Credit Risk Management: An Empirical Study on BRAC Bank Ltd.

Abstract

Credit Risk Management holds a positive relationship with credit monitoring, reliability and assurance factors. All these factors play vital role in the mitigation process of credit risks. Risk mitigation process starts from sourcing loan applications and the loan application goes through several screening process where reliability and assurance factors are very much important. Here, knowledge of practical world and product program are very much essential to identify risks associated with loan proposals. With the centralized banking system BRAC Bank deals with a systematic lending procedure which follows an straightforward policy. This type of policy helps the analysts to analyze loan proposals very easily. But there are some weak points of this straightforward policy and guidelines. This procedure deny any type of exceptional proposals which may have better creditworthiness and repayment capacity. Business is lost in these situations which is treated as opportunity cost. In a word, credit risk management is all about ensuring repayment capability of the customers who are provided loans and advances. Minimizing Credit Risk is subject to proper framework of risks and justification with historical trend and other assurance factors.