Credit Management of Mercantile Bank Limited

Internship Report
On
Credit Management of Mercantile Bank Limited
Submitted To
Mr.Md Shamim Ahmed
Lecturer &Assistant Coordinator
BRAC Business School
BRAC University
Submitted By
Jubayet Hossain Rahat
ID-16164021
Masters of Business Administration
Date of Submission: 9th September 2018
Credit Management of Mercantile Bank Limited Page 1

Letter of Transmittal
9th Sep, 2018

Md.shamim Ahmed
Lecturer
BRAC University
Subject: Submission of Internship Report
Dear Sir,
In accordance to your advice, I have prepared my internship report on “Credit Management
In Mercantile Bank Limited”. In my report, I have tried to focus on the relevant information
that will cover reporting purposes. But no doubt, my best effort and contribution will be best
evaluated on your sharp scale of acceptance and remarks.
I have tried my best to showcase my skills, which were achieved by this report in three (3)
months of effective practical experience. .Finally, I would like to assure that I will remain
standby for any clarification, explanation as and when required.
Thank you in advance for your kind assistance.
Sincerely Yours
Jubayet Hosain Rahat

ID-16164021
BRAC University

Acknowledgement
Almighty Allah enabled me to successfully complete the internship report on “Credit

Management of Mercantile Bank Ltd” Elephant Road Branch Dhaka. A large number of
personals have helped me directly or indirectly to ready this report. I am thankful to them.
Internship program is an integral part of MBA (Masters of Business Administration) course
of BRAC University. Every MBA student was assigned to conduct an internship program in
the practical field directed by studied subject to learn something within the pre stipulated time
by observing the organizations daily practices about the business factors.
I would like to Thank Md.Shamim Ahmed, Lecturer in BBS, BRAC University, for giving
me lots of support to do this internship report.
My special gratitude goes to Mr.Humayon Kabir(VP&Head of Branch, Mercantile Bank ltd,

Elephant road branch)and Mrs.Mekhala Parveen ( FVP &Manager operation).I am also
undoubtedly grateful to All Employees of Credit Department for their kind co-operation
specially Mr.Hafizul Rahman(FAVP), Mr.Rahmat Ullah Ripon(Executive officer),
Mr.Ikramul Aziz (MTO)and all other employees of other departments for supporting me in
my internship report work.
To complete the report I met some hardship, but managed to complete the case within time
constraints, which would not have been possible without the guidance and assistance of
certain people

Executive Summery
This report is based on "Credit Management of Mercantile Bank Limited" which is prepared
from my experience working at Mercantile Bank Limited's Credit Department. The most
important tasks of the bank are to collect deposits from the clients and lend to the client.
Through this process the banks are earning their revenue. Mercantile Bank Limited
employees are very serious about their work. They maintain a protocol with existing clients
and establish a good relationship with new clients to collect large amounts of deposits from
MBL clients per month for their better service. It is very important to manage the deposit
money for a bank. MBL believes that 80% to 90% of the deposit is required to be invested in
the debt section. This report focuses on various debt benefits given by Marketing Bank
Limited and the overall process of debt
Mercantile Bank Limited emerged as a new commercial bank and started operations in June
1999 with a clear mission for effective banking services and socio-economic development in
the country. There are 129 branches in the bank by 2018. The branches are always ready to
prepare better service for their clients. I am in interne at MBL-75, Osman Plaza, Elephant
Road Branch, and Dhaka-1205
Last 3 month I worked in the Credit department. I got a chance at the site Visit. I got a clear
idea about the loan process.
The main function of a bank is to manage its assets and liabilities effectively and in the
competitive environment of the credit service. And Mercantile Bank Limited effectively
manages the resources and liabilities and achieves continual success and prosperity. With the
focus on driving productivity with a sustainable improvement in business performance, it is
managed in a disciplined and intelligent way.

Table Of content
Serial Number Contents Page Number

1 Chapter one (Introduction) 8-11
Rational for internship 09
Background of Topic 10
Objectives of the report 10
Scope 11
Methodology 11
Limitations 11
2 Chapter Two(Overview of the 12-24
Organization)
History 13-14
Core values of MBL 14
Mission and Vision 14
Strategic Objectives 15
Glance at Mercantile Bank Ltd-Elephant 16-19
Road Branch
Introduction 16
Service of MBL 17
Hierarchy of the 18
Mercantile Bank Ltd
Products service, Schemes 19
and Special feature
MBL, Elephant Road Branch organ 20
gram
SWOT Analysis OF MBL 21
MBL interest rate on Loan & Advances 21-23
3 Chapter Three(Internship 24-25
Experience)
4 Chapter Four(Credit Management of 26-38
MBL)
Credit Division 27
Fundamentals of Credit 27
Principal of Advance 28
Different Type of Loans and Advances 28-31
Retail loan 28-29
Corporate Credits 29
Cash Credit (CC) 29-31
Hypothecation
Export Cash Credit 32
Credit approval procedure 32-33

