...with representatives from the Bangladesh Bank as team coordinators to look into the practices of the best performing banks both at home and abroad. These focus groups identified and selected five core risk areas and produced a document that would be a basic risk management model for each of the five 'core' risk areas of banking. The five core risk areas are as follows- a) Credit Risks; b) Asset & Liability / Balance Sheet Risks; c) Foreign Exchange Risks; d) Internal Control & Compliance Risks; and e) Money Laundering Risks. Bangladesh Bank in one of it’s circular (BRPD Circular no.17) advised the commercial banks of Bangladesh to put in place an effective credit approval and monitoring system by December, 2003 based on the guidelines sent to them. In my study, I would try to put forward my findings about the “Credit Management Policy of Bangladesh Bank, and its implementation”. To illustrate my point, I am giving the example of Bank Asia Limited. 2. Objectives of the study. Broad objective: ❖ The broad objective is to know the Credit Management Policy of Bangladesh Bank. ❖ To analyze its implementation at Bank Asia Limited. Specific objective: In order to reach the broad objective, some specific objectives are identified.In this report, I have attempted to give an overview of foreign exchange operation of BAL. Following are the main objective: ❖ To familiarize with the history and...
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...has been able to build up high sales volume through cheaper pricing than its competitors and through a strong sales force. The company has also been able to keep prices down by maintaining a strict budget with tight control over operating expenses, including paying its sales team on commission and keeping overhead low. Financing is another key in a business and is a large factor that will determine the success of Jones Electrical is their financing. Jones Electrical needs to take out larger loans in order to build up inventory and increase sales. Also by taking loans the company is able to take advantage of the 2% purchase discounts that its manufacturers provide. The company’s financials show that with an increase in its line of credit the more sales it has, resulting in growth and a higher net income. 2. Why does a business that has a profit of $30,000 per year need a bank loan? A loan in many cases for companies is something that is necessary to have a successful growth and create excellent opportunities. The company’s biggest problem is its shortage of cash. With the extra cash Jones Electrical will be able to buy more inventories which will help it to grow and increase sells. The cash will also allow Jones Electrical to take advantage of the 2% purchase...
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...SUMMARY OF MASTER CIRCULAR ON EXPOSURE NORMS INTRODUCTION As a prudential measure aimed at better risk management and avoidance of concentration of credit risks, the Reserve Bank of India has advised the banks to fix limits on their exposure to specific industry or sectors and has prescribed regulatory limits on banks’ exposure to individual and group borrowers in India. In addition, banks are also required to observe certain statutory and regulatory exposure limits in respect of advances against / investments in shares, convertible debentures /bonds, units of equity-oriented mutual funds and all exposures to Venture Capital Funds (VCFs). Banks should comply with the following guidelines relating to exposure norms. Purpose This is a summary on Master Circular providing framework of the rules/regulations/instructions issued by the Reserve Bank of India to Scheduled Commercial Banks relating to credit exposure limits for individual / group borrowers and credit exposure to specific industry or sectors, and the capital market exposure of banks. Definition of 'Credit Exposure' The total amount of credit extended to a borrower by a lender. The magnitude of credit exposure indicates the extent to which the lender is exposed to the risk of loss in the event of the borrower's default. Credit Exposures to Individual / Group Borrowers • Exposure to a single borrower not to exceed 15% of bank’s capital funds • Exposure to a group of borrowers not to exceed 40% of capital...
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...Abstract Contents: Context- Objectives of group lending- Methodology- Some experiences of FINGOs, Potentialities- Limitations-Further improvements suggested- Conclusion Micro credit was visualized as a specialized sector by central bankers in 1970s as a necessity to serve small business and rural poor households who were out of reach of banking services in Nepal. Historically priority sector credit, small farmer development program, production credit for rural women, micro credit for women, and saving, credit cooperatives, and deprived sector credit programs are major initiatives from formal financing system. Thousands of informal occupational groups and community groups function informally. Main thrust of both formal and informal agencies is group mechanism to generate saving, serve micro credit and other social development inputs to their group members. Poor households variously called low income families, Janajati, backward Madhesi, Dalit, Women, and unemployed youth who live in rural areas have low saving, low capital base are excluded by banks and financial institutions intentionally from their service folds. They lack general and financial literacy. As an individual they are ineligible to take loans. They are recognized by financing institutions under Groups as legal entity. The Financial Intermediary Act 2055 recognizes groups including 4 to 10 members from disadvantaged households as a unit to receive social and financial inputs. From lenders’ as well as borrowers’...
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...area. He has a $15,000 budget for research that he can purchased from a research supplier called Manson and Associates to help him make this decision. Larry also has a $500,000 trust fund coming available to him soon and the option to borrow $400,000 from family members and an additional $400,000 line of credit with the bank. Recommendation We have concluded that it is feasible for Larry to pursue the investment of a Coors distributorship. The information we recommend purchasing are: studies A, B, C, E, F and I. good choicesThe cost of these studies totals $6,749.50, which would save $8,250.50 to use toward the initial investment. With fixed costs and the estimated amount Larry had figured for the initial investment, he would need $1,050,000. After Larry’s $500,000 of trust fund money and the additional money saved from the research budget, he would still need to borrow $541,748,50 to acquire the distributorship. We recommend that he borrow the $400,000 he has been offer from family first and the remaining $141,749.50 from the bank to avoid a larger interest payment or fees he may incur with a larger loan from the bank. He would also still have a $258,250 line of credit with the bank available if he needed it in the future. Rationale 1. When analyzing Table A it is clear that the consumption in gallons of beer per capita is much higher in Delaware than the average for the United States as a whole. Based on this information and the percentage of the population in...
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...ADVISER MAY 2012 TABLE OF CONTENTS TITLE PAGE APPROVAL SHEET ACKNOWLEDGMENT ABSTRACT CHAPTERS I. THE PROBLEM AND ITS BACKGROUND Introduction Some peple doesn’t now w Theoretical Framework Conceptual Framework Statement of the Problem Hypothesis of the study Assumption of the study Significance of Study Scope and Limitation Definition and Terms II. REVIEW OF RELATED READINGS Conceptual Literature Research Literature III. METHODOLOGY Materials Procedures Flowchart Set-Up IV. PRESENTATION, ANALYSIS & INTERPRETATION OF DATA Question Number 1 Question number 2 V. SUMMARY, CONCLUSIONS AND RECOMENDATION Summary Major findings Conclusion Recommendation BIBLIOGRAPHY APPENDIX APPROVAL SHEET Name of Candidates : Amza Aulia Zamani Devano Arsyandiaz Syahreza Milvan Mohammad Fahri Shahab Title of the Study : What’s On Your Plate Mr. Rizaldy Santos Instructor Date : ACKNOWLEDGEMENT We would like to thank our instructor,Engr. Carlos G. Peña, for guidingand supporting us all throughout this project. His constant reminders andprogress report checks have helped us become more focused during this thesiswriting process. He taught us how to undertake this writing task and evenprovided us with examples, which were of great assistance.We would also like to thank Chemrez Technologies , specifically their employees namely Engr. Alfredo Urlanda Jr. and Mr. Carlos...
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...not wanted to take on investors and wanted total control of the business yourself, one may want to pursue debt financing in order to start up a business. One would tap your own sources of funds first by using personal loans, home equity, and even credit cards. A business loan is another option. Debt financing is when a company borrows money that must be repaid but with interest. This will not affect the ownership of the company. Two examples of such would be Issued Bonds and Line of credit. With a line of credit, this is a bank loan where a business can draw out funds whenever money is needed. In Issue Bonds the business can issue bonds as for of debt financing these bonds are marketable securities. Debt financing allows one to have control of your own destiny regarding the business. If you finance your business using debt, the interest you repay on your loan is tax-deductible. This means that it shields part of your business income from taxes and lowers your tax liability every year. That is some of the advantages. The disadvantages of borrowing money are you may have large loan payments at precisely the time you need funds for start-up costs. If one does not make payments to credit cards or commercial banks, you can ruin our credit rating and make borrowing in the future difficult...
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...4 Demand for Credit: Companies demand credit for various operating, investing and financing activities. Operating activities – many companies have cyclical operating cash needs. For example, manufacturers of inventory or retailers that purchase merchandise for the end of year holiday season. Investing activities – companies routinely require large amounts of cash for investments including purchases of new equipment and property and for corporate acquisitions. Important for start-ups and growth companies. Financing activities – for issuance of debt for repayment of maturing debt obligations or the repurchase of common stock. Supply of Credit: Trade credit – from supplies is routine and most often non-interest bearing. Bank loans – banks structure financing to meet specific client needs. Bank regulators require that banks hold capital in proportion to their loan portfolio. Revolving credit lines – loans that companies draw on as needed. They are like credit cards because a company can take cash out as needed and make payments as cash is available. Lines of credit – are guarantees that funds will be available when needed. These LOC act as backup or interim financing. Letters of credit – facilitate private international transactions. A letter of credit interposes a bank between the two parties to a transaction. The letter provides a guarantee of payment from the buyer. The benefit is that is substitutes the bank’s credit rating for that...
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...Lending and Retail Lending. For the purpose of this Code, the term ‘credit’ will include all funded and non-funded credit facilities. RBI’s guidelines / directives, that may be issued from time-to-time, will override the Code where applicable. 2 Short title and commencement 2.1. This Code is called IDBI Bank Ltd. Fair Practice Code for Lending. 2.2. This Code is made pursuant to the Directives of Reserve Bank of India, vide Circular No:DBOD.Leg.No.BC.204/09.07.007/2002-03 dated May 5, 2003. 2.3. This Code is applicable to all members of staff of IDBI Bank Ltd. 2.4. The Board of Directors of the Bank may modify the Code from time to time. 3 Applications for Loan and its Processing 3.1. Application for loan in the loan application form/Loan related important document (LRID) shall be comprehensive to include information about rate of interest (fixed/floating) and manner of charging (monthly/quarterly/halfyearly/yearly), process fees and other charges, penal interest rates, pre-payment option and any other matter which materially affects of the interest of the borrower. The LRID would be retained with the applicant for his future reference and would also act as an acknowledgement for the applicant for having submitted 1 Fair Practices Code for Lending the application form. (A copy of the filled application form duly signed by the borrower would also be retained by the borrower). It is expected that credit application from borrower will be completed in all aspects and be accompanied...
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...Key Inputs for th XII Plan Financing of Power Sector Central Electricity Authority Government Of India Agenda Sector Profile Magnitude of Investment Funding Sources and Issues Power Sector Profile A LL INDIA DEFICITS IN POWER 20 15 Percent 10 5 Energy Def icit Peak Def icit 0 1998 -99 2000 -01 2002 -03 2004 -05 2006 -07 2008 -09 Energy availability has increased by 32.7% in the past 5 years but demand continues to outstrip supply Nearly 600 million Indians do not have access to electricity AT&C losses currently exceed 30% for the country as a whole. Need to Accelerate Power Sector Growth Growth in GDP and Gross Power Generation 15.00 Grow th in Gross Generation 10.00 Grow th in GDP Percent 5.00 0.00 199900 200001 200102 200203 200304 200405 200506 200607 200708* 200809* For India to grow @9% p.a. its power sector must also grow at 7.2% p.a (XIIth Plan projects electricity use elasticity wrt GDP at 0.8) But over the last 5 years, Gross Power generation has grown by only 5.89% pa NEP objective : Power for all by 2012 Targeted Growth of Generation XIth Plan target is 78,700MW XIIth Plan target is 1,00,000 MW Current investment focus is on Generation Investment in Sub-transmission and Distribution is lagging However, for smooth functioning of the sector Investment should be in the ratio 2:1:2 Magnitude of Investment (Rs crore) Plan Generation Transmi ssion 1,40,000 2,40,000 Distributi...
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...Cash Credit : Overviews Cash Credit is also known as Working Capital .Cash Credit is a facility to withdraw the amount from the business account even though the account may not have enough credit balance. The limit of the amount that can be withdrawn is sanctioned by the bank based on the business cycle of the client and the working capital gap and the drawing power of the client. This drawing power is determined, based on the stock and book debts statements submitted by the borrower at monthly intervals against the security by hypothecating of stock of commodities and/ or book debts. The excess withdrawal of cash is made generally on demand from the customer and the customer has to pay interest on the excess amount he/she has withdrawn. The Cash Credit facility is quite useful to those businesses where cash payment like wages, transportation,cash purchases are to be made and the receivables are not realized in time. Cash Credit : Process The following are the sequence of steps taken by the banks on receipt of completed application forms. 1. Application form is accepted and acknowledged. 2. Personal interview /discussions is held with the customers by the bank’s officials. 3. Bank's Field Investigation team visits the business place/work place of the applicant. (All the documents submitted are verified by the bank with the originals so as to ensure the authenticity of the same.) 4. Bank verifies the track record of the applicant with the common information sharing bureau...
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...Accounting 70150 Financial Institution Financial Analysis, Part I 75 points Name: Signature 1. (12) Refer to the Citigroup 2009 10-K report. Explain the primary reasons for the Net Income differences between 2008, 2009 and 2010. Use the following format: 2009 2010 2011 Citigroup’ net income (loss) $billions ($1.606) 10.602 $11.067 Change $12.208 $.465 2011 vs. 2010: Citigroup and Consolidated Subsidiaries Overall, the largest change between the two years on the Income Statement is the 50.86% reduction (26,042 to 12,796) in the provisions for credit losses and benefits and claims. Net income for Citigroup increased 4.65% (10,602 to 11,067) while revenues decreased 10% (from 86,601 to 78,353) and operating expenses increased 7.51% (47,375 to 50,933). Additionally, the income from discontinued operations increased from (68) to 112. Citicorp Analysis: While total Citicorp income from continuing operations only decreased 2%, the Global Consumer Banking increased 33%, the Securities and Banking decreased 25%, and the Transaction Services decreased 7%. Citi Holdings Total Citi Holdings increased 38% in the period, as Brokerage and Asset Management decreased 27%, Local Consumer Lending increased 43% and Special Asset Pool decreased 49%. Thus, Citi Holdings income from continuing operations increased only 1%, but the Discontinued Operations, Net Income attributable to NCI decreased 47%, causing Citigroup net income to increase by 4%...
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...rewards included underwriting fee, interest payments, being a part of a big loan-financing project in Asia and developing networks and relationships with Asian governments and companies. This outweighed the risks of underwriting risk, credit risk and long-term collateral risk. In addition, we believe it was the correct decision to initially bid to lose and then change this approach once there was concrete support from the HK government. From Disney’s perspective, despite Chase’s standard commitment letter leaving them slightly vulnerable, choosing Chase as sole mandate made the most sense. Due to the unique nature of the loan (extreme long term, Disney’s desire to use operating cash flow for expansion and the principal collateral being non-existent for first 2 years), it made sense for Disney to choose a company that has a strong relationship with and one that was extremely flexible on the structuring of the loan. Finally, we believe the most suitable syndication strategy is to be Chase as the sole mandate with a two-stage syndication process and sub-underwriting (exhibit 8a) Chase Manhattan Bank made a smart initial decision by attempting to bid to lose. This strategy was ideal because due to the uniqueness of the loan it posed several credit issues. Firstly it was extremely long (15 years). In addition, the problems of Disneyland Paris, which boasted large initial capital expenditures and an overly aggressive capital structure meant banks had to tread warily and do their due...
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...David Smith, had lost my job due to the economy and my wife was in school to become a beautician so our income took a severe reduction. I have always been a hard worker and value my word and my credit. During this time I contacted my mortgage lender and told them what was going on and they told me that we could go into arrears and they would see what they could do for us. I did not want to do this as I knew it would possibly hurt our credit but I took my lender at their word and did as they instructed me to do. Once we were behind they contacted me to begin the process for the modification. We then had our loan modification accepted and once the modification went through we were able to catch up the mortgage they instructed me to fall behind on and now we have been current for over 18 months with no late fees. In fact, there have been several months where we were able to send a little extra. It has been a terrible mess and learning experience but I have completely gotten this resolved and have maintained our perfect credit and payment schedule I always had before this event occurred. My employment is stable and my wife is now finished with her school and she is bringing in income as well. Thank you for taking time to read this and for giving us a chance to continue building our excellent credit history. Sincerely, David...
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...Samuel Kui Section 0501 Be Our Guest Be Our Guest, a Boston based company, is a rapidly growing equipment rental company with substantial seasonality in its revenues and profits. For years, the company has been renting party supplies and furniture to caterers, event planners and hotels; it has also managed to grow gradually in a very volatile and seasonal business. The founder, Stephen Lizio and co-owners Al Lovata and Simone Williamson found it difficult to fund daily operations because of seasonal cash shortages. In 1996, the company had secured a $100,000 revolving line of credit at the prime rate plus 1.5%, and a $390,000 five-year loan at a fixed rate of 9.25%. By the end of 1997, the loan outstanding balance was reduced to $315,000 and the monthly payment is more than $8000. Many of Be Our Guest's customers had followed up their annual holiday rush, then party-equipment rentals peak, with their annual winter slump, leaving them unable to pay their bills until late spring. Holiday seasons in the fall and winter typically accounted for half of the company's annual revenues and the size of the seasonal rises is unpredictable. Trying to finance such sharp swings in demand has been one of the biggest challenges that the owners had to face. Although the company's annual revenue from 1995 to 1997 had risen 49% to $2.7 million, net income for 1997 had declined 37% to only $88,000; the decline was primarily attributed to large payouts and was taking it as salary...
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