This report summarizes the author's 3-month internship at Mercantile Bank Limited in Bangladesh. It discusses the bank's general banking and credit risk management practices. Mercantile Bank provides various deposit products and loan options. It aims to bridge the gap between businesses and individuals who need financial services. The report also examines the bank's credit policies, which involve assessing borrower creditworthiness and obtaining collateral. Mercantile Bank offers financing to both large corporations and small businesses/entrepreneurs. Managing credit risk is important for achieving the bank's goals. The author found that the bank's general banking and credit programs were performing well and helping to grow the economy.

1. This report is the outcome of the internship program under BBA program (Major
Finance) of the Department of Business Administration, Victoria University of
Bangladesh. An internship program is designed for the completion of my B.B.A.
program, which acts to bridge the gulf between the theoretical knowledge & real life
experience and have a practical experience while passing through the theoretical
understanding. The report is the result of three months internship program at Mercantile
Bank Limited, Moghbazar Branch (Dhaka). Through working different departments of
MBL under this internship program, I have gathered a pre idea about the organizational
culture before proceeding to my professional career.
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2. ACKNOWLEDGEMENT
At the very beginning, I would like to express my deepest gratitude to almighty ALLAH
for giving me the strength and the composure to finish the assigned task within the
scheduled time.
I am deeply indebt to my supervisor Mohibul Islam, Lecturer, Department of Business
Administration, Victoria University of Bangladesh, for giving me the opportunity to
discover the kind of kinship that ensues when I work in close proximity to compile this
report. I am also grateful to him for his whole-hearted guidance and supervision, during
the preparation of the report.
Moreover, my heartiest gratitude is to Mr. Ahsanul Haq Chowdhury (VP & Head of
Moghbazar branch), Mr. Md. Shawkat Hossain (SEO), Ms. Tuhin Pervin (EO & In
charge GB) Mr. Md. Shakhawat Hossain (Assistant Officer-GB) Ms. Nusrat Jahan (EO-
GB), Mr. Sahed (Cash), Mr. Shariful Islam (IT), Mr. Md. Ziaul Kader (EO-Credit
Division), Ms. Nahida Sultana (Credit Division) and to all the personnel of Mercantile
Bank Ltd. Moghbazar Branch, who has co-operated and helped me in collecting
information for the improvement of my report.
I gratefully acknowledge the time and effort that the above-mentioned persons have
voluntarily shared. Their suggestions and comments to make the report a good one, was
really a great source of inspiration for me.
My love and thanks to all my friends who have helped and supported me all the way,
while doing the report.
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3. LETTER OF TRANSMITTAL
9th August, 2009
Mohibul Islam
Supervisor of BBA Internship
Department of Business Administration
Faculty of School of Business and Management
Victoria University of Bangladesh, Dhaka
Subject: Submission of the Internship Report.
Dear Sir,
Here I present my Internship report titled ‘General Banking & Credit Risk
Management of Mercantile Bank Ltd’ with due gratitude and appreciation. As per
partial fulfillment of the requirement for the B.B.A. program, I have completed the
Internship from Mercantile Bank Limited, Moghbazar Branch, Dhaka.
The internship program has given me the opportunity to learn about different aspects of a
reputed organization. Before facing the real Business world, I have gathered a pre idea
about the organizational culture. To prepare this report both the Primary and secondary
data both has been used.
However, I have gathered all the facts and information’s that I could collect within this
short period of time and tried my level best to exert all the things as much presentable as
possible. I sincerely hope that my report will meet the requirements that you set for me.
For further query please do contact with me.
Yours faithfully,
Md. Masbah Uddin Bhuiyan
B.B.A (5th Batch)
ID# 110502201
Department of Business Administration
Victoria University of Bangladesh, Dhaka
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4. I, Md. Masbah Uddin Bhuiyan, student of Business Administration Department (BBA
Program) major in Finance of Victoria University of Bangladesh, do hereby declare that
the internship report “General Banking & Credit Risk Management of Mercantile
Bank Ltd” has not been submitted by me before, for any degree, diploma, title or
recognition.
