Credit Risk Management: A Case Study of BD Finance Ltd

Abstract

Today, Non-banking financial institutions are contributing much in the economy of Bangladesh. There are now 34 NBFIs in Bangladesh which are providing diversifying financial services to their customers. Like banks, these financial institutions are also highly exposed to credit risk, as the main activities of NBFIS are financing other institutions and individuals through various credit facilities. For that reason, managing credit risk is a crucial task for all financial institutions. BD Finance ltd is one of the NBFIS in Bangladesh, pursuing business for last 19 years. It has been financing commercial, industrial and SME sectors through lease and term loan finance. To manage the credit risk associated with financing, BD Finance has Credit Risk Management department. This department reviews the credit applications, mitigates risk by ensuring appropriate terms and conditions and directly monitors and manages all unclassified/classified accounts. Another important responsibility of the department is to ensuring that the company is earning right share of return against the risk taken by facilitating finances.