Ship breaking.

3q avc t

mvaviY I †m±i wfwËK EDD Check List Gi Dc‡ii As‡k ewY©Z cÖkœmg•‡ni m¤¢ve¨ DËi m¤úbœ Kivi ci
†PK wj‡ói bx‡Pi As‡k High, Moderate, Low BZ¨vw` Environment Risk Rating (EnvRR) Ki‡Z
n‡e|

~ 101 ~
 Annexure -7
cvZv bs- 5

4_© avc t

me‡k‡l mvaviY EDD Check List I Specific / †m±i wfwËK EDD Check List Gi Risk Rating wb‡q
wb‡gœv³ Q‡Ki mvnv‡h¨ mvwe©K (Overall) EnvRR wbY©q Ki‡Z n‡et

General EDD Sector-specific EDD Result

Low Low Low

Moderate/Low Low/Moderate Moderate

If any one or both the General and Sector-specific EDD High

checklists is indicated as "High"

D‡j­ L¨, EnvRR "High" n‡j A_v©q‡bi cÖ¯ÍvewU e¨vs‡Ki cwiPvjbv cwil` wKsev wbev©nx KwgwU KZ…©K Aby‡gvw`Z n‡Z n‡e| hw` Env RR
"Low" A_ev "Moderate" nq ‡m †¶‡Î mPivPi FY SzuwK e¨e¯’vcbv wb‡`©kbv †gvZv‡eK A_v©q‡bi wm×všÍ MÖnY Ki‡Z n‡e| hw` EnvRR
A¯úó nq Z‡e FY MÖnxZvi wbKU n‡Z cÖ‡qvRbxq Z_¨ msMÖn K‡i AšÍ©wbwnZ High/ Moderate/Low SzuwK m¤ú‡K© cwi¯‹vi aviYv MÖnY
Ki‡Z n‡e| EnvRR wbY©‡qi †¶‡Î cÖkœc‡Î D‡jøwLZ †Kvb welq AcÖ‡qvRbxq g‡b n‡j Zv cÖkœcÎ †_‡K ev` ‡`qv †h‡Z cv‡i|

ERM ev¯Íevq‡bi wbwg‡Ë evsjv‡`k e¨vsK KZ©„K cÖ`Ë Check List cÖ‡hvR¨ n‡e|

~ 102 ~
 Annexure - 8
cvZv bs- 1

AMÖYx e¨vsK wjwg‡UW G MÖxY e¨vswKs Kvh©µg PvjyKiY

wek¦e¨vcx gbyl¨ m„ó Avc‡`i Kvi‡Y Z_v cÖK…wZi ¯^vfvweK AvPi‡bi wei“‡× AhvwPZ n¯—‡¶‡ci d‡j evqygÛ‡j Kve©b WvB-A·vBW e„w×
cv‡”Q| evqygÛ‡j †K¬v‡iv †d¬v‡iv Kve©b (wmGdwm) M¨vm wbM©g‡bi d‡j IRb ¯—†ii ¶q RwbZ Kvi‡Y ˆewk¦K ZvcgvÎv e„w× cv‡”Q | bvbvwea
¶wZKi AwZ †e¸bx iwk¥ evqygÛ‡j cÖ‡ek K‡i mvgwMÖKfv‡e cwi‡ek‡K `–wlZ K‡i Zzj‡Q| †mB mv‡_ AbvKvswLZ cvigvbweK cix¶v-wbix¶v
I ZrKvi‡Y D™¢yZ mf¨Zv wech©qKvix cvigvbweK e‡R©¨i Avwa‡K¨i Kvi‡Y wek¦ cwi‡ek, wek¦ Rjevqy AvR gvbe Rxeb I cÖvYxKy‡ji cÖwZ ûgwK
n‡q †`Lv w`‡q‡Q| hvi cÖZ¨¶ Avμg‡bi wkKvi ZZ…xq we‡k¦i †`k mgyn | evsjv‡`‡ki cwi‡ek AvR Rjevqy cwieZb© I ˆewk¦K Dòvq‡bi
Kvi‡Y gvivZ¥K ûgwKi m¤§yLxb| B‡Zvg‡a¨ wek¦‡bZ…e„‡›`i mfvq Rjevqy cwieZ©‡bi Kvi‡Y evsjv‡`‡ki ¶wZMÖ¯’ nIqvq welqwU gvbbxq cÖavbgš¿x
†kL nvwmbv h_v_©fv‡e DÌvcb K‡i‡Qb|

03| Kg Kve©b wbM©Z nq Ggb wk‡í A_©vqb, ˆRe cÖhyw³ e¨envi K‡i ev‡qvM¨vm c­ ¨v›U ¯’vc‡b A_©vqb, †mŠikw³ e¨envi K‡i cwi‡ek evÜe
cÖhyw³i Dboeq‡b A_©vqb, KxUbvkK I ivmvqwbK mvi e¨envi n‡e bv Ggb me cÖK‡í A_©vqb, ˆRe mvi Drcboe nq Ggb me cÖK‡í A_©vq‡bi
¸i“Z¡ cÖ`vb BZ¨vw`i gva¨‡g Avw_©K cÖwZôvb ¸‡jv cwi‡e‡ki e¨vcK ¶wZ †iva Ki‡Z cv‡i| G QvovI Af¨š—ixbfv‡e Awd‡m e¨eüZ
KvMRcÎ, Kvwj Kjg, we`y¨r, cvwb BZ¨vw`i AcPq †iva K‡i cwi‡ek‡K AveR©bvgy³ (Waste-free) ivLvI MÖxY e¨vswKs Gi AvIZvfz³| G
mKj fveavivq DØy× n‡qB MÖxY e¨vswKs Kvh©μ‡gi D‡`¨vM †bqv evwÃZ|

04| GgZve¯’vq, wb‡gœv³ welq¸‡jv AMÖvwaKvi wfwˇZ we‡ePbv K‡i MÖxY e¨vswKs Kvh©µg Pvjy Ki†Z n‡e t

K) ewn¯’ t MÖxY e¨vswKs (Out House Green Banking):

i) we`¨gvb cÖK‡í PjwZ gyjab FY cÖ`vb A_ev bZzb †Kvb cÖKí ¯’vc‡bi c~‡e© cwi‡ekMZ fvimvg¨ †Lqvj Ki‡Z n‡e hv‡Z
cÖKíwU Drcv`bKvjxb Ggb †Kvb cwiw¯’wZi m„wó bv nq hv cwi‡ek‡K AviI ¶wZKi Ae¯’v‡b wb‡q hvq|

ii) L/C †Lvjvi c–‡e© wk‡íi eR©¨, wb®‹vk‡bi Rb¨ Aek¨B eR©¨ wb®‹vkb cwi‡kvab c×wZ (Effluent Treatment Plant
(ETP) mswkøó wk‡í ¯’vcb wbwðZ Ki‡Z n‡e|

iii) evsjv‡`k e¨vs‡Ki cybtA_©vq‡bi AvIZvq evwYwR¨K e¨vsK¸‡jv †mŠikw³, ev‡qvM¨vm, eR©¨ wb®‹vkb cø¨v›U, cvwb †kvab
cÖKí, weï× cvwb mieivn †K›`ª ¯’vcb, B‡Ui fvUvq HHK ndg¨vb wKb (Hybrid Hoffman Kiln) BZ¨vw` Lv‡Z FY
cÖ`v‡b D‡`¨vM MÖnY Ki‡Z n‡e|

iv) jebv³Zv mwnòy (Salinity tolerance crops) km¨ Drcv`b, RjgMoeZv mwnòy dmj (Water tolerance crops)
Drcv`b, f‚-Dcwi¯’ cvwb e¨env‡ii gva¨‡g Liv mwnòy dmj (Drought tolerance crops) Drcv`b, ˆRe mvi e¨envi,
ivmvqwbK mvi I KxUbvk‡Ki cwie‡Z© ‰Re mvi I cÖvK…wZK c×wZ e¨envi K‡i ‡ivMevjvB `gb BZ¨vw` Lv‡Z e¨vsK FY
cÖ`v‡b D‡`¨vM MÖnY Ki‡Z n‡e|