Md. Masbah Uddin Bhuiyan
B.B.A (5th Batch)
ID# 110502201
Department of Business Administration
Victoria University of Bangladesh, Dhaka
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5. DECLARATION OF THE SUPERVISOR
This is to certify that Md. Masbah Uddin Bhuiyan, ID NO-110502201, student of BBA
program of Victoria University of Bangladesh, has completed the internship report titled
“General Banking & Credit Risk Management of Mercantile Bank Limited” successfully
under my supervision.
The student is found to be intelligent, sincere and hardworking & he has put in lot of
work and also brought his ideas with Mercantile Bank Limited.
I wish him every success in life.
Mohibul Islam
Supervisor of BBA Internship
Department of Business Administration
Faculty of School of Business and Management
Victoria University of Bangladesh, Dhaka
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6. EXECUTIVE SUMMARY
This report focuses on three months working experiences in Mercantile Bank Ltd.
Moghbazar Branch. The report will give a clear idea about General Banking & Credit
Risk Management of MBL, which I have gathered through working in different
departments of MBL during this three months internship program.
The whole study has been made under the supervision of Mohibul Islam, Lecturer,
Department of Business Administration; Victoria University of Bangladesh.
Banking sector in Bangladesh has been flourished during last few decades. It results due
to the adoption of privatization policy. Until, Government sector owned, controlled and
operated financial sector of Bangladesh with the objective of allocating funds to priority
sectors. Mercantile Bank Limited (MBL) is one of the leading private commercial bank of
Bangladesh. MBL has been incorporated on May 20 th, 1999 in Dhaka, Bangladesh as a
public limited company with the permission of the Bangladesh Bank. MBL introduced its
formal commercial banking operation from June 02, 1999. The Bank has 42 branches all
over the country up to 2008. Mercantile Bank Ltd. mobilized a total deposit of BDT
49,538.36 Million in 2008 as compared to that of BDT 39,348.00 million up to December
2007.The investment deposit of this bank was BDT 7690.12 million in 2008.
Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking
services and to contribute socio-economic development of the country. The Bank
commenced its operation in June 2, 1999.The Authorized Capital of the Bank is Tk.3, 000
million and the Paid-up Capital is Tk.1, 199.12 million. The Bank provides a broad range
of financial services to its customers and corporate clients. The Board of Directors
consists of eminent personalities from the realm of commerce and industries of the
country. The Bank is manned and managed by qualified and efficient professionals.
General Banking & Credit Risk Management are the most important sides for a bank.
Bank is nothing but a middleman between lenders (surplus sector) and borrowers (deficit
sector). To provide loan, bank needs a huge amount of money from the lenders. General
banking is the side where bank offers different options to the clients to deposit (save) and
remit their money. To invite the clients, bank offers different options in front to their
clients. Most of these options are very much similar between the banks, but the customer
services and facilities may not be the same.
It has many services which are provided for customer. Such as DBDS, MSP, FDR, STD
etc. In the modern banking business they also provide online banking, ATM facility, SMS
banking and so many other things.
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7. A credit policy includes all rules relating to loans and advances made by the bank to the
borrowers. It includes types of credit extended by banks, method of judging the credit
worthiness of borrowers, the collateral or securities that are accepted by the banks and so
on. This policy guidelines refer to all credit facilities extended to customers including
placement of funds on the inter bank market or other transactions with financial
institutions. MBL Credit policy contains the views of total macro-economic development
of the country as a whole by way of providing financial support to the Trade, Commerce
and Industry. Throughout its credit operation MBL goes to every possible corners of the
society. They are financing large and medium scale business house and industry. At the
same time, they also take care of entrepreneurs through its operation of Lease Finance
and some Micro Credit, Small Loan Scheme etc. All these are risk related. To reach the
MBL’s mission & vision, credit risk management has become one of the most important
tasks of this bank.
In this report, I have also mentioned the overall services that Mercantile Bank Limited
has been offering to their customers. The findings are that General Banking and Credit
programs MBL are performing nicely. Handle of these two departments performance are
expectable. They fulfill their targets of their banking systems through their performance.
It results a better portfolio not only for the organization but also for the whole economy of
the country.
This report consist three parts and eight chapters. Part one covers with front pages of this
report. The chapters start from second part of this report. Chapter one is the introductory
chapter, where I have shown my procedures and technique of the study. Chapter two &
three contains the organizational profiles. The major chapters of the report are chapter
four and chapter five, it includes General Banking and Credit risk Management policies
of MBL. Chapter six contains Financial Summary of MBL. Chapter seven contains
Finding & Analysis of the study, which is based on the survey. And the last important
part is the recommendation and conclusion which is in chapter eight.