Sanction 34
Securities 34-37
Letter of Guarantee 37-38
5 Chapter Five(Findings) 39-40
6 Recommendation 41-42
7 Conclusion 43-44
Reference 45
Appendices 46

Chapter One
INTRODUCTION

A)Rational for Internship
Do not make the student perfect for academic education in today's world Competitive
internship, with the outside world is a great opportunity to gain ideas, knowledge and
experience with the application of academic knowledge. Through the internship program, a
student gets the opportunity to face the real business world. It helps to build self-reliance, and
interpersonal skills that are important for entering the job market as a young one. It is
beneficial for both students and institutions to emerge a relationship between them for more
opportunities. This program covers 12 weeks of organizational experience.
As a compulsory part of my graduation, I took the opportunity to manage my internship with

one of the prominent private commercial banks in my country, Mercantile Bank Limited.,
With the help of Hafizur Rahman (First Assistant Vice President) and Md. Ikramul Aziz
(Management Trainee Officer),Credit Department. I submitted my Internship Report on
"Credit Managemnentof Mercantile Bank Limited". My academic supervisor Md. Shamim
Ahmed, Lecturer, BRAC Business School approved this and gave me appropriate guidance
for preparing reports as a supplementary part of the internship requirement.
I got the privilege of working on MBL from June 10, 2018 to september 10 2018 . In the
recent banking sector, MBL has already created a stong positive image of the customers by
giving the best banking services. This bank has introduced some modern banking schemes
which have received high market demand. As banks are maintaining pace with the
competitive business world, its activities, culture, philosophy and style will be in the bestfield
of work

B)Background Of the topic
A credit management of a bank is a dynamic sector that requires funding and reducing risks
and the longest-range plan for redistribution of investment funds. The purpose of credit
management is to ensure the best and best points of credit and advance and to ensure their
efficient management, as well as minimize the maximum and the obsolete properties of the
entire property. Mercantile Bank Limited's credit policy is a combination of some recognized,
time-tested values and other dynamic factors that are determined by the reality in the changed
circumstances of different markets. MBL is one of the major banks to provide quality foreign
exchange, transparency and quality of credit to banking sector. MBL wants to increase their
profits by meeting their customers' needs and providing optimum credit facilities. I tried to
analyze the credit activities of Mercantile Bank Limited
C) Objectives of the report
The objective of the report is to divide into two categories. There are: general and specific
objectives
C.1) General objectives
The general objective of the study is to know about the credit management system at
Mercantile Bank Limited as well as to view the current status of overall debt condition of
MBL.
C.2) Specific Objectives

The specific focuses of the study are:
 To find out the overall activities of credit management system.
 To represent the procedures that bank follows for lending to the customers.
 To describe the detailed operational procedure of the different credit facilities.
 How they recover the bad debts and get back the uncollected advances.
D) Scope

In this report I shared my real life experience, what am I doing in credit department? My
report is based on credit management of MBL, so I will covers the background and functions
mostly on credit management system of The Mercantile Bank Limited.
E) Methodology
I am working with different books, articles, reports and newspapers which have been
reviewed to prepare this report. The overall processes of methodology are given below:
I used both primary and secondary data to complete my report-

E.1) Primary Data
 Direct Observance
 Discussion with MBL employees
 Discussion with MBL regular customer
E.2) Secondary Data
 Information regarding from bank website
 Annual Report
 Bank related important circular and published notice
F) Limitation of study
An obstacle in the collection to know the practical activities of the Bank, I have faced some
constraints are as follow:
 The time which providing for us from university is not sufficient for gathering data
and achieving idea about the institution.
 Relevant paper and document were not given by authority because of security
purposes
 For the lake of our practical knowledge, some shortcomings may be available in the
internship report