~ 103 ~
 cvZv bs-2

L) Af¨š—ixY MÖxY e¨vswKs (In House Green Banking)

i) cÖ‡Z¨K kvLv Zv‡`i Af¨š—ixb cÖ‡qvR‡b e¨eüZ KvMR, we`y¨r, cvwb I Ab¨vb¨ mvgMÖxi ev¯—e wnmve ivL‡Z n‡e hv‡Z
D³ e¨envh© e¯‘i AcPq †iva Kiv hvq| cÖ‡qvR‡b `xN©w`‡bi cyivZb Ae¨eüZ mvgMÖx Acmvib Ki‡Z n‡e |

ii) MÖxY e¨vswKs Awdm MvBW bv‡g GKwU cyw¯—Kv cÖ‡Z¨K Kg©KZ©v/Kg©Pvix‡`i‡K mieivn Ki‡Z n‡e hv‡Z K‡i Zviv we`y¨r,
cvwb, KvMRcÎ BZ¨vw` e¨env‡i m‡PZb nq|

iii) KvMR c‡Îi e¨envi Kgv‡bvi j‡¶¨ AbjvBb e¨vswKs Kvh©µ‡gi Dci ¸iæZ¡ w`‡Z n‡e|

iv) we`y¨r mvkÖqx B‡jKwUªK hš¿cvwZ e¨envi Ki‡Z n‡e|

v) e¨vsK Gi mKj Kvh©vj‡q wb‡R‡`i we`y¨r LiP Kgv‡bvi Rb¨ h_vm¤¢e †mŠiwe`y¨r e¨envi Ki‡Z n‡e|

vi) M¨v‡mi ch©vßZv mv‡c‡¶ M¨vmPvwjZ hvbevnb e¨envi Ki‡Z n‡e|

vii) B›Uvi‡bU A_ev wbivcËvg–jK I‡qemvBU e¨envi K‡i AbjvBb e¨vswKs e¨e¯’v Pvjy Ki‡Z n‡e| G‡Z K‡i KvMR cÎvw`i
e¨envi n«vm mn cwi‡e‡ki `–lY Kg‡e|

viii) e¨vs‡K wb‡qvwRZ gvbe m¤ú`‡K cwi‡ek m‡PZb Kivi j‡¶¨ wewfbœ cÖwk¶Y Gi Av‡qvRb Ki‡Z n‡e|

5| AMÖYx e¨vsK wjwg‡UW G cix¶vg–jKfv‡e MÖxY e¨vswKs Kvh©µg ïiæ Kivi Rb¨ AMÖYx e¨vsK wjwg‡UW Gi iæivj †µwWU I GmGgB †µwWU
wWwfkb Gi `vwqZ¡cÖvß Dc-gnve¨e¯’vcK Gi Aax‡b GKwU Ô†K›`ªxq MÖxY e¨vswKs Dc-wefvMÕ †Lvjv n‡q‡Q| Ô†K›`ªxq MÖxb e¨vswKs Dc-wefvMÕ
KZ…©K MÖxY e¨vswKs msµvšÍ hveZxq Kvh©µ‡gi gwbUwis Kiv n‡e|

~ 104 ~
 Annexure-9
µwgK bs

di‡gi g~j¨ Uvt 100.00(UvKv GKkZ) gvÎ

AMÖYx e¨vsK wjwg‡UW †Mvcbxq
........................................ kvLv
....................................... AÂj
....................................... †Rjv

cwiPvjK‡`i
wjwg‡UW †Kv¤úvwbi Rb¨
mZ¨vwqZ Qwe
F‡Yi Av‡e`bcÎ
(Av‡e`bKvix c~iY Ki‡eb)

PjwZ wnmve b¤^i t ............................................

wnmve †Lvjvi ZvwiL t ...........................................
wnmv‡ei Mo w¯’wZ t $ ........................................

wnmv‡ei eZ©gvb w¯’wZ t $........................................

1| †Kv¤úvwbi bvg t Av‡e`‡bi ZvwiL t

(K) Aby‡gvw`Z g~jab t †dvb t
(L) cwi‡kvwaZ g~jab t †gvevBj t
B-†gBj t
2| †Kv¤úwbi wbewÜZ wVKvbv t I‡qe mvBU t
3| †Kv¤úwbi MV‡bi ZvwiL t
(mvwU©wd‡KU Ae BbK‡c©v‡ik Gi d‡UvKwc w`‡Z n‡e)

4| * (K) e¨emv Avi‡¤¢i ZvwiL t

(L) e¨emv msµvšÍ• Z_vewj t
b¤^i ZvwiL †gqv`Kvj
†UªW jvB‡mÝ t
wUAvBGb (TIN) t
Avg`vwb †iwR‡óªkb mvwU©wd‡KU(cÖ‡hvR¨ †¶‡Î)t
ißvwb †iwR‡óªkb mvwU©wd‡KU(cÖ‡hvR¨ †¶‡Î) t
(M) Avg`vwbi cÖK…wZ t evwYwR¨K/wkí‡fv³v

5| KviLvbvi wVKvbv t
(K) kvLv n‡Z KviLvbvi `yiZ¡ t †dvb t
(L) kvLv n‡Z ¸`v‡gi `yiZ¡ t †gvevBj t
(M) ¸`vg fvov Kiv n‡j gvwj‡Ki B-†gBj t
bvg I wVKvbv(fvovi iwm` mshy³ Ki‡Z n‡e) I‡qe mvBU t

........................
cixw¶Z/mZ¨vwqZ
kvLv e¨e¯’vcK/Kg©KZ©vi Aby¯^v¶i .........................................
†Kv¤úvwb g‡bvbxZ e¨w³i ¯^v¶i
* cvewjK wjwg‡UW †Kv¤úvwb n‡j mvwU©wd‡KU Ae K‡g݇g›U Gi d‡UvKwc mshy³ Ki‡Z n‡e|

~ 105 ~
 µwgK bs
(2)

AMÖYx e¨vsK wjwg‡UW, .............................................. kvLv

6| †Kv¤úvwbi kvLv/kvLv mg~•‡ni bvg I †dvb t

wVKvbv (hw` _v‡K) t †gvevBj t
B-†gBj t
I‡qe mvBU t

7| (K) cÖ¯ÍvweZ F‡Yi cÖK…wZ t

(L) cÖ¯vÍ weZ F‡Yi A¼ t
(M) cÖ¯vÍ weZ F‡Yi D‡Ïk¨ t

8| cÖ¯ÍvweZ Rvgvb‡Zi weeiY t

Rvgvb‡Zi cÖK…wZ weeiY cwigvY g~j¨

(K) cÖv_wgK/gyL¨

* (L) mnvqK/AwZwi³ (mvBU cøvbmn cÖvmw½K `wjjcÎ mshy³ Ki‡Z n‡e)

* Ab~a© 50 j¶ UvKv g~‡j¨i m¤úwËi †¶‡Î †Kej kvLv e¨e¯’vc‡Ki g~•j¨vqbcÎ AÂj cÖavb Gi KvD›Uvi ¯^v¶imn `vwLj Ki‡Z n‡e| 50
j¶ UvKvi AwaK g~‡j¨i m¤úwËi †¶‡Î cyi-cÖ‡KŠkjx I wbewÜZ mv‡f©qvi KZ©„K m¤úwËi g~•j¨ wbiƒcYc•e©K Zdwm‡ji we¯—vwiZ eY©bv
mnKv‡i g~j¨vqbcÎ Ges G wel‡q kvLv e¨e¯’vc‡Ki ¯^Zš¿• I wbi‡c¶ cÖZ¨qbcÎ I e¨vsK g‡bvbxZ AvBbRxexi gZvgZ ms‡hvRb Ki‡Z
n‡e| cÖ‡qvR‡b e¨vs‡Ki g‡bvbxZ Kg©KZ©v KZ©„K †h †Kvb ch©v‡q G m¤úwË mn‡R wPwýZKi‡Yi j‡¶¨ †hvM¨ cyi-cÖ‡KŠkjx / WªvdUmg¨vb KZ©„K
bKkvK…Z mvBU cø¨vb mshy³ Ki‡Z n‡e| †ckK…Z `wjjvw`i h_v_©Zv m¤ú‡K© †iwRwóª / mve-†iwRwóª Awdm / wmI †iwfwbD Awdm / Znwmj
Awdm n‡Z hvPvBc~e©K kvLvi g~j¨vqbcÎ `vwLj Ki‡Z n‡e|

........................
cixw¶Z/mZ¨vwqZ
kvLv e¨e¯’vcK/Kg©KZ©vi Aby¯^v¶i ........................................
†Kv¤úvwb g‡bvbxZ e¨w³i ¯^v¶i
~ 106 ~
 µwgK bs
(3)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

9| GB e¨vsK ev Ab¨ e¨vs‡Ki †Kvb kvLvq †Kv¤úvwbi wnmve _vK‡j Zvi weeiY t

e¨vs‡Ki kvLvi bvg I wVKvbv wnmv‡ei cÖK…wZ I wnmv‡ei b¤^i wnmve †Lvjvi ZvwiL gš—e¨

