Lending Operations and Risk Management

November-2010

1 a. Discuss the important components those are to be taken into consideration in formulating the
lending operational policy of a bank.
b. List down the activities those are financed as included in the credit portfolio of your bank.

2 a. Distinguish between the term credit and short term credit. Why to the private commercial banks
prefer short term lending? Explain.
b. Do you think that National Economy will not flourish if all banks do not equally participate in
financing the long term investment projects? Elaborate your answer.

3 a. Discuss the importance of working capital loan for running an industrial project.
b. How would you assess the working capital requirement of a poultry project? Prepare a case study
assuming 5000 birds in the poultry firm.

4 a. What do you mean by credit planning? What factors are to be taken into consideration while making
a credit plan for a bank?
b. Discuss the important points to be looked into while selecting a prospective good entrepreneur.

5 a. What do you mean by project appraisal? During appraisal of a project loan proposal, what factors a
banker take into consideration? Please explain.
b. Mr. Ali, an entrepreneur of your branch area, applied for a loan of Tk.5.00 (five) lac to establish an
SME business to your branch. Please write an appraisal report explaining the following points:
(i) About entrepreneur, (ii) About the enterprise, (iii) Security, (iv) Credit need, (v) Marketing aspect,
(vi) Managerial ability, (vii) Recommendation.

6 a. What is fund flow? Discuss the importance of fund flow statement for a bank.
b. Discuss the differences between fund flow and cash flow statement. Please write a sample of a cash
flow statement.

7 a. Explain why core risk management is getting so much highlighted for proper financing of a bank.
b. Explain different aspects of credit risk grading (CRG) with grading points.

8 a. Distinguish between loan write-off and loan rescheduling.

b. Discuss loan rescheduling rules set by Bangladesh Bank.

9. Write Short Notes on any 05 (five) of the following:

a. Debt equity ratio

b. Non-performing asset
c. Loan pricing
d. Break-even point
e. Capital market
f. Micro credit
g. Packing credit
h. Loan documentation
i. Back-to-back L/C
 Lending Operations and Risk Management
May-2011

1 a. Define Portfolio Management. Highlight the role and responsibilities of a branch manager in
identifying a borrower, loan processing and appraisal of the loan proposal.
b. What do you mean by Asset-Liability Management (ALM)? Do you agree that the absence of good
asset-liability management of a bank may lead different crisis to jeopardize the image and
soundness of the bank? Elaborate your answer.

2 a. Banks usually extend credit against securities. Please list down the different types of securities
against which banks sanction loans to its clients.
b. “Loan cannot be turned into bad if it is perfectly made”. Elaborate your comments on this
statement while selecting a borrower.

3 a. Define SME credit with reference to Bangladesh Bank’s given definition. List out the booster sectors
financed under SME scheme.
b. Do you think that the credit delivery under SME scheme is given due weightage by the banks and
financial institutions from the view point of national interest? Explain.

4 a. What do you mean by CRG? What is the purpose of applying CRG? Write down the components of
CRG.
b. What should be the expected minimum CRG requirement for extending credit? Explain with
example.

5 a. What is loan pricing? Discuss the components those are required to be taken into account in pricing
of loan.
b. In competitive market, which of the variable and fixed pricing as a banker you would advocate? Give
reasons.

6 a. What is provisioning? Discuss the basis of determining the status of classified loans and advances.
b. Is it due to the increase of classified loans of the bank that they now facing liquidity problems and
borrow interbank call money at very high rate? Just the view point.

7 a. Discuss different types of credit that a commercial bank can provide to its clients.
b. Explain why creditworthiness of an applicant is assessed and what aspects are to be taken into
consideration in assessing the creditworthiness.

8 a. Distinguish between Money Market and Capital Market. Can increased call money rate influence the
capital market? Elaborate with example.
b. What do you mean by SEC? Elaborate its functions. Do you think that SEC is performing its role
properly in monitoring and controlling capital market especially stock market of our country? Please
pass your comments.

9. Write Short Notes on any 05 (five) of the following:

a. Loan syndication
b. Pari-passu charge
c. Debt-service coverage ratio
d. Micro-credit Regulatory Authority (MRA)
e. Debt-equity ratio
f. Bankers Book of Evidence Act
g. Preference share
h. Economic Rate of Return (ERR)
i. Green Banking
 Lending Operations and Risk Management
May-2012
1 a. Define Portfolio Management. Highlight the role and responsibilities of a branch manager in
identifying a borrower, loan processing and appraisal of the loan proposal.
b. What do you mean by Asset-Liability Management (ALM)? Do you agree that the absence of good
asset-liability management of a bank may lead different crisis to jeopardize the image and
soundness of the bank? Elaborate your answer.

2 a. Explain Term Loan. Why the private commercial banks discourage to consider loan term loans?
Explain.
b. What is working capital? Distinguish between working capital loan (WC) and cash credit (CC). List
down the items of costs to be taken into consideration in assessing the working capital need of a
poultry firm.

3 a. What do you mean by a project? List down the cost component of a rice mill project (capital cost).
b. Mr. Rahmat Ali, a potential entrepreneur, has applied for a loan of Tk.10.00 (ten) lac to establish a
nursery project to your branch. Please write an appraisal report explaining the following points:
(i) About the entrepreneur, (ii) About the enterprise nursery, (iii) About the securities, (iv) About the
credit needs, (v) Marketing aspect, and (vi) Your recommendations.

4 a. Distinguish between LRA and CRG.

b. List down the risk factors those can make an industry sick. Explain how each factor accelerates the
sickness.

5 a. Distinguish between money market and capital market. Can increased call money rate influences the
capital market? Elaborate with example.
b. What do you mean by SEC? Elaborate its functions. Do you think that SEC is performing its role
properly in monitoring and controlling capital market especially stock market of our country? Please
pass your comments.

6 a. What is fund flow? Discuss the importance of fund flow statement for a bank.
b. Distinguish between fund flow and cash flow statement. Please write up a sample of a cash flow
statement of your bank.

7 a. Distinguish between loan write-off and loan restructuring.

b. Discuss loan write-off rules set by Bangladesh Bank. Does it have any effect on bank’s balance sheet?
Explain.

8 a. Banks usually extend credit against securities. Please list down the different types of securities
against which banks sanction loans to its clients.
b. “Loan cannot be turned into bad if it is perfectly made”. Elaborate your comments on this
statement while selecting a borrower.

9. Write Short Notes on any 05 (five) of the following:

a. Liquidity management
b. Debt-equity ratio
c. Non-performing asset
d. Loan documentation
e. Pari-passu charge
f. Corporate banking
g. Financing agriculture sector - its importance
h. Preference share
i. Balance of payment