CREDIT POLICY AND PERFORMANCE ANALYSIS OF AGRANI BANK LIMITED

Abstract

The report titled as „Credit policy and performance analysis of Agrani Bank Limited’ is discussed about the credit policy and performance of Agrani Bank Limited at the specified period. For ease of understanding, the report is segmented into four parts. In the first part contains background of the report, objectives, scope, methodology and limitations of the report. Next part of the report demonstrated the profile of the bank. The third part contains credit Policy that ABL follow. The fourth part contains details about the financial performance of the bank. The credit division is an independent division in Agrani Bank limited. This division basically deals with the extension of credit to the worthy clients and thus to make a profit from the interest charges. There are Relationship Managers in the branches who have the responsibility to gather valued client where the bank can invest. When a client applies for certain amount of credit, the credit officers first assess the financial and operational viability of the client. A sanction advice is prepared and provided to the client. Before extension of loans, a comprehensive credit risk appraisal is done and annual reviews are made. A credit memorandum is prepared by the Relationship Manager which includes the findings of such assessment. ABL has duly implemented a credit risk grading policy in its credit risk assessment program. The system defines the risk profile of borrower‟s to ensure that account management, structure and pricing are commensurate with the risk involved. Importantly ratios have been used to evaluate liquidit y, profitabi lit y and efficiency of the bank since it is useful indicators of a bank's performance and financial situation. The current ratio of ABL is observed that the liquidity position of ABL is increasing to cover its current liabilities with its current assets and I have selected five profitability ratios which will help to evaluate the performance effectively. Those are- Net Profit Margin, Return on Equity (ROE), Return on Assets (ROA), Return on Deposit (ROD), Net Operating Margin from where it is observed that all these five ratios were significant. This is very positive sign and I come up with result that this bank is using its resources effectively, operating successfully and also increasing. Finall y I tried to make an interpretation from analytical point of view and came up with a view that ABL is growing and even more successful.