1 2 3 4

10|(K) †Kv¤úvwbi Ab¨vb¨ e¨vs‡Ki bvg I Zv‡`i wbKU n‡Z †bqv FY msµvšÍ• Z_¨vewj|

(cÖKíFY cÖ`vbKvix e¨vs‡Ki QvocÎ mshy³ Ki‡Z n‡e)|

kvLvi bvgmn F‡Yi cÖK…wZ eZ©gvb †gqv‡`vËx‡Y©i F‡Yi eZ©gvb Rvgvb‡Zi

e¨vs‡Ki bvg I I FYmxgv e‡Kqv ZvwiL Ae¯’v
weeiY cwigvY g~•j¨
wVKvbv

1 2 3 4 5 6K 6L 6M

(L) †Kv¤úvwbi Ab¨vb¨ `vq †`bvi weeiY(hw` _v‡K) t

(M) G e¨vsK †_‡K FY myweavi Rb¨ Av‡e`‡bi KviY (bZzb FYcÖv_x©i †¶‡Î) t

......................
cixw¶Z/mZ¨vwqZ
kvLv e¨e¯’vcK/Kg©KZ©vi Aby¯^v¶i ........................................
†Kv¤úvwb g‡bvbxZ e¨w³i ¯^v¶i
~ 107 ~
 µwgK bs

(4)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

(N) GB e¨vs‡Ki Ab¨ †Kvb kvLv †_‡K FY MÖnY K†i _vK‡j †m kvLvi bvg I wVKvbv t

(O) Ab¨ e¨vs‡K FY _vK‡j G e¨vs‡K F‡Yi Rb¨ Av‡e`‡bi KviY t

(P) †Kvb mvj n‡Z G e¨vs‡Ki FY myweav †fvM K‡i Avm‡Q t

cÖviw¤¢K FYmxgv t
gÄywii ZvwiL t

11| †Kv¤úvwbi cwiPvjKgÛjxi e¨w³MZ bv‡g ev ¯^v_©mswk­ ó †Kv¤úvwb / dv‡g©i bv‡g G e¨vsK ev Ab¨ †Kvb e¨vs‡K `vq‡`bv _vK‡j
Zvi weeiY t

cwiPvj‡Ki bvg ev kvLvi bvgmn F‡Yi cÖK…wZ I eZ©gvb †gqv‡`vËx‡Y©i eZ©gvb Rvgvb‡Zi
e¨vs‡Ki bvg I FYmxgv e‡Kqv Ae¯’v
cwiPvjK‡`i ¯^v_© mswk­ ó wVKvbv ZvwiL weeiY cwigvY g~j¨
†Kv¤úvwb/dv‡g©i bvg I
wVKvbv

1 2 3 4 5 6 7K 7L 7M

........................
cixw¶Z/mZ¨vwqZ

kvLv e¨e¯’vcK/Kg©KZ©vi Aby¯^v¶i .........................................

†Kv¤úvwb g‡bvbxZ e¨w³i ¯^v¶i

~ 108 ~
 µwgK bs

(5)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

12| †Kv¤úvwbi cwiPvjK‡`i Z_¨ewj t

(K) cwiwPwZ t

µwgK cwiPvjK‡`i bvg, †kqv‡ii msL¨v I ¯^v_© mswk­ ó Ab¨ †Kv¤úvwb / dv‡g©i bvg
b¤^i cwigvY
wVKvbv I RvZxqZv, AvBwW b¤^i †Kv¤úvwb / dv‡g©i bvg †kqv‡ii cwigvY /
I wVKvbv
(`•ivjvcbx, B-†gBj b¤^imn) gvwjKvbv ¯^v_©

1 2 3 4K 4L

(L) m¤úwË msµvšÍ• t

µwgK ¯’vei m¤úwË A¯’vei m¤úwË

b¤^i
weeiY cwigvY g~•j¨ weeiY cwigvY g~j¨

1 2K 2L 2M 3K 3L 3M

13|(K) FY MÖn‡Yi ¶gZv t

(†g‡gv‡iÛvg GÛ AvwU©‡Kjm Ae
G‡mvwm‡qkb Gi Kwc mshy³
K‡i mswk-ó aviv D‡j-L
Ki‡Z n‡e)|

(L) cÖ¯ÍvweZ FY/AwMÖ‡gi Rb¨ †Kv¤úvwbi cwiPvjbv cwil‡`i

mfvq M„nxZ wm×v‡š—•i Abywjwc mshy³ Ki‡Z n‡e hv
cwil‡`i mfvcwZ KZ©„K ¯^v¶wiZ Ges FYMÖnxZv
†Kv¤úvwbi mwPe KZ©„K cÖwZ¯^v¶wiZ n‡Z n‡e|

........................

cixw¶Z/mZ¨vwqZ
kvLv e¨e¯’vcK/Kg©KZ©vi Aby¯^v¶i .........................................
†Kv¤úvwb g‡bvbxZ e¨w³i ¯^v¶i

~ 109 ~
 µwgK bs
(6)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

14| G kvLvq †Kv¤úvwbi e‡Kqv `vq‡`bvi we¯—vwiZ weeiY t
F‡Yi cÖK…wZ FYmxgv eZ©gvb w¯’wZ †gqv‡`vËx‡Y©i cÖv_wgK Rvgvb‡Zi mnvqK Rvgvb‡Zi
ZvwiL weeiY cwigvY g~j¨ weeiY cwigvY g~j¨
1 2 3 4 5K 5L 5M 6K 6L 6M
(K) dv‡ÛW t
1| cÖKí FY
2| wmwm(nvB‡cv)
3| wmwm(†c-R)
4| GjwUAvi
5| Ifvi WªvdU
6| Zjex FY
7| wcGwW
8| wjg
9| AvBwewc
10| Gdwewc
11| Ab¨vb¨
(L) bb-dv‡ÛW t
1| FYcÎ (Gjwm)
(weeiYx mshy³)
2| e¨vsK M¨vivw›U
3| Ab¨vb¨
†gvU t

15| MZ wZb eQ‡ii FY msµvšÍ• Z_vewj t

weeiY mb 200 mb 200 mb 200

(K) gÄywi KZ©„c¶
(L) gÄywicÎ b¤^i I ZvwiL
(M) FYmxgv
(N) †gqv‡`vËx‡Y©i ZvwiL
(O) FY cwi‡kv‡ai ZvwiL
(P) Rgvi mgwó (Credit Summation)
(Q) D‡Ëvj‡bi mgwó (Debit Summation)
(R) †gqv‡`vËx‡Y©i Zvwi‡L w¯’wZ
(S) eZ©gvb `vqw¯’wZ
(T) †gqv`Kvjxb mg‡q KZevi
FYwU cwi‡kvwaZ n‡q‡Q
(U) gyL¨/cÖv_wgK Rvgvb‡Zi g~j¨
(V) mnvqK/AwZwi³ Rvgvb‡Zi g~j¨
.......................
cixw¶Z/mZ¨vwqZ
kvLv e¨e¯’vcK/Kg©KZ©vi Aby¯^v¶i ...........................................
†Kv¤úvwb g‡bvbxZ e¨w³i ¯^v¶i

wcGwW - Payment Against Document, Zjex FY - Demand Loan, wmwm - Cash Credit, IwW - Over Draft, wjg - Loan Imported
Merchandise, GjwUAvi - Loan Against Trust Receipt, AvBwewc - Inland Bill Purchase, Gdwewc - Foreign Bill Purchase, Rgvi
mgwó - Credit Summation, D‡Ëvj‡bi mgwó - Debit Summation