Chapter-Two
OVERVIEW OF THE ORGANIZATION

1) History
Mr. Md. Abdul Jalil, MP was the founder and chairman of Mercantile Bank Limited. At
present, A.K.M Shahed Reza, Chairman of the Chief. Mercantile Bank Limited started a
commercial operation in Bangladesh as a public limited company on May 20, 1999 with
limited liability under Bank Company Act, 1991 and Undertaken commercial operation on 2
June 1999. It was listed in Dhaka Stock Exchange and Chittagong Stock Exchange in
February. 16, 2004 and February 26, 2004 respectively.129 branches of the bank spread
across the country. MBL is a capitalized new generation bank which is an authorized capital
and paid-up capital of 12,000 million and 6,599.61 million Taka respectively. Total assets
have 145,102,377,756 and more than 1,814 employees; bank's retail banking, corporate
banking and international trade divisions have diversified activities.
There are 28 sponsors involved in the creation of Marketing Bank Limited; the sponsors of
the bank have a long tradition of trade, commerce and industry. They are highly regarded for
their entrepreneur's eligibility. Sponsors may be members of various professional groups,
including famous banks, there are a wide range of banking knowledge professionals. There
are also other financial institutions involved in insurance companies, leasing companies, etc.
MBL has been able to establish itself as a third-generation private commercial bank,
promoted by its intelligent policy guidelines with a broad and excellent customer service,
with a broad and efficient banking service. The main activities of the bank are all types of
deposit banking deposits, loans, bill exchange, foreign exchange business, off-bank banking,
treasury functions, card business and mobile banking. MBL Visa offers double prepaid cards,
Visa Double Hajj card, credit card and debit card and various services to the customers
through international / dual card.
MBLs are constantly expanding on its ATM network and make cards more attractive and
convenient to connect with other banks. In addition to this, MBL is providing other services
through its (02) two Sister concern
There are two (two) support organizations in the name of MBL's Mercantile Bank Securities
Limited (MBSL) and Mercantile Exchange House (UK) Limited. For dealing with stock
dealing and broking, the MBSL was formed on 27th June 2010. MBSL started commercial

activities on September 14, 2011, with the issuance of a stock dealer and broker license from
the concerned authorities.
Mercantile Exchange House (UK) Limited, another subsidiary of MBL Included in the
private limited company on 01 December 2010. This business started in Birmingham, UK on
December 06, 2011. Currently it is working with two branches; One in Birmingham and
another in London to provide quick and easy remittance services to the Bangladeshi
expatriates in the UK.
2) Core values of Mercantile Bank Ltd
Palace customer interest and satisfaction as first priority and provide customized banking
products and services.
 Inclusion of stockholders by attaining maturity in banking operations.
 Maintain high moral standards and transparency in transactions.
 Creates and maximizes values for our shareholders
 Be a compliant institution by complying with all regulatory requirements.
 Make a significant contribution to the development of society.
 Spurring innovation for reinforcement of our business.
3) Vision and mission of Mercantile Bank Ltd.
Mercantile Bank Ltd has vision which are stated below

” Would make finest corporate citizen”
Mission of Mercantile Bank Ltd

‘‘Will become most caring, focused for equitable growth based on diversified
development of resources, and nevertheless would remain healthy and gainfully profitable
bank’’

4) Strategic objectives
 To increase shareholders value
 To achieve economic value addition
 To be market leader in product innovation
 To be one of the top three financial institutions in Bangladesh in terms of efficiency
5) Corporate Governance
Board of Directors
The Board of directors consists of 14 member elected from the sponsor’s. The Board
Directors-11 supreme of the bank.
Executive Committee
All routine beyond the delegated powers of management are decided upon by or routed
through ‘Executive Committee’ subject to ratification by the board of Directors.
Audit committee
In line with the guidelines of Bangladesh Bank, a four-members audit committee of the board
of directors been formed to assist the board in matters related to audit and internal control
system of the Bank.
Chairman
A.K.M Shahed Reza
Vice-chairman
Md.Abdul Hannan
A.S.M Feroz Alam

Directors
Md.Anwarul Haque
Dr.Mamoon Osman Imam
M.Amanullah
Shahidul Ahsan
Al-Haj Akram Hossain
Mohd.Selim
Morshed Alam(MP)
Md.Sahbuddin Alam
Al-Haj Moshareff Hossain
Dr.Md Rahmat Ullah
Kazi Moshiur Rahman

Managing director&CEO
6) Glance at Mercantile Bank Ltd-Elephant Road Branch
6.1) Introduction
Elephant Road Branch is the 123th Branch of Bangladesh Mercantile Bank Ltd. It was
established in 2012 .Manpower of this Branch are 29.

