2.1 Introduction
Bank Asia Limited is a schedule Bank under private sector established with in the ambit
of Bank Company Act, 1991 and was incorporated as a Public Limited Company Under
Company Act, 1994 on September 28, 1999. The Bank started commercial banking
operations from November 27, 1999 with the inauguration of the Banks Corporate Office
at the Rangs Bhaban. A huge public response has enabled the Bank to keep up the plan of
expanding its network. The opening of the principal office was the big leap forward and
successively the opening of Gulshan and Chittagong branch expanded the horizon of
Bank Asia to bring its services to valued clients more effectively. Within a short period,
the bank has opened four more branches in Dhaka and two branches in Sylhet and
Kishorgonj. In February 2001, Bank Asia took over the Bangladesh operation of The
Bank of Nova Scotia, the first acquisition of a foreign bank by a local bank in the banking
history of Bangladesh. Later, Bank Asia took over the Bangladesh operation of Muslim
Commercial Bank of Pakistan in December 2001. These courageous moves were possible
for some visionary decision makers and also dedicated team of professionals who are
constantly putting their best efforts to establish the bank as one of the leading concerns in
the industry.
Bank Asia has so far been highly successful in keeping its customers satisfied with its
high quality service, while continuing its expansion to reach more people around the
country. Bank Asia conducts all types of commercial banking activities. The Bank is
involved in most of the areas of commercial banking operations. The core business of the
Bank comprises of trade finance, term finance, working capital finance and corporate
finance. Bank Asia has acted as the lead arranger in raising term loan for a number of
projects under syndicated finance and also participated in some cases under such
financing arrangement. The Bank is also providing personal credit, service related to
local and foreign remittances and several other products. The Personal Credit scheme
of the Bank, which is designed to help the fixed income group in raising standard of
living is competitively priced and has been widely appreciated by the customers. Bank
Asias program under Poverty Alleviation Scheme delivered through rural branches in
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
the form of micro credit is playing an important role towards socio economic
development of the poor people in the rural areas.
The management of Bank Asia is determined to maintain and upgrade the quality of these
resources through continuous training and upgrading technology to keep pace with
market demands, new developments and practices of the competitors. Bank Asia entered
the market at a time when economic policy environment of the country is poised for
higher level of business activities and growth. The prevailing macroeconomic
management and the governments determination to carry on reforms in the banking
sector provide a supporting and encouraging environment.
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ID#2003010000097
Credit Policy and Risk Management A Case Study On Bank Asia Limited
Board of Directors
Chairman
Managing Director
Advisor
Company Secretary
Board Affairs
General Service
Share
Department
Human Resource
Credit
Foreign Ex.
Corporate/Retail
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Operations
Implementation of
Board Decisions
Development &
Planning
International Division
Dealing Room
MIS/IT
Accounts/
Budget
Treasury
Specialized
Services
Call Market
Public Relations
Credit Policy and Risk Management A Case Study On Bank Asia Limited
Mr. A. Rouf
Chowdhury
Director
Director
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
To become the most sought after bank in the country, rendering technology
driven innovative services by their dedicated team of professionals.
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
2.6.1 Strength
Superior Quality: Bank Asia provides its customers excellent quality of service.
It gives the first priority to customer satisfaction.
Dynamism: Bank Asia draws its strength from the adaptability and dynamism it
possesses. It has quickly adapted to world class standard in terms of banking
services. Bank Asia has also adapted state of the art technology to connect with
the world for better communication to integrate facilities.
Financial Strength: Bank Asia is a finally sound company backed by the
enormous resource base of the mother concern Rangs Group. As result customers
feel comfortable in dealing with the company.
Efficient Management: All the levels of the management of Bank Asia are
solely directed to maintain a culture of the betterment of the quality of the service
and development of a corporate brand image in the market through organization
wide term approach and open communication system.
State of the Art Technology: Bank Asia utilizes state-of-the-art technology to
ensure consistent quality and operation. The corporate office is equipped with
SWIFT (SWIFT is a banking software, used by Bank Asia). All other branches
are also equipped with SWIFT system.
Experts: The key contributing factor behind the success of the Bank Asia is its
employee, who are highly trained and most competent in their own field. Bank
Asia provides their employees training both in-house and out side job.
In-House Utility: Bank Asia is free from dependence on ever disruptive power
supply of our public sources. The company generates the required power through
generator fed on diesel. Water generation is done by deep tube wells on site and
in abundance.
Excellent Working Environment: Bank Asia provides its workforce an
excellent place to work in. Total complex has been centrally air conditioned. The
interior decoration was done exquisitely with choice of soothing colors and blend
of artistic that is comparable to any overseas bank.
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
2.6.2 Weaknesses
Limited Workforce: Bank Asia has limited human resources compared to its
financial activities. There are not many people to perform most of the tasks. As a
result many of the employees are burdened with extra workloads and work late
hours with out any overtime facilities. This might cause high employee turnover
that will prove to be too costly to avoid.