~ 110 ~
 µwgK
bs

(7)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

16| †Kv¤úvwbi AvqKi msµvšÍ Z_¨vejx t wR,AvB,Avi bs ......................... ZvwiL ............................... |

cye©eZx© wZb ermi cwi‡kvaK…Z AvqK‡ii AvqKi cwi‡kva msµvšÍ QvocÎ

A¼ b¤^i ZvwiL

20
20
20

17| Ab¨vb¨ cÖ‡qvRbxq Z_¨vw` t

18| †Kv¤úvwbi †NvlYv t

Avgiv G g‡g© mÁv‡b cÖwZÁvc•e©K †NvlYv I wbðqZv cÖ`vb KiwQ †h,

(K) Dc‡i ewY©Z Z_¨vw` mwVK Ges G‡Z †Kvb wKQyB †Mvcb Kiv nhwb| hw` fwel¨‡Z KL‡bv cÖgvwYZ nq †h, FY myweav jvf
Kivi Rb¨ D‡Ïk¨ cÖ‡Yvw`Z n‡q Avgiv cÖ‡qvRbxq Z_¨vw` †Mvcb K‡iwQ Zv n‡j AvBbZt `Ûbxq n‡ev|
(L) Avgv‡`i bv‡g G e¨vsK n‡Z FY gÄyi n‡j G e¨vs‡Ki wjwLZ m¤úwË Qvov Ab¨ †Kvb e¨vsK n‡Z †Kvb FY MÖnY
Kie bv| Ab¨_vq AvBbZt `vqx _vK‡ev|
(M) G FY cÖ¯Ív‡ei cÖ‡qvR‡b e¨vsK KZ©„K mg‡q mg‡q PvIqv Z_¨vw` mieivn Ki‡Z _va¨ _vK‡ev|
(N) AÎ `iLv‡¯Í• ewY©Z FY Qvov Avgiv G e¨vs‡Ki Ab¨ †Kvb kvLvq/wnmv‡e ev Ab¨ †Kvb e¨vsK n‡Z †Kvb FY MÖnY Kwiwb ev
Avgv‡`i †Kvb `vq-†`bv †bB|

¯^v¶x t .....................................
¯^v¶xi t ........................... †Kv¤úvwbi Aby‡gvw`Z ¯^v¶i
bvg t (cyiv bvgI mxj )
wVKvbv t
ZvwiL t
ZvwiL t

2| ¯^v¶i t ...........................
bvg t

wVKvbv t

ZvwiL t

........................................
cixw¶Z/mZ¨vwqZ
~ 111 ~
 kvLv e¨e¯’vcK/Kg©KZ©vi ¯^v¶i

µwgK bs

(8)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

2q - Ask
(kvLv c~iY Ki‡e)

19.1| †Kv¤úvwbi weMZ 3(wZb) erm‡ii w¯’wZ cÎ Abyhvqx Z_¨vw` t

(weMZ wZb erm‡ii wbixw¶Z w¯’wZ cÎ ms‡hvwRZ)

`vq mg~•n Zvwi‡L Zvwi‡L Zvwi‡L m¤ú` mg~•n Zvwi‡L Zvwi‡L Zvwi‡L
(UvKv) (UvKv) (UvKv)
(UvKv) (UvKv) (UvKv)

gvwjK‡`i BKzBwU Bb‡UbwRej m¤ú`

(K) cwi‡kvwaZ g~•jab (K) mybvg, †UªW gvK©
(L) msiw¶Z Znwej ¯^Z¡vwaKvi BZ¨vw`
(M) jvf Ges †jvKmvb (L) cÖv_wgK e¨q, jvf
wnmve(†µwWU) †jvKmvb wnmve
(†WweU)
1| †gvU BKz¨BwU 5| †gvU Bb‡UbwRej
2| `xN© †gqv`x `vq mg~•n m¤ú`
3| †gvU BKz¨BwU I `xN© 6| ¯’vqx m¤ú`
†gqv`x `vqmg~•n (K) f‚wg Ges
(1+2) `vjvb †KvUv
4| PjwZ `vq mg~•n (L) hš¿cvwZ
(K) e¨vs‡Ki ¯^í (M) Ab¨vb¨ ¯’vqx
†gqv`x FY m¤ú`
(L) Ab¨vb¨ ¯^í (M) †gvU ¯’vqx
†gqv`x FY m¤ú`
(M) wewea †`bv / Ab¨vb¨ (K+L+M)
`vqmg~•n
(N) †gvU PjwZ `vq 7| PjwZ m¤ú`
mg~•n (K+L+M) (K) KuvPv gv‡ji gRy`
(L) IqvK©-Bb-cÖ‡mm
(M) ˆZix `ªe¨vw`i gyR`
(N) wewea cvIbv
(O) bM` A_© Ges
e¨vs‡Ki Rgv
(P) †gvU PjwZ m¤ú`
(K+L+M+N+O)

me©‡gvU `v‡qi mgwó me©‡gvU m¤ú‡`i mgwó

(3+4) (5+6N+7P)

Kg©KZ©vi ¯^v¶i

~ 112 ~
 µwgK bs
(9)

AMÖYx e¨vsK wjwg‡UW, ...................................................... kvLv

19.2| w¯’wZcÎ we‡k-lY
(K) †Kv¤úvwbi cÖK…wZ m¤ú` (wbU Iqv_©)
†Kv¤úvwbi cÖK…Z m¤ú` = 1| cwi‡kvwaZ g~jab + msiw¶Z Znwej + jvf I †jvKmvb wnmv‡ei(†µwWU)
w¯’wZ/A`„k¨ m¤ú`
= Uvt ....................................

2| †gvU m¤ú`- (A`„k¨ m¤ú` + †gvU ewnt †`bv mg~•n) t

21.1 Gi { (5+6N+7P) - (5+2+4N) }

= Uvt ....................................

(L) Ki cÖ`v‡bi ci Avmj gybvdv t = Uvt ....................................

( ........................ Zvwi‡L mgvß mg‡qi )
(M) wb‡qvwRZ g~jab n‡Z Avq = my`+Ki c•e© gybvdv = =
¯’vqx m¤ú`+PjwZ m¤ú`
(....................... Zvwi‡L mgvß mg‡qi)

(N) PjwZ AbycvZ t = PjwZ m¤ú` = =

PjwZ `vq

(O) Bb‡fbUix UvY© IAvi †iwmI = gv‡ji wewµZ LiP (Kó Ae ¸Wm& †mvì) = =
Mo Bb‡f›Uix = 1/2 (cÖvwßi gRy` + mgvcbx gRy`)

(P) †WeU BKz¨BwU †iwmI = 1| `xN©‡gqv`x `vqmg~n =

( ............ Zvwi‡L) gvwj‡Ki BKz¨BwU/†UbwRej †bU Iqv_©

2| `xN©‡gqv`x `vq mg~•n + PjwZ `vq mgyn =

gvwj‡Ki BKz¨BwU

(Q) †WUim †iwmI = †UªW †WUim& =

* cÖwZw`‡bi weµq

* cÖwZw`‡bi weµq = erm‡ii †gvU weµq =

300

.......................... ....................................
Kg©KZ©vi ¯^v¶i kvLv e¨e¯’vc‡Ki ¯^v¶i

~ 113 ~
 µwgK
bs

(10)

AMÖYx e¨vsK wjwg‡UW, .................................................... kvLv

19.3| PjwZ g~ja‡bi cÖ‡qvRb wbi“cb Ges
e¨vsK KZ©„K Aby‡gvw`Z cwigvY

* 1| wkí cÖwZôvb
UvKvi As‡K
Pvwn`v eZ©gvb gRy`
(K) ............... gv‡mi Rb¨ Avg`vwbZe¨
KuvPv gv‡ji Pvwn`v I eZ©gvb gRy` t
(L) ................ gv‡mi Rb¨ †`kxq KuvPv
gv‡ji Pvwn`v I eZ©gvb gRy` t
(M) .................. gv‡mi Rb¨ Drcv`‡b
e¨eüZ KuvPv gv‡ji Pvwn`v I eZ©gvb gRy` t
(N) ............. gv‡m gvj ˆZixi ¶gZv Abyhvqx
Drcvw`Z `ª‡e¨i AbywgZ cwigvY I eZ©gvb gRy` t
(O) ............gv‡mi Rb¨ †fvM¨ miÄvg Ges ¶z`ª
hš¿cvwZi Pvwn`v I eZ©gvb gRy` t
(P) ............ gv‡mi cÖvc¨ Abv`vqx we‡ji cwigvY t .........................................................
(Q) ............ gv‡mi Drcv`b Lv‡Z Ab¨vb¨ LiP t .........................................................
ev` t eZ©gvb gRy` t
cÖ‡qvRbxq PjwZ g~ja‡bi cwigvY t .........................................................
ev` t gvwR©b t
e¨vsK KZ©„K wbiƒwcZ PjwZ g~•ja‡bi
cwigvY t

* †h mKj wkí cÖwZôv‡bi †¶‡Î evsjv‡`k e¨vsK KZ©„K wba©vwiZ

bxwZgvjvi wfwˇZ PjwZ g~ja‡bi Pvwn`v wbiƒwcZ nq †m mKj
†¶‡Î 1 cÖ‡hvR¨ n‡e bv| Z‡e 21.3 Aby‡”Q‡`i 3-G eY©bv w`b|

.......................... ....................................
Kg©KZ©vi ¯^v¶i kvLv e¨e¯’vc‡Ki ¯^v¶i

~ 114 ~
 µwgK
bs

(11)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

e¨emv cÖwZôvb UvKvi As‡K
2| (K) weMZ 3 erm‡i ieQi Iqvix mb µq weµq
gvjvgv‡ji µq I weµ‡qi cwigvY t 200 .........
200 .........
200 .........