6.2) Service of Mercantile Bank Ltd
There are mainly three departments in Mercantile Bank Ltd for providing service to the
clients-

6.3) Hierarchy of the Mercantile Bank Ltd

7) Products service, Schemes and Special feature
Deposit product Scheme deposit Special feature

Current Deposit Monthly Saving School Banking
Accounts(CD) Scheme(MSS)
Savings Bank Deposit Double Benefit Deposit
(SB)Account Scheme
Fixed Deposit Receipt(FDR) Family Maintenance
deposit scheme
Quarterly benefit deposit
scheme
Special saving scheme
Super benefit Deposit
scheme

8) MBL, Elephant Road Branch organ gram

9) SWOT Analysis OF MBL:
STRENGTHS WEAKNESS
 Experienced management team  Less promotional activities
 Internal communication is good  The service quality of this bank is
 Various product lines good But not as high as customers;
 Low human resources deficit Expectation
 Interactive corporate culture  The online network is not so beautiful
 Employee salary is higher than the
other The bank
OPPORTUNITIES THREATS
 Invest in second market  Raise market competition
 In Retail Banking Opportunity  Fewer number of ATM booth
 particular corporate role  Raise cost of fund
 Project for corporate customers
 Diversify Into Leasing and Insurance
Sector
10) MBL interest rate on Loan & Advances
The board of Director of the bank in its 320th meeting held on 24.05.2018 and they little bit
change the interest rate. The revised rate on lending will be effective from 01.06.2018and
will remain in force until further instructions
Agricultural Loans Interest rate

Term Loan(Both short &long term) As per Bangladesh Bank's directives
Term Loan Interest rate

Industrial /Manufacturing project 12.00%

Other term loan 12.00%
Working capital financing Interest rate

Industrial project/Manufacturing 12.00%
project
Supply order 13.00%
Export Loan 7.00%
Trade financing/Business loan 12.00%
Import financing of rice ,wheat ,edible 12.00%
Oil ,pulse ,peas, onion ,dates ,sugar
Financing to small and Medium Interest rate

enterprise
Lease finance 12.50%
Loans against FDR FDR Rate + 3.00%*
Loans against scheme deposit of the Scheme Deposit Rate + 4.00%*
bank
Special credit scheme Interest rate

Doctors credit scheme
 Interest rate 18.50%
1%
 Loan processing fee
Any purpose loan (personal loan)

Up to l% on loan amount Nil
 Loan processing loan

Risk fund
Car Loan
Up to 1% on loan amount
Home Loan
 Interest rate 1l.50%
Up to l% on loan amount
Women entrepreneurs development 14.50%
scheme
Rural development scheme 14.00%
Overseas employment scheme 14.00%

Chapter –Three
INTERNSHIP EXPERIENCE

PROLOGUE
After the end of the academic study, all our professionals must enter into the world. Before
dealing with the real world, the best opportunity to practice corporate culture and use of
academic education is to work as an organization's intermediary. I received the privilege of
working at Mercantile Bank Limited for 12 weeks.
I have experienced that every desk is employed in specific jobs and taking special jobs as
well as carrying out jobs while cooperating with the people I have worked with, I appear to
learning a lot that would help me not only in my professional life but also my personal life.
I worked at Elephant Road branch from 10 June, 2018 to 10 September 2018, and the three
months of my internship with Mercantile Bank Limited was very pleasant. I enjoyed my
work and everything, all stuffs; officers of the bank are very friendly and helpful.
As I worked as an intern there, I was assigned at only desk of the Credit divisions of bank.
Credit Department
I worked 12 weeks in this department. My job was to create file for applicants with the
corresponding papers (applicant’s information, company invoices, TIN, VAT certificate,
credit report etc.) and help them to fill up it. I adjoined stamp in some of the papers like as
Demand Promissory Note and then gave some seals like as Signature Verifying seal. I fill up
some SME (Small Midterm Enterprise) forms. This form is different from savings account
form. I also fill up some personal loan forms. I also write CIB (Credit Information Bureau)
form. One day I went to site visit with my sir (Md.Ikramul Aziz, Management trainee
Officer).I was visit 3 customers business area. I saw their business and visited their property
which they want to give mortgage.

Chapter-four
CREDIT MANGAMENT OF MERCANTILE BANK LIMITED

Credit Division:
Mercantile Bank Limited is a new generation bank. It is committed to give high quality
financial services / products to increase the GDP of the country by prosperous industrial
development, improve of the industry, increased export, and employment opportunities for
educated youth, poverty reduction, and quality improvement .The livelihood of limited
income groups and the overall sustainable socio-economic development of the country.
The bank's credit performance is the most important reason to achieve the bank's top goal, the
highest percentage of the total revenue of the bank is made, based on the maximum risk and
even the existence of the bank depends on the intelligent system, the failure of a commercial
bank of its credit portfolio, usually with the problem of credit portfolio. Are related to It is
less likely to shrink the value of other property. For example, the loan portfolio does not only
affect the structure of the bank's property, it is critically important for the success of the bank.
Nature wise loan:
Fundamentals of Credit:
The word "credit" comes from the Latin word "credo", which means "I believe". The word
loan can be big or narrowly defined. It is widely said that the loan (borrowers, buyers,
corporate or non-corporate organizations) means (lenders, dealers, or shareholders / owners),
others which are generally used for loan credit loans. Credit debt is the opposite. In the
future, a debt lending obligation is a debt lender to both debt repayment loans and the same
law-making loan.