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8. ACRONYMS
Particulars Descriptions Particulars Descriptions
AD Authorized Dealer IBC Inward Bills for Collection
BDT Bangladeshi Taka IBCA Inter Branch Credit Advice
B/L Bill of Lading IBDA Inter Branch Debit Advice
BOE Bill of Exchange ID International Division
CAD Central Account Division IRC Import registration
Certificate
CB Central Bank L/C Letter of Credit
CC (H) Cash Credit (Hypo) LCAF Letter of Credit
Authorization Form
CC (P) Cash Credit (Pledge) LIM Loan Against Imported
Merchandise
CCS Consumer Credit Scheme LTR Loan Against Trust Receipt
CD Current Deposit. Tk. Taka
CIB Credit Information TIN Tax Identification Number
Bureau
CIF Cost Insurance & Freight TT Telegraphic Transfer
DBDS Digun Briddhi Amanat MBL Mercantile Bank Limited
DD: Demand Draft. MSS Monthly Saving Scheme
DPS Deposit Pension Scheme MT Mail Transfer.
D&M Developing and OBC Outward Bills for Collection
Marketing
EPB Export promotion Bureau PAD Payment Against Document
ERC Export Registration PO Payment Order
Certificate
EXP Export Form R&P Research & Planning
FC Foreign currency SB Savings Account
FDD Foreign Demand Draft SOD Secured Over Draft
FDR Fixed Deposit Receipt SS Savings Schemes
FMD Family Maintenance STD Short Term Deposit
Deposit
GSD General Service Division SWIFT Society for Worldwide Inter
bank Financial Transaction
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9. TABLE OF CONTENTS
Chapters Topic Page No
Part-01
Preface i
Acknowledgement ii
Letter of Transmittal iii
Declaration iv
Declaration of the Supervisor v
Executive Summary vi
Acronyms viii
Part-02
Chapter 1 Introduction 1-5
1.1 Prelude 2
1.2 Origin of the report 2
1.3 Background of the Study 2
1.4 Objective of the study 3
1.5 Methodology of the study 3
1.6 Scope of the study 4
1.7 Limitations of the study 5
Chapter 2 Organizational profile 6-19
2.1 Overview of MBL 7
2.2 Historical Background of MBL 7
2.3 The Corporate Structure 8
2.4 Nature of Business 8
2.5 Vision 9
2.6 Mission 9
2.7 Objectives of MBL 9
2.8 Core Value 9
2.9 Branch Network of MBL 10
2.10 Management hierarchy of Mercantile Bank Ltd 11
2.11 Management 12
2.12 Human Resource Development 12
2.13 Board Structure 13
2.14 Corporate Social Responsibility 14
2.15 Credit Rating Report on MBL by CRISL 15
2.16 Corporate Information of MBL at a Glance 16
2.17 Value Added Statement 16
2.18 Financial Summary (MBL) 17
2.19 Operating Efficiency Ratio 18
2.20 Asset Portfolio 18
2.21 Funding Structure 18
2.22 MBL Moghbazar Branch 18
2.23 Mercantile Bank Ltd. at a Glance 19
Chapter 3 Product &Services of MBL 20-28
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10. 3.1 Product & Services 21
3.2 Monthly Saving Scheme 22
3.3 Family Maintenance Deposit 22
3.4 Double Benefit Deposit Scheme 22
3.5 Quarterly Benefit Deposit Scheme 23
3.6 Time Deposit Benefit Scheme 23
3.7 Advance Benefit Deposit Scheme 23
3.8 Consumer Credit scheme 23
3.9 Small Loan scheme 23
3.10 Lease Finance 23
3.11 Doctors Credit Scheme 23
3.12 SME financing Scheme 24
3.13 Personal Loan Scheme 24
3.14 Car Loan Scheme 24
3.15 Home Loan Scheme 24
3.16 MBL Card Facilities 24
3.17 Online Banking 26
3.18 SMS Banking 27
Chapter 4 General Banking 29-47
4.1 General Banking 30
4.2 Customer Service of MBL 31
4.3 Account Opening 31
4.4 Process of account opening 31
4.5 Current Account 32
4.6 Savings Account 32
4.7 Necessary Document for Current and Saving A/C 32