(L) ................ w`‡bi/gv‡mi Rb¨ t Pvwn`v eZ©gvb gRy`

gvjvgv‡ji Pvwn`v I eZ©gvb gRy` t
ev` t eZ©gvb gRy` t
cÖ‡qvRbxq PjwZ g~ja‡bi cwigvY t
ev` t gvwR©b t
e¨vsK KZ©„K wbiƒwcZ PjwZ g~jab t

3| evsjv‡`k e¨vsK KZ©„K wba©vwiZ wbqgvPv‡ii wfwˇZ PjwZ g~ja‡bi Pvwn`v t (hw` cÖ‡hvR¨ nq we¯ÍvwiZ fv‡e) t

........................
Kg©KZ©vi ¯^v¶i ..................................
kvLv e¨e¯’vc‡Ki ¯^v¶i

~ 115 ~
 µwgK bs
(12)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

20.1| weMZ ermi FY wnmv‡e †jb‡`‡bi weeiY t
(wnmvewU mvßvwnK †WweU w¯’wZ jvj Kvwj‡Z
Ges †µwWU w¯’wZ Kvj Kvwj‡Z †`Lv‡Z n‡e)|

ZvwiL w¯’wZ ZvwiL w¯’wZ ZvwiL w¯’wZ ZvwiL w¯’wZ

Rvbyqvwi GwcÖj RyjvB A‡±vei
7 7 7 7
14 14 14 14
21 21 21 21
28 28 28 28
†deªyqvwi †g AvMó b‡f¤^i
7 7 7 7
14 14 14 14
21 21 21 21
28 28 28 28
gvP© Ryb †m‡Þ¤^i wW‡m¤^i
7 7 7 7
14 14 14 14
21 21 21 21
28 28 28 28

m‡e©v”P w¯’wZ = †WweU Uv t ...................................... , ........................................... ZvwiL

= †WweU Uv t ...................................... , ........................................... ZvwiL

†gvU Avq = Uvt ............................... |

* cY¨ FY wnmve bs ............................................ wnmve †Lvjvi ZvwiL ..................................................

* hw` cY¨ FY wnmve †_‡K _v‡K Ges Bnv fvjfv‡e cwiPvwjZ nq Z‡e kvLv KZ©„K wnmve mg~•‡ni †jb‡`b weeiY †`Lv‡Z n‡e|

................................. ...............................
Kg©KZ©vi ¯^v¶i kvLv e¨e¯’vc‡Ki ¯^v¶i

~ 116 ~
 µwgK bs

(13)
AMÖYx e¨vsK wjwg‡UW, ........................................................ kvLv
20.2| bM` A_© cÖevn Ges Awf‡¶cb (cÖ‡Rkb)
bM` A‡_© LvZ mg~n
200 ......................200 .............................200 200 ............(Awf‡¶cb)

UvKv UvKv UvKv

bM` A‡_©i Drm
1| Ki cÖ`vb I cÖ‡qvRbxq mgš^‡qi ci t
cÖK…Z gybvdv (Av‡qi weeiY Abyhvqx)
2| Bmy¨K…Z bZzb †kqvi g~jab t
3| `xN© †gqv`x FY t
4| ¯^í †gqv`x FY t
5| ¯’vqx m¤ú` weµq/wewb‡qvM t
6| PjwZ m¤ú` n«vm
(K)
(L)
(M)
7| PjwZ `vq e„w×
(K)
(L)
(M)
A = †gvU bM` A_© AvšÍt cÖevn t
bM` A‡_©i e¨envi
1| ¯’vqx m¤ú` µq t
2| `xN© †gqv`x FY cwi‡kva t
3| ¯^í †gqv`x FY cwi‡kva t
4| jf¨vsk cÖ`vb t
5| PjwZ m¤ú` e„w× t
(K)
(L)
(M)
6| PjwZ `vq n«vm
(K)
(L)
(M)
7| cÖ‡qvRbxq mgš^‡qi ci cÖK…Z †jvKmvb t
(Avq weeiYx Abyhvqx)
Av = †gvU bM` A_© AvšÍt cÖevn t
cÖK…Z bM` A_© (AvšÍt cÖevn (A/Av) t
†hvM t cÖviw¤¢K bM` A_© w¯’wZ t
mgvcbx bM` A_© w¯’wZ t

......................... ...............................
Kg©KZ©vi ¯^v¶i kvLv e¨e¯’vc‡Ki ¯^v¶i

~ 117 ~
 µwgK bs
(14)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

21| kvLvi mZ¨vqb, gšÍe¨, gZvgZ, wm×všÍ•, Aby‡gv`b I mycvwik t

( mywbw`©ó fv‡e D‡jøL Ki‡Z n‡e)

Avgiv G g‡g© cÖZ¨q KiwQ †h, G Av‡e`b I g~j¨vqbc‡Î ewY©Z Z_¨vw` Avgiv cÖ‡qvRbxq AbymÜvb c~e©K hvPvB K‡i Dnvi h_v_©Zv
m¤ú‡K©-

(K) wbwðZ n‡qwQ Ges Bnvi †cÖw¶‡Z FYwU wbæwjwLZ fv‡e gÄyi Kiv n‡jv / gÄywii Rb¨ mycvwik KiwQ|

(L) ewY©Z Z_¨vw`‡Z cwijw¶Z AmsMwZi Kvi‡Y wb‡gœ Avgv‡`i gšÍe¨, gZvgZ I wm×všÍ• †ck KiwQ t

................................. .......................................
Kg©KZ©vi ¯^v¶i kvLv e¨e¯’vc‡Ki ¯^v¶i
cyiv bvg t cyiv bvg t
c`ex t c`ex t
¯^v¶i bs t ¯^v¶i bs t
ZvwiL t ZvwiL t

~ 118 ~
 µwgK bs
(15)
3q Ask

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

22| AvÂwjK Kvh©vj‡qi gZvgZ, gšÍe¨, wm×všÍ• Aby‡gv`b I mycvwik t

(mywbw`©ó fv‡e D‡jøL Ki‡Z n‡e)

G Av‡e`b I g~j¨vqbcÎ mwbœ‡ewkZ Z_¨ mg•‡ni wfwˇZ Ges kvLvi mZ¨vqb I mycvwi‡ki †cÖw¶‡Z FY gÄywii/
bevq‡bi / ewa©ZKi‡Yi h_v_©Zv m¤ú‡K© t

(K) Avgiv wbwðZ n‡qwQ Ges FYwU wbgœwjwLZ fv‡e gÄyi / bevqb/ ewa©ZKiY Kiv n‡jv| gÄywi/ bevqb / ewa©ZKi‡Yi Rb¨
mycvwik n‡jv|

A_ev

(L) ewY©Z Z_¨vw`‡Z cwijw¶Z AmsMwZi Kvi‡Y wb‡æ Avgv‡`i gšÍe¨, gZvgZ I wm×všÍ• †ck KiwQ t

................................. .......................................
Kg©KZ©vi ¯^v¶i AvÂwjK e¨e¯’vc‡Ki ¯^v¶i
cyiv bvg t cyiv bvg t
c`ex t c`ex t
¯^v¶i bs t ¯^v¶i bs t
ZvwiL t ZvwiL t

~ 119 ~
 µwgK bs

(16)

4_© Ask

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

23| gnve¨e¯’vc‡Ki mwPevj‡qi gšÍe¨, gZvgZ, wm×všÍ•, Aby‡gv`b I mycvwik t

(mywbw`©ó fv‡e D‡jøL Ki‡Z n‡e)

Dc‡i D‡j-wLZ Av‡e`b, g~j¨vqb mZ¨vqb I mycvwi‡ki †cÖw¶‡Z FYwU gÄyi/bevqb/ewa©ZKiY Gi h_v_©Zv m¤ú‡K©-

(K) Avgiv wbwðZ n‡qwQ Ges FYwU wbgœwjwLZfv‡e gÄyi/bevqb/ewa©ZKiY Kiv n‡jv| gÄywi/bevqb/ewa©ZKiY Gi Rb¨ mycvwik
KiwQ|

A_ev

(L) ewY©Z Z_¨vw`‡Z cwijw¶Z AmsMwZi Kvi‡Y wb‡gœ Avgv‡`i gšÍe¨, gZvgZ I wm×všÍ• †ck KiwQ t