Principal of Advance:
Advance payment is one of the most important tasks of the bank and the bank's strength
depends on its progress and total amount, which depends on the total deposits. Although the
exchange, commission and bank charges are the minimum profit or commercial bank's
contribution to profit, their earnings are mainly from interest charged on loans and discounts.
A knowledgeable and intelligent policy about a progress is considered to be an important
factor in the confidence of the bank's depositors and buyers. Traditionally banks are
following three main capital debts: Security, liquidity, and profitability can be made both of
debt and advance borrowers, and subsequently called Safe Progress. Based on the
unprotected progress of the borrower depends on confidence.
Different Type of Loans and Advances:
BC Circular No 33: 16/11/89 Bank has been given various types of loans, which were made
by the Bangladesh Bank, split on 11 September 01/01/90, which was later BCD notice
number. 03 dated 09/10/93 and again 10 major areas of BC measurement number: 8 dated
25/04/94 to determine interest rates on various banks' funds, conventional marketing
conditions and country's financial policies. Loans and advances have primarily been divided
into two major groups:
Retail loan:
1. Consumer credit scheme: Consumer’s credit scheme is one of the popular areas of
Collateral free finance of the bank. People with limited income can get credit facilities to buy
computer and other durable family products. The maximum loan limit is Tk 1 lakh.
2. Lease finance: This scheme is designed to help and encourage genuine and capable
entrepreneurs and professionals to acquire capital equipment, medicines, computers, vehicles
and other items.
3. Car loan: Car loan for people in the middle class has been launched to buy cars. MBL
maintains certain conditions of car loan. For example, a car worth 20 million. Here the bank

will pay 10 lac, because the car loan bank will give 50% loan to the vehicle. Most car loan
limit is 2 million
4. Home loan: To symposium the growing demand for housing for medium and lower
medium income people, the MBL Home Loan Scheme has been launched. Such loans can be
purchased or available Construction of new apartments for self-resident. Banks will keep
mortgages against home loans
5. Any purpose loan (personal loan scheme): Personal loan scheme has been launched to
provide credit facilities to the needs of low and middle income groups for a purpose. The
maximum loan limit is Tk 15 lac. The bank will not take any mortgage against this loan.
6. Overseas employment loan scheme: This scheme is planned for simplify the Bangladeshi
youths seeking employment aboard but who are unable to meet the expenses to reach the
workplace from their own sources. By availing loan under this scheme, the active youths of
middle and lower class can get overseas employment by avoiding borrowing from the
mohajon at high cost or selling their ancestral properties.
7. Cottage loan: The development plan of women entrepreneurs has been introduced in the
business. Under this scheme, small and cottage industrial projects funded by banks women
are financed by women.
8. Rural development scheme This project makes financing and self-reliant by financing
various income generating projects for the rural population of the country. This scheme is
managed on the basis of the group.
Corporate Credits:
This advance has no fixed payment schedule, but it has a validity time, which is renewable
activity renewable. Depending on the different nature of financing, the main of all lending
activities has been brought under the following.
Cash Credit (CC) Hypothecation:
A cash loan is a provision that allows the customer to borrow money up to a specific limit.
This is a permanent arrangement and the customer will not have to draw an authorized

amount simultaneously, but draw the required amount and time as much as needed. He can
return to the excess amount, which he can find with her. So cash credit is an active and
running A / C deposit and withdrawal that can often be affected Interest is charged only for
the amount withdrawn and not for the whole amount charged. Cash credit systems are
generally composed of good commitment or hypothecation adjustment.
OD:
Overdraft is an arrangement between a bank and its customer, which will later be uploaded to
a consent limit on its credit balance. This is temporary accommodation provided through
securities only. The borrower is allowed to draw and pay at any time, but the amount of
excess amounts does not exceed the limit. For the amount of interest charged for the amount
approved. A cash credit is doing regular business for long-term traders, when overdrafts are
sometimes made for a short time
SOD (Other):
Approval against the order of work for the contractual work is below this head. Advance is
usually approved for a specific purpose. This is not a continuous loan.
OD (General)
Advances allowed to the individual / organizations against financial liabilities, such as the
EDR line Or Defense Savings Certificate, ICB unit certificate etc.
SOD:
This is a continuous advance advantage. Through this agreement, bankers allow their
customers to overdraft out their current A/C from their credit limit. Interest is charged on the
amount, which does not take part in it, not in sectional quantity. MBL SOD against various
security departments. Based on a variety of security, we can share the following advantages.