4.8 Necessary Documents for Sole Proprietorship Business 33
4.9 Necessary Documents for Partnership Business 33
4.10 Necessary Documents for Limited Company 33
4.11 Fixed Deposit 34
4.12 Short Term Deposit 34
4.13 Interest Posting to the client account 35
4.14 Operating the bank account 35
4.15 Cheque Book Issue 35
4.16 Account Closing 36
4.17 Transfer of an Account 37
4.18 Remittance 38
4.19 Demand Draft Issue/Collocation 39
4.20 Issuing T.T Collocation 41
4.21 IBC/OBC 42
4.22 Locker Service 42
4.23 Accounts Department 43
4.24 Transfer 44
4.25 Clearing 44
Chapter 5 Credit Risk Management 48-78
5.1 MBL Credit 49
5.2 Credit Policy of Mercantile Bank Limited 49
5.3 Sound Principles of lending 50
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11. 5.4 Credit Facilities Extended by MBL 53
5.4.1 General Loan 53
5.4.2 Cash Credit (CC) Hypothecation 53
5.4.3 House Building Loan 54
5.4.4 Packing Credit 54
5.4.5 PAD (Payment against document) 55
5.4.6 Secured Overdraft (SOD) 55
5.4.7 Car Loan 56
5.4.8 Staff Loan 57
5.4.9 Hire Purchase 57
5.4.10 Lease Finance 57
5.4.11 Micro Credit 57
5.4.12 Letter of Credit 59
5.4.13 Bank Guarantee 60
5.5 Situation of Different Types of Loan 60
5.6 Nature of the Loan 61
5.7 Types of Borrowers 61
5.8 Interest Rate 62
5.9 Type of Security for Loan 63
5.10 Disbursement Situation 65
5.11 Funded and Non-Funded Loan 65
5.12 Loan Recovery 66
5.13 Classification of Loans and Advances 67
5.14 Credit Assessment and Risk Grading 68
5.14.1 Credit Assessment: 68
5.14.2 Risk Grading 68
Chapter 6 Findings Analysis 79-82
6.1 Findings 80
6.2 SWOT Analysis 81
Chapter 7 Recommendations and Conclusions 83-86
7.1 Recommendation 84
7.2 Conclusion 86
Part-03
Appendices xiii-xvi
Appendix-I
1.1 Bibliography xiii
Appendix-II
2.1 Report xiv
Appendix-III
3.1 Questionnaire xiv
LIST OF FIGURES
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12. Figure No. Particulars Page No.
Figure 1 MBL Time Line 7
Figure 2 MBL Location Map 11
Figure 3 Chart of Corporate Management Level 12
Figure 4 Various committees 13
Figure 5 Financial summary 17
Figure 6 Products & Services offered by MBL. 21
Figure 7 SMS Banking35 27
Figure 8 Registration form for SMS Banking 28
Figure 9 Procedure of outward clearing cheques 46
Figure 10 Tools for appraisal credit 51
Figure 11 No of loan disbursement over years 65
Figure 12 Funded and Non-Funded Loan 66
Figure 13 Situation of Disbursement and Recovery of Loan 67
Figure 14 Status of Classified Loan 68
Figure 15 Managing Director and CEO’s report on Credit Risk 78
Management
LIST OF TABLES
Table No. Particulars Page No.
Table 01 Job rotation during my internship period 5
Table 02 Branch Network of MBL 10
Table 03 General Information of MBL 16
Table 04 MBL at a Glance 19
Table 05 Online Banking Charge 26
Table 06 Interest Rate on Fixed Deposits 34
Table 07 Charges for Pay Order 39
Table 08 Charges for Demand Draft 40
Table 9 Recognized Bank with their Clearing House Code 47
Table 10 Financial Products of MBL 50
Table 11 Disbursement Situation 61
Table 12 Nature of loan at a glance 61
Table 13 Types of Borrower at a glance 62
Table 14 Lending interest on MBL 63
Table 15 Collateral securities 64
Table 16 Funded and Non-Funded Loan 65
Table 17 Loan Recovery 66
Table 18 Grading of Risk 71
Table 19 Credit Risk Grading Score Sheet 77
Table 20 Suggested Repayment Period 84
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