.............................. ........................................................
Kg©KZ©vi ¯^v¶i Dc-e¨e¯’vcK/mnKvix gnve¨e¯’vc‡Ki ¯^v¶i
cyiv bvg t cyiv bvg t
c`ex t c`ex t
¯^v¶i bs t ¯^v¶i bs t
ZvwiL t ZvwiL t

......................................
gnve¨e¯’vc‡Ki ¯^v¶i I mxj
ZvwiL t

~ 120 ~
 µwgK bs
(17)
5g Ask

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

24| cÖavb Kvh©vj‡qi gš—e¨¨, gZvgZ, wm×vš—• I Aby‡gv`b t

(cÖwZwU ¯—‡ii gšÍe¨/gZvgZ/mycvwik/wm×všÍ•/Aby‡gv`b mywbw`©ófv‡e D‡jøL Ki‡Z n‡e)

(1) mswkøó Kg©KZ©v

..........................................
¯^v¶i I mxj
¯^v¶i bs t
ZvwiL t

(2) mnKvix gnve¨e¯’vcK

..........................................
¯^v¶i I mxj
¯^v¶i bs t
ZvwiL t

~ 121 ~
 µwgK bs
(18)

AMÖYx e¨vsK wjwg‡UW, ......................................................... kvLv

(3) Dc-gnve¨e¯’vcK t

..........................................
¯^v¶i I mxj
¯^v¶i bs t
ZvwiL t

(4) gnve¨e¯’vcK ( ................................ ) t

..........................................
¯^v¶i I mxj
ZvwiL t

(5) e¨e¯’vcbv cwiPvjK ( ................................ ) t

..........................................
¯^v¶i I mxj
ZvwiL t

~ 122 ~
 µwgK bs

(19)

AMÖYx e¨vsK wjwg‡UW

e¨e¯’vcK, gÄywicÎ gÄywicÎ b¤^i t ..................

AMÖYx e¨vsK wjwg‡UW ZvwiL t ...........................
....................... kvLv
.......................
welq t Rbve/†gmvm© ....................................................
....................................................
....................................................

wVKvbv

wcÖq g‡nv`q,

Dc‡iv³ FY/myweav cÖv_x©i Av‡e`b Ges GZ`m¤ú‡K© Avcbv‡`i g~j¨vqb, mZ¨vqb I mycvwi‡ki †cÖw¶‡Z e¨vs‡Ki ¯^vfvweK wbqg I
wb‡gœ ewY©Z kZ© mv‡c‡¶ Zvi/Zv‡`i AbyK‚‡j wb‡gœv³ FY/myweav mxgv gÄyi/bevqb/bevqb I ewa©ZKiY Kiv n‡q‡Q| FY/myweav cÖ`v‡bi c~‡e©B
ewY©Z kZ©vw` FY/myweav MÖnxZv‡K wjwLZfv‡e AewnZ K‡i cÖwZwjwc‡Z (Wzwcø‡KU Kwc) Zvi/Zv‡`i Aby‡gvw`Z ¯^v¶‡i m¤§wZ MÖnY c~e©K
m¤úvw`Z Ab¨vb¨ `wjjvw`i mwnZ msi¶Y Ki‡Z n‡e|

1| F‡Yi cÖK…wZ t
2| FY/myweav mxgvi AsK t Uv t ................................... ( UvKv .......................................... ) gvÎ
3| my‡`i nvi t
4| gvwR©b t
5| †gqv‡`vËx‡Y©i ZvwiL t
6| cwi‡kva c×wZ t

............................ ......................................................
Kg©KZ©vi ¯^v¶i Dc-gnve¨e¯’vcK/mnKvix gnve¨e¯’vcK

~ 123 ~
 µwgK bs
(20)

AMÖYx e¨vsK wjwg‡UW

gÄywicÎ b¤^i t ..................

ZvwiL t ...........................
7| RvgvbZ (FY cÖ`v‡bi c~‡e©B MÖnY Ki‡Z n‡e) t
(K) cÖv_wgK/g~L¨ t

(L) mnvqK/AwZwi³ t

............................ ......................................................
Kg©KZ©vi ¯^v¶i Dc-gnve¨e¯’vcK/mnKvix gnve¨e¯’vcK

~ 124 ~
 µwgK bs

(21)

AMÖYx e¨vsK wjwg‡UW

gÄywicÎ b¤^i t ..................

ZvwiL t ...........................

8| m¤úvw`Ze¨ `wjj cÎvw`i ZvwjKv (FY cÖ`v‡bi c~‡e©B m¤úv`b c~e©K MÖnY Ki‡Z n‡e)|

............................ ......................................................
Kg©KZ©vi ¯^v¶i Dc-gnve¨e¯’vcK/mnKvix gnve¨e¯’vcK

~ 125 ~
µwgK bs

(22)

AMÖYx e¨vsK wjwg‡UW

gÄywicÎ b¤^i t ..................

ZvwiL t ...........................

8| we‡kl wb‡`©kvejx/kZ©vejx

............................. ......................................................
Kg©KZ©vi ¯^v¶i Dc-gnve¨e¯’vcK/mnKvix gnve¨e¯’vcK/
cyiv bvg t AvÂwjK e¨e¯’vc‡Ki ¯^v¶i
c`ex t cyiv bvg t
¯^v¶i bs t c`ex /c`gh©v`v t
ZvwiL t ¯^v¶i b¤^i t
Kvhvjq/wefv‡Mi
bvg I wVKvbv t
ZvwiL t

~ 126 ~
 µwgK bs

(23)

17(K)| †Kv¤úvwbi eZ©gvb FY wnmve mg~•‡ni weeiY(†KejgvÎ kvLv c~iY Ki‡e)

(GKvwaK F‡Yi †ejvq Avjv`v weeiY wbgœ QK Abyhvqx mshy³ Ki‡Z n‡e)

weeiY FY wnmv‡ei cÖK…wZ (†hgb wmwm, IwW, BZ¨vw`)

1) Rgvi mgwó (†µwWU mv‡gkb
2) D‡Ëvj‡bi mgwó
3) m‡e©v”P D‡Ëvjb
(nvB‡qó †WweU e¨v‡jÝ)
4) me©wbgœ D‡Ëvjb
(†jv‡qó †WweU e¨v‡jÝ)
5| FY wnmv‡e eZ©gvb w¯’wZ

(L) †Kv¤úvwbi eZ©gvb `vqe× gvjvgvj (†cøR/nvB‡cvw_‡Kkb/cÖv_wgK RvgvbZ) Gi cwigvY I Ae¯’v (kvLv KZ©„K e¨vs‡Ki wba©vwiZ Q‡K
cÖv_wgK RvgvbZ/gvjvgv‡ji gRyZ cwi`k©b cÖwZ‡e`b mshy³ Ki‡Z n‡e)|

1) gvjvgv‡ji weeiY t
2) gvjvgv‡ji cwigvY t
3) evRvi g~j¨ t
4) gvwR©b t
5) AwMÖg g~j¨(G¨vWfvÝ f¨vjy) t
6) F‡Yi w¯’wZ t
18| †Kv¤úvwbi gva¨‡g Ab¨vb¨ e¨emv I e¨vs‡Ki Av‡qi weeiY (†KejgvÎ kvLv c~•iY Ki‡e)

(K) Ab¨vb¨ e¨emv

MZ ermi PjwZ ermi

1) A_© †cÖiY (AvDU IqvW© †iwg‡UÝ)
(wWwW, wUwU, GgwU, wej&m BZ¨vw`)
2) A_© Av`vb(BbIqvW© †iwg‡UÝ)
(wWwW, wUwU, GgwU, wej&m BZ¨vw`)
3) Avg`vwbi cwigvY
4) ißvwbi cwigvY
5) wejm& msMÖn
†gvU t

L) e¨vs‡Ki Avq

1) F‡Y my`
2) Kwgkb
3) Ab¨vb¨
†gvU t

~ 127 ~
 Annexure - 10

AMÖYx e¨vsK wjwg‡UW

cÖavb Kvh©vjq
XvKv|

FY Av‡e`‡b Aby‡gv`‡b wK wK wbqgbxwZ I cÖwµqv AbymiY Kiv nq

wbqgbxwZ / `vwLjZe¨ KvMRcÎvw` t

(K) cÖv_wgK `vwLjZe¨ KvMRcÎvw`/Z_¨vw` t

(1) c~Y©vsMfv‡e ciYK…Z wba©vwiZ FY Av‡e`b cÎ |
(2) gvwjK / Askx`vi / cwiPvjK‡`i cÖZ¨vqbK…Z cvm‡cvU© AvKv‡ii Qwe Ges wk¶vMZ †hvM¨Zv ( hw` _v‡K) m¤cwK©Z mb`cÎ|
(3) MÖvn‡Ki cwim¤ú‡`i †NvlYv Ges †NvlYvq D‡j­ wLZ ¯’vei m¤úwËi gyj `wj‡ji d‡UvKwc|
(4) MÖvn‡Ki ¯^v_© mswk­ ó cÖwZôv‡bi bvg I `vq‡`bvi Z_¨vw`|
(5) MÖvn‡Ki ¯^PQjZvi cÖZ¨vqbcÎ Ges wUAvBGb b¤^i|
(6) wjwg‡UW †Kv¤cvbxi †¶‡Î †Kv¤cvbxi e¨e¯’vcbv cwiPvj‡Ki cÖZ¨vqbmn †g‡gvivÛvg GÛ AvwU©‡Kjm Ae G¨v‡mvwm‡qkb, mvwX©wd‡KU
Ae BbK‡c©v‡ikb, mvwX©wd‡KU Ae K‡g݇g›U (cvewjK wjwg‡UW †Kv¤úvbxi †¶‡Î) Ges Askx`vix dv‡g©i †¶‡Î Askx`vi‡`i
cÖZ¨vqbmn †iwRóvW© Askx`vwiZ¡ Pzw³cÎ|
(7) Ab¨ †Kvb e¨vsK / Avw_©K cÖwZôvb/ e¨w³i wbKU Avw_©K `vq‡`bvi (hw` _v‡K) weeiY Ges G e¨vcv‡i †NvlYvcÎ|
(8) nvjbvMv` wmAvBwe cÖwZ‡e`b msMÖ‡ni Rb¨ A½xKvibvgv I Qwe (gvwjK / cÖ‡Z¨K cwiPvj†Ki Rb¨, e¨vsK n‡Z msMÖn‡hvM¨)| m‡š—
vlRbK wmAvBwe|
(9) Jla wkí ¯’vc‡bi †ejvq WªvM cÖkvmb KZ©„c‡¶i mb`cÎ|
(10) †iwRóªvi Ae R‡q›U óK †Kv¤úvbxR GÛ dvg©m Gi Kvh©vjq KZ©„K cÖZ¨qbK…Z dig XII, X weeiYx|
(11) †UªW jvB‡mÝ (nvjbvMv`)|
(12) †evW© Ae Bb‡fó‡g›U Gi Aby‡gv`b, U¨v·, nwj‡W Gi wel‡q NBR Gi Aby‡gv`b|
(13) cÖK‡íi/ e¨emv cÖwZôv‡b cÖ‡qvRbxq we`y¨r/M¨vm ms‡hvM cÖ`v‡bi wel‡q mswk­ ó KZ…©c‡¶i Aby‡gv`b|
(14) FY MÖn‡Yi wel‡q †Kv¤úvbxi †evW© †iRy¨‡jkb|
(15) cÖK‡íi/e¨emvq wewb‡qvMZe¨ BKz¨BwU/gvwR©b †hvMv‡bi Drm|
(16) MÖvn‡Ki RvZxqcwiPqc‡Îi d‡UvKwc|

(L) cÖKí f~wg I mnvqK Rvgvb‡Zi ¯’vei m¤úwËi †¶‡Î t

(1) cÖKí f‚wgi Ges PjwZ g~•jab F‡Yi mnvqK Rvgvb‡Zi (¯’vei m¤úwË) gvwjKvbv msµvš— †PBb Ae WKz‡g›Um/ `wjjvw`, wmGm,
AviGm, GmG cP©v, mswkøó mve-†iwRóªvi Gi Awdm n‡Z nvj mb ch©šÍ f‚wgi wb`©vq mb`cÎ, nvj m‡bi LvRbv iwk` I gvV cP©v,
wgD‡Ukb, cP©v, wWwmAvi BZ¨vw` hveZxq KvMRcÎvw`|
(2) cÖK‡íi Ae¯’vb bKkv (mvBU cø¨vb)|
(3) cÖ¯—vweZ Rwg‡Z D³ cÖKí ¯’vc‡b ¯’vbxq mswkøó KZ©„c‡¶i AbvcwË mb`cÎ|
(4) cÖ¯—vweZ Rwg‡Z cÖKí ¯’vc‡b cwi‡ek Awa`ßi Ges ¯’vbxq KZ…©c‡¶i AbvcwË cÎ|
~ 128 ~
(5) cÖ¯ÍvweZ cÖKí f‚wgi AwiwRb¨vj †gŠRvg¨vc, †PŠnwÏ|

(cvZv bs- 2)

(M) c~Z© I Ab¨vb¨ c~Z©Kv‡Ri †¶‡Î t

(1) cÖKí f‚wgi Zdwmj, Rwgi cwigvb, d¨v±ix febmn Ab¨vb¨ BDwb‡Ui wc­ š’ Gwiqv, †mKkb, Gwj‡fkb, (Dchy³
cÖ‡KŠkjx/ AvwK©‡U± , D‡`¨v³vi ¯^v¶i Ges Aby‡gvw`Z KZ©„c¶ KZ©„K ¯^v¶wiZ)| cÖ‡R± †j-AvDU cøvb ¯’vbxq
KZ…©c¶/ivRDK Aby‡gvw`Z( Aby‡gv`bcÎmn)|
(2) m‡qj †Uó wi‡cvU©|
(3) D‡`¨v³v KZ…©K wb‡qvwRZ Dc‡`óv cÖwZôv‡bi AvwK©‡U± Gi ¯^v¶wiZ we¯—vwiZ AvwK©‡UKPvivj WªBs|
(4) evsjv‡`k b¨vkbvj wewìs †KvW (BNB Code) Ges Av‡gwiKvb KbwµU BbwówUDU (ACI Code) G D‡j­ wLZ MvBW
jvBb Abyhvqx feb mg•‡ni óªvKPvivj wWRvBb, WªBs/IqvwK©s WªBs|
(5) cÖK‡íi febmg•‡n eb¨v, R‡jv”Qvmmn f‚wgK¤ú cÖwZ‡ivaKg~•jK Factor we‡ePbvq G‡b wbwg©Z n‡q‡Q- Gg‡g© wb‡qvwRZ
KbmvjU¨v›U cÖ‡KŠkjx KZ…K
© Bmy¨K…Z cÖZ¨vqb cÎ|
(6) cÖKí feb/febmg•‡ni h_vh_ B‡jKwUªK¨vj, wWRvBb I WªBs|
(7) †mwbUvix/cøvw¤^s/†Wª‡bR wm‡÷g BZ¨vw`i WªBs I wWRvBb
(8) †¯úwmwd‡Kkb, †iBU, wej Ae †KvqvbwUwU Gi K¨vjKz‡jkbmn m¤úbœ I Am¤úbœ Kv‡Ri we¯ÍvwiZ cÖv°jb e¨q|
(9) cÖK‡íi †gwkb mieivnKvix cÖwZôvb KZ…©K mieivnK…Z †gwkb †j-AvDU c­ vb Abyhvqx cÖ‡qvRbxq cwimi ''cÖWvKkb
K‡bvMÖvd''|
(10) D‡`¨v³v KZ…©K `vwLjK…Z KbmvjU¨vwÝ wd Gi wecix‡Z Kv‡Ri cwiwamn Advi †jUvi Ges GK‡mÞ†UÝ †jUvi|
(11) D‡`¨v³v KZ…©K `vwLjK…Z cÖKí feb wbg©vY Kv‡Ri mycviwfkb wd Gi wecix‡Z KbóªvKkb †Kv¤úvbxi M„nxZ Aby‡gvw`Z
`icÎ|
(12) c~•Z© Kv‡Ri/cÖK‡íi m¤úb© Kv‡Ri UvBg wmwWDj/evi PvU©, wmwcGg (wµwUK¨vj cv_ †g‡_vW)|

(N) Avg`vbxZe¨ I ¯’vbxq hš¿cvwZi †¶‡Î t

(1) eªvÛ g‡Wj, K¨vcvwmwU, AwiwRb, g¨vbyd¨vKPvivi, †UKwbK¨vj †¯úwmwd‡Kkb BZ¨vw` D‡jøLc•e©K Zzjbvg•jK 3(wZb) †mU
`icÎ I K¨vUvjM|
(2) ¯’vbxq hš¿cvwZ/miÄvgvw` I dvwb©Pvi wd·Pvim Gi Zzjbvg•jK 3(wZb) †mU `icÎ I K¨vUvjM (cÖ‡hvR¨ †¶‡Î)|
(3) Avg`vbxZe¨ I ¯’vbxq hš¿cvwZ mg•‡ni `icÎ mg•‡ni g‡a¨ MÖnbxq GK‡mU `ic‡Î Aby‡gvw`Z ¯^v¶‡i m¤§wZm•PK ¯^v¶i|
(4) †gwkbvixi †j-AvDU cøv‡bi Kwc|
(5) Avg`vbxZe¨ hš¿cvwZi g~•‡j¨i 10% mgcwigvY A‡_©i ˆe‡`wkK gy`ªvq wcwR/wi‡Ubkb cÖ`v‡bi wel‡q D‡`¨v³vi/hš¿cvwZi
mieivnKvixi gZvgZ|
(6) †gwkbIqvBR BDwUwjwUR KbRv¤úkb|
(7) wiKwÛkb hš¿cvvwZi †¶‡Î g~•j¨, Kvh©¶gZv, Avqy¯‹vj BZ¨vw` m¤ú‡K© wbwðZ nIqvi Rb¨ AvšÍR©vwZKfv‡e ¯^xK…ZxcÖvß I
e¨vsK KZ©„K MÖnY‡hvM¨ †Kvb Bbm‡cKkb / mv‡f©qvi †Kv¤úvbx KZ©„K cÖ`Ë mvwU©wd‡KU|

~ 129 ~
 (cvZv bs- 3)

(O) Avw_©K we‡k­ lY/m¤¢veZvi †¶‡Î t

(1) cÖ‡R± †cÖvdvBj|

(2) KuvPvgvj I Drcvw`Z c‡Y¨i weeiY Ges AvB‡UgIqvBR g~j¨|
(3) cÖK‡í cÖ‡qvRbxq we`y¨r/ M¨vm ms‡hvM msµvšÍ mswkøó KZ©„c¶ Z_v wcwWwe/ †Wmv/ AviBwe/ wcweGm/M¨vm KZ©„c¶ Gi m¤§wZcÎ
A_ev cª¯ÍvweZ cªKí¯’v‡b h_vmg‡q we`y¨r/M¨vm cÖvwß m¤c‡K© D‡`¨v³v KZ©„K cÖ`Ë wbðqZvcÎ | cÖK†í Kv‡bK‡UW †jv‡Wi cwigvb|
(4) wm Avi wR cÖwZ‡e`b (CREDIT RISK GRADING)|
(5) 1 †KvwU I Z`yש F‡Yi †¶‡Î External Credit Rating Agency KZ©„K cÖK‡íi †µwWU †iwUs|
(6) ¯^v_© mswkøó cÖwZôv‡bi weMZ 3 eQ‡ii Audited Financial Statements.

(P) weGgAviB cÖ¯—v‡ei †¶‡Î t

(1) Drcv`b ¶gZv e„w×, bZzb ai‡Yi cY¨ Drcv`b, ÎæwUc~Y©/mvgÄm¨nxb hš¿cvwZi ¯’‡j bZzb hš¿cvwZ cÖwZ¯’vcb/ms‡hvRb Gi
cÖ‡qvRbxqZvi †hŠw³KZv / h_v_©Zvi mg_©‡b cÖ¯‘ZK…Z g~j¨vqb cÖwZ‡e`b|
(2) cÖK‡íi weMZ 3 erm‡ii wbixw¶Z / cÖwfkbvj †÷U‡g›U Ae GKvD›Um I e¨v‡jÝ kxU|

~ 130 ~
 Annexure-11

Avoidable Reasons for Problematic Credits

The causes of problem loans range from poor plant management or increasing raw materials costs in the
case of a manufacturer to poor accounts receivable collection policies or a rise in the price of products in
the case of a wholesale company. Most often, a problem loan is the result of not one, but several, factors.

Poor Loan Interview

A poor interview most often occurs when the lender is dealing with a friend or when the business owner
has leverage. Rather than ask tough, probing questions about the company’s financial situation, the lender
opts for friendly banter instead. Sometimes the lender may be intimidated or conned. The lender may be
reluctant to ask questions for fear of sounding dumb or appearing to lack basic knowledge of the company
or industry. For whatever reason, he or she may allow a loan request that should have been rejected during
the initial interview to proceed to financial analysis and beyond. With each subsequent step, it becomes
increasingly more difficult to reject the request.

Inadequate Financial Analysis

Many loans become problems when a lender considers the financial analysis unimportant and believes that,
instead, the true test of whether a loan will be repaid lies in a handshake, the eyes, or some of the subjective
measure of the client. Although some characteristics, such as the ability to overcome adversity, do not
appear on financial statements, there is no substitute for a complete analysis of income statements, balance
sheets, ratios, and cash flow. Together, they present an objective measure of performance that can be
compared with those of similar companies.

Improper Loan Structuring

Another cause of problem loans is the failure of the lender to structure the loan properly. Problems often
arise when the lender fails to understand the client’s business and the cash flow cycle. Without this
knowledge, it is difficult to anticipate future financing needs and to choose the appropriate loan type,
amount, and repayment terms. Most borrowers, regardless of financial health, find it difficult to repay debts
that do not coincide with their cash flow cycle.

Improper Loan Support

Another leading cause of loan loss is improper collateralization. Accepting collateral not properly evaluated
for ownership, value, or marketability can leave the bank unprotected in a default situation.
Inadequate Loan Documentation
Failure to completely and accurately document the obligations of the bank and borrower in the lending
arrangement also contributes to problem loans.
Inadequate Loan Monitoring
Many problem loans can be avoided if they were more closely followed.
Adverse Business Owner Decisions
Problem loans due to poor business practices include a lack of management depth, product deterioration,
poor marketing, and poor financial controls.
Adverse External Developments
Changes in the environment, economy, regulations, competition, technology, and other adverse
developments affect a business. However, mature businesses can anticipate and adapt to changing external
circumstances.
~ 131 ~
Intervention from Board
Sometimes Board of Directors intervenes in the loan origination process to make loan to bad borrower
which unless otherwise should have been rejected. Below is a long but not exhaustive list of mistakes that
bankers can make that eventually lead to the bank having a problem loan.

Common Banking Mistakes That Can Lead to Problem Loans

In the Beginning
Allowing customer to intimidate, coerces into, or sells the banker on making the loan
Failure to ask pertinent questions for fear of angering or losing the customer
Making difficult loans that should be handled by a more experienced officer
Basing the lending decision on pressure from other parties, especially the competition
Trying to be an entrepreneur/businessman through the customer using the bank’s money
Inadequate analysis of the borrower
Inadequate analysis of financial statements
Inadequate analysis of loan purpose, source of repayment, and excess cash flow
Improper loan structure—amount, source of repayment, timing of repayment (terms)
Improper collateralization
Failure to properly identify entity bank is dealing with
Failure to supervise utilization of loan proceeds
Failure to obtain and perfect valid security interest

After the Loan Was Made

Did not effectively follow loan
Request and review financial information
Make periodic visits to company
Perform periodic trade and industry checks
Monitor impact of changing economic conditions on company
Did not control expansion
Let customer borrow in small amounts until he/she had too much debt or bank placed in forced
lending situation
Inappropriate management of the lending function

When the Problem is Recognized

Afraid to look into credit—ask tough questions
Afraid to admit made a mistake or have a problem
Cut off communication with customer, resort to pressure/threats to collect loan
Inaction—hoping situation will improve—“miracle approach”

~ 132 ~
 Annexure-12

~ 133 ~
~ 134 ~
 Acronyms
AoA Article of Association

BB Bangladesh Bank

BCP Basel Core Principle

CET1 Common Equity Tier I

CIB Credit Information Bureau

CP Credit Policy

CRMP Credit Risk Management Policy

EA Early Alert Reporting

ECAI External Credit Assessment nstitution

ESRR Environmental and Social Risk Rating

ICRRS internal Credit Risk Rating System

LTV Loan-to-value
MAT Management Action Trigger
MIS Management Information Systems
MoA Memorandum of Association

NBFIs Non Bank Financial Institutions

NGOs Non Government Organizations
NPLs Non Performing Loans

NII Net Interest Income

NFI Net Fees Income

OBS Off Balance Sheet

PD Probability of Default
PNS Personal Net-Worth Statement
RAS Risk Appetite Statement

RAR Risk Adjusted Return

RJSC Registered Joint Stock Company
RM Relationship Management

RMD Risk Management Division

TP Trading Profit

SMEs Small & Medium-sized enterprises

~ 135 ~