Problem in Delivery: Few of the Bank Asias products offered to its clients like
Personal Credit (PC) is lying idle due to proper marketing initiative from the
management. These products can easily be made available in attractive ways to
increases its client base as well as its deposit status.
2.6.3 Opportunities
Government Support: Government of Bangladesh has rendered its full support
to the banking sector for a sound financial status of the country, as it has become
one of the vital sources of employment in the country now. Such government
concern will facilitate and support the long-term vision of Bank Asia.
Evaluation of E-Banking: Emergence of e-banking will open more scope for
Bank Asia to reach the clients not only in Bangladesh but also in the global
banking arena. Although the bank has already entered the world of e-banking but
yet to provide full electronic banking facilities to its customer. A proper blend of
Banking and information technology might give the bank leverage to its
competitors. Nevertheless there are ample opportunities for Bank Asia to go for
product innovation in line with the modern day need. The bank has yet to
develop credit card facility, lease financing and merchant banking.
2.6.4 Threats
Merger and Acquisition: The worldwide trend of merging and acquisition in
financial institution is causing concentration. The industry and competitors are
increasing in power their respective areas.
Poor Telecommunication Infrastructure: As previously mentioned, the world
is advancing e-technology very rapidly. Though Bank Asia has taken effort to
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
Tk. 1,200,000,000.00
PAID UP CAPITAL
Issued
3,000,000 Ordinary Shares of Tk. 100.00 each have already
been subscribed for and fully paid up by the Sponsors.
Tk. 300,000,000.00
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
To be Issued
3,000,000 Ordinary Share of Tk. 100.00 each are being hereby
offered to the General Public for Subscription in cash.
Tk. 300,000,000.00
Pre-IPO
1,000,000 Ordinary Shares of Tk. 100.00 each at par have been
subscribed by investors under private placement arrangement
Tk. 100,000,000.00
IPO
2,000,000 Ordinary Shares of Tk. 100.00 each at par are being
hereby offered to the general Public for Subscription in cash.
TOTAL
Tk. 200,000,000.00
Tk. 600,000,000.00
2.9.2 Deposit
A strong deposit base is necessary for the success of a Bank. During the year 2005 the
Bank mobilized a substantial amount of deposits from mid-level income group people
under Deposit Savings Scheme. After critical handling the Bank mobilized total Deposit
of Tk. 14,884.91 million as at December 31, 2005, thus recording an increase in
comparison with Tk. 13,470.98 million as at December 31, 2004. The significant growth
in deposit enabled the Bank to expand its business, performing assets and also had an
impact on the profit position of the Bank.
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
2.9.3 Advance
The Banks Loans and Advances portfolio also indicates an impressive growth. Total
Loans and Advances amounted to Tk. 17,897.15 million in 2006 up to July against Tk.
11,861.19 million in 2005. Bank Asias Advance portfolio is well diversified and covers
a wide range of businesses and industries. The sectors financed include Manufacturing,
Trading, Construction, Transport, Agriculture, Fishing and Forestry, Edible Oil,
Pharmaceuticals, Information Technology, and Consumer Credit amongst others.
Advances constitute the most significant indicator of the health of a Bank. The Bank has
formulated its policy to give priority to SME (Small and Medium Enterprise) and at the
same time the Bank is financing large-scale enterprises through consortium of Banks.
Bank Asia is committed to maintain a very high quality of assets. Close monitoring and
efficient asset management has resulted in minimal creation (1.50%) of classified loans to
total Loans and Advances.
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ID#2003010000097
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
2.9.5 Investment
Investment stood at Tk. 4,048.58 million at the end of 2005. This consists of Tk. 3,240.51
million in Treasury Bills and Prize Bonds, Tk. 529.75 million in Debentures and Tk.
202.34 million in Shares.
2.9.6 Dividend
Bank Asia has distributed a substantial amount of dividend in the preceding years and
also strengthened the platform of the Bank. The percentages of distribution of dividend
are as follows.
Cash
Total
2003
2004
2005
(%)
16%
17%
18%
(%)
8%
8%
8%
(%)
24%
25%
26%
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
assistance in the form of loan to the consumers for procuring household durables,
which have had encouraging responses.
The Bank is committed to continuous research and development so as to keep
pace with modern banking.
The operations of the Bank are computer oriented to ensure prompt and efficient
services to the customer.
The Bank has introduced camera surveillance system (CCTV) to strengthen the
security services inside the Bank premises.
The Bank has introduced customer relations management system to assess the
needs of various customers and resolve any problem on the spot.
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
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Credit Policy and Risk Management A Case Study On Bank Asia Limited
Credit facility: Bank Asia credit card offers free credit facility up to 45 days & minimum
15 days without any interest.
Cash advance: Bank Asia master card gives facility to draw cash up to 50% of the credit
limit against local master card and can enjoy this facility by using any ATMs across the
country which shows Master Card logo. Besides this can also withdraw cash from any
of our branches.
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