IBP :
In order to meet the urgent need of the customer, there is such credit facility by paying
internal bill / cheques purchase. This applies to purchase bills / cheques for temporary
advance collection. It falls under the category of 'commercial loans
P.C :
In case of specific processing / packing, it is allowed to move forward against the customer
against specific L / C Farm Contract. This is classified as underground and 'packing credit'.
Increasing relevant export processing should be done within 180 days. It is under 'Export
Credit'.
F.D.B.P:
Under the department, the money given to the customer through the purchase / deviation of a
foreign document bill. Regular from this temporary advance shipping / export documents
premium. It comes under the 'Export Credit' category.
F.D.B.P. (Local):
Payment is made against documents representing sell of goods to local export oriented
industries which is considered as a fixed currency in the local currency / foreign currency of
this division. This liability is adjustable form proceeds of the bill.
F.B.P:
Purchases or payments made to a customer through foreign currency, checques / drafts fall
under this head. This temporary progress is fixed / dated to the premium of the draft.

Export Cash Credit:
For export of goods, the customer falls under this head of the approved financial shelter and
is categorized as "Export Credit". Advance advancement should be out of export within 180
days
L.T.R.:
Shipping documents are released and this product is released by L / C at the bottom of the
head. Under the transfer of the product, the importer under the trust will transfer the sale
quantity for a progress settlement within a period which is transferred. This is the post import
finance by MBL.
P.A.D:
Amount paid by the bank against the claims of tax on the products exported by L / C by the
bank. This is in exchange for an interim advance and exchange in exchange for the money
paid by the party at the end of the document to free the imported goods from customs
authorities. It falls under the category of commercial credit
Credit approval procedure:
After receiving the application from the client, MBL official prepares a credit line proposal
(CLP) (Annexure-1, 2, 3) and forwards the same to the Head Office to place before Head
Office Credit.
Committee (HOCC) or approval. It includes:
 Request for credit limit for customer.

 Project profile / profile of business.
 Copy of trade license dully attested.
 Copy of TIN certificate.

 Certificate copy of Memorandum and Article of Association, certificate of
incorporation, certificate of commencement of business, Resolution of the Board,
Partnership deed. (Where Applicable).
 03 (Three) years Balance Sheet and Profit and Loss account.
 Personal net worth statement of the owner / directors / partners etc.
 Valuation certificate of the collateral security in banks from with photographs of the
security.
 CIB inquiry from dully filled in (for proposal of above ten lac).
 Credit report from another banks.
 Stock report dully verified (Where Applicable).
 Indent / Performa invoice / Quotation.
 Price verification report.
 Statement of accounts.
 Declaration of the name of the sister concern and their liability
 In case of L / C detailed performance of L / C during last year.
 Schedule of mortgage able properties and relevant papers.
 Market reputation.
 Lending risk analysis, LRA (Applicable only for Loan more than Tk. 50 lac).
 Financial spreadsheet analysis.
 Credit scoring.
 Credit report.
Therefore, the steps in lending can be sum up as follows:
 Entertainment of application for loan proposal.

 Preliminary screening of credit proposal.
 Feasibility study and Appraisal of loan proposal or credit investigation.
 Sanction of loans or advances.
 Documentation.
 Disbursement of loans or advances.
 Supervision and follow up of loans and advances.

Sanction:
When a branch manager writes a letter acknowledging the terms and conditions of the loan,
he is called loan approval. Terms, which include loan approval, are given below: -
 Limit of the loan amount.

 Primary securities.
 Collateral securities.
 Rate of interest of the loan.
 Expire date.
 Documentation and,
 Other conditions
Securities:
To protect the loan, the security of the churches, credit facilities, is very important. The
banker cannot take the risk of not returning the money. The following two types of security
charges MBL.
Primary security: These are security by the ownership of things that the bank offers.
Collateral security: Collateral Securities are securities submitted by third parties, which can
save for a borrower in a narrow sense. In broad terms, it indicates some kind of security that
has the personal right to bank action in advance.
Pledge: As a promise of safety, products from the title, such as a promise of a product with
secured stock and shares, as well as railway receipts, bill of landings, dock warrants etc., are
appropriately approved by the bank.
Hypothecation: In case of forced ownership, ownership rights and ownership are both
borrower. To the bankers, a bona fide charge is made on the security of the borrower .The
lender lends a loan known as a hypothecation agreement to the bank and execute a document

Lien: Lien is the right of the banker to retain, the goods of the borrower until the loan id
repaid. The banker’s lien is general lien. A banker can retain all the securities in his
possession till and claims against the concern are satisfied.
Mortgage:
According to property law transfer (58), 1882 may be "the transfer of certain fixed assets,
permanent property, current or future debt or employment-related work of credit, which can
lead to financial liability. In this case the Mortgage doesn’t transfer ownership of the specific
immovable property to the mortgage, only transfers some of his rights as an owner. The
banker exercises the equitable mortgage.
Loan:
 D.P. notes signed by revenue stamp.

 Letter of agreement
 Letter of disbursement
 Letter of partnership (partnership farm) or Board of resolution (limited companies)
 Letter of lien and ownership / share transfer from (in case of advance against share)
 Letter of hypothecation
 Letter of lien for packing credit
 Letter of lien (in case of advance against FDR)
 Letter of lien and transfer authority (in case of advance against PSP, BSP)
 Legal documents for mortgage of property (as draft by legal adviser)
 Copy of sanction letter mentioning details of terms and conditions duty acknowledges
by the borrower
 Trust receipt
 DP Note
 Letter of partnership
 Letter of arrangement
 Letter of continuity
 Letter of lien
 Letter of lien and ownership / share transfer from (in case of advance against share)
 Letter of lien and transfer authority
 Legal documents for mortgage of property
 Letter of hypothecation of bill
 DP Note
 Letter of hypothecation [in case of cash credit (Hypothecation)]
 DP Note
 Letter of acceptance, where it calls for acceptance by the drawee
 Letter of hypothecation of bill
 DP Note
 Letter of authority
 Letter of installment
 Letter of guarantee
Overdrafts
Cash Credit
Bill purchased
Lease Finance
 C.C.S:
 DP Note

 DP Note
 DP Note
 S.S.S
Letter of Guarantee:
Disbursement:
The loan distribution documentation was made after approval of the terms and conditions.
The project implementation can be effectively supervised at every stage of disbursement of
loan for monitoring by the bank officials and can hold the borrower firmly in order to
complete the project in a timely manner. There are three main reasons for the disbursement of
loans, such as: -
 Finishing the documentation

 Stock verification
 All important documentation

Credit Monitoring, Follow-Up and Supervision:
Credit monitoring implies that it is free to check whether it is free or not, to ensure that the
distribution of distributed funds is tested. It includes a reporting system and communication
system between the borrower and the lending institution within the division, in the
evaluation, distribution, recovery, follow-up, etc.
Recovery:
Experienced commercial bankers are creating problems for the recovery of progress in our
country. As a result, they should think that Shakespeare's Hamlet's Pala wise has been
advised of his son Laureates, "Both the borrower and the lender do not have the debt; debt
often damages themselves and the friend". But most of them are logical, trade and commerce,
where debt and loan business refuse to fully ban the application for a part of the business, it is
a national or international level. While considering the capital of banks linked to their total
assets, the banks are generally highly leveraged companies. In advance, such as overdraft,
loan cash credit and bill, there are a large number of such assets. And the adequacy or
inadequacy of capital depends on the quality of the bank's management as an example of
intelligent lending decisions; Regular control and advance restoration.
Loan Classification:
Loan classification is a process by which the probability of risk or loss associated with the
loan of a bank is identified at a particular date and the quantum of measurement of the
accuracy of the bank is determined by the bank for possible losses / who are at risk risk
1. Unclassified : Repayment is regular
2. Substandard: Repayment is topped or irregular but has reasonable prospect
Of improvement.
3. Doubtful debt: Unlikely to be repaid but special collection efforts may
Result in partial recovery
4. Bad / Loss : Very little chance of recovery

Chapter -Five
FINDINGS

During crafting this report I have gone through different aspects of Credit policies and
procedures of Mercantile Bank Limited. By analyzing, I have identified the following
Findings as importantly:
 The transaction delay and the customer across the counter have found that there are
long queues in the counter due to the lack of concern for the concerns officers, due to
such lines of line.
 The lack of teamwork in the general category is a big problem. This is one of the most
important criteria for customer service development in this branch.
 In the Advanced Division they face various problems for the recovery of the loan
installment. The loan installment does not realize at the right time that this branch can
be appointed as a problem bank.
 Sometimes the valuation of property is not counted properly due to that the customer
is damaged. It does not offer different loan projects than other banks.
 The decision is centralized.
 The loan and advance division takes a long time to process the loan because the
approval loan process itself is taken.
 The banker has many problems to meet the loan related documents of the bank, loan
application, stock report, net price inflation etc.
 The CIB inquiry form does not provide information about the new client of the bank.
 CIB report is not easily available from the Bangladesh Bank.
 The political problems of Bangladesh are political issues. Due to political

interference, in most cases banks are mandatory to provide loans, which are rarely
restored. Every year, this bank has to face almost the convenience.

