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Lending Principles and Practice in the Banking Sector: A Case Study of Some Selected Private Commercial Banks in Bangladesh

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  • Md. Moslah Uddin

    (Lecturer, Department of Accounting, Bangladesh university of Business and technology (BUBT).)

Abstract

Purpose: The purpose of the study is to examine whether private commercial banks in Bangladesh follow the lending principles and practice before granting loan to customers. it examined the opinions of participants on lending practices and philosophies within the chosen institutions. Methodology: The descriptive statistics were utilized to make inferences based on the views obtained from the individuals who participated. One hundred (100) questionnaires were given to the credit department and a few personnel of thirteen (13) private commercial banks in the Dhaka metropolitan area. Findings: The study discovered that the chosen private commercial banks employed a variety of lending models, with the Credit Scoