A Study on the Credit Policy of Prime Bank Limited

Abstract

Banks are the financial institutions that playa very useful and dynamic role in the economic life of every modern state. Banks support industrial developments, business expansion, job creation etc. banks are the lender of borrowed funds. Bank accepts deposit from public and provides loans to them. The spread between the interest of loan and deposit is bank's profit. There are various types of Bank in our society. These are nationalized, semi-nationalized, private commercial, specialized Bank etc. Nowadays private commercial banks are very successful and they are playing significant role in the economic development of the country. Such a private commercial bank is PBL. Prime Bank Ltd has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. The services of PBL include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software. PBL have formulated the various Loan Schemes. Those are General Loan Scheme, Lease Finance, House Building / Apartment Loan Scheme, Small & Medium Enterprise (SME), Consumer Credit Scheme, Hire Purchase and Advance Against Share. General loan schemes are allowed to individual/firm/industries for a specific purpose but for a definite period and generally repayable by installments fall under this head. Lease financing is one of the most convenient long-term sources of acquiring capital machinery and equipment. Loans allowed to individual/enterprises for construction of house (residential or commercial) falls under House Building / Apartment Loan Scheme. Loans extended to Small & Medium Enterprise (SME) falls under SME Scheme. In order to provide financial assistance to the limited income group for raising their standard of living by acquiring domestic durables like freeze, TV, Computer, Motor Car, etc. Prime bank Ltd has introduced a Consumers Credit Scheme. To purchase capital machineries PBL has also formulated Hire Purchase Scheme. In order to contribute to the development of the Capital Market of the country Prime Bank Limited extends Advance Against Share loan scheme. PBL has extended TK. 12686.85 million as loans & advances. Loans and Advances are primarily divided into two major groups Fixed term loans and Continuous credit. Fixed term loan can be dividend as short term, medium term and long term. Continuous credits are short term. Loans can also be categorized in sectors.