Chapter-SIX
RECOMMENDATION

Mercantile Bank Limited has been successful in all its operations since its inception. It has
virtually outs performed all its colleagues and rivals and peer banks in all areas of all
activities. There is still a chance for the bank to improve and any or all of the following can
implement Mercantile Bank Limited to do better:
 An outside company should be recruited to recover the bank's debt because it takes a
lot of time for bank employees to recover the fraudulent debt.
 The bank can increase its retail credit loan by approving credit to more customers.
This could be possible by discounting the credit policy like a third party guarantee
waiver
.
 Banks can increase the quality of their assets by discounting interest rates and
therefore customers can return back on time. It will only be offered to regular
customers.
 Extra, more services should be included with current services. It is highly needed to
Provide customer service Market competition
 In the advance section for the recovery loan and delay issue, special monitoring
should be in the field of cell field.
 The loan approval process should be easy so that borrowing from the client bank can
be comfortable.
 Property Assets should be calculated by surveyors.
 Regular performance evaluation and promotion / reassurance, which will prevent the
switching of employees.
 Internal conflicts between employees should be reduced.
 Banks should make credit cards arrangements because it shows that all payment credit
cards in the near future will be in plastic money.
 Customer loan will continuing.

CONCLUSION

Banking is becoming more important for economic development of Bangladesh by acquiring
capital and other resources. The third generation bank, Mercantile Bank, contributed to the
progress of the socio-economic conditions of the country.
My main goal of this internship was on banking system and how it actually works. MBL has
given an insight into the operation of the bank on the basis of the Credit Management
Department experience day. Despite some criticism, MBL's overall performance is above the
average of current banking industry. With a culture of strict discipline and risk management,
a bank's growth will increase the level of high levels. Following the superiority, the bank
system changes its reality with the reality, policy, process and reviews its products and
services. In this way, MBL wants to create a new era in banking.

References
 Annual report of 2016, 2017

 Statement of Affairs, Mercantile Bank Limited
 Different types of report related to Credit management department of
MBL
 Bangladesh Bank policy Guidelines for credit Management
 History ,Mission ,vision and core values ,http://www.mblbd.com/
A credit management of mercantile Bank Limited,
http://www.assignmentpoint.com/
 Internship_Report_on_Credit_Management_Procedure_of_Mercantile_B
ank_Ltd, http://www.academia.edu/12831107/
 https://www.scribd.com/
 https://www.bb.org.bd/

Appendices
MBL-Mercantile Bank Limited

P.C -- Packing Credit.
CIB-- credit Information Beaureu
.OD—Overdraft.
SOD--Savings Overdraft.
L.T.R. --Loan against Trust Receipts.
IBP --Inland Bill Purchase.
F.D.B.P. -- Foreign Documentary Bill Purchase.
L.T.R. -- Loan against Trust Receipts.
P.A.D.--Payment against Documents.
F.B.P. --Foreign Bill Purchase.


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Internship Report

Credit Management of Mercantile Bank Limited

Mr.Md Shamim Ahmed

Lecturer &Assistant Coordinator

BRAC Business School

Jubayet Hossain Rahat

Masters of Business Administration

Date of Submission: 9th September 2018

Credit Management of Mercantile Bank Limited Page 1

9th Sep, 2018

Subject: Submission of Internship Report

Jubayet Hosain Rahat

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Almighty Allah enabled me to successfully complete the internship report on “Credit

My special gratitude goes to Mr.Humayon Kabir(VP&Head of Branch, Mercantile Bank ltd,

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Serial Number Contents Page Number

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As a compulsory part of my graduation, I took the opportunity to manage my internship with

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C) Objectives of the report

C.1) General objectives

C.2) Specific Objectives

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I used both primary and secondary data to complete my report-

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2) Core values of Mercantile Bank Ltd

3) Vision and mission of Mercantile Bank Ltd.

Mercantile Bank Ltd has vision which are stated below

Mission of Mercantile Bank Ltd

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Kazi Moshiur Rahman

6) Glance at Mercantile Bank Ltd-Elephant Road Branch

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Deposit product Scheme deposit Special feature

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10) MBL interest rate on Loan & Advances

Agricultural Loans Interest rate

Term Loan Interest rate

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Working capital financing Interest rate

Export Loan 7.00%

Trade financing/Business loan 12.00%

Import financing of rice ,wheat ,edible 12.00%

Oil ,pulse ,peas, onion ,dates ,sugar

Financing to small and Medium Interest rate

Loans against FDR FDR Rate + 3.00%*

Loans against scheme deposit of the Scheme Deposit Rate + 4.00%*

Special credit scheme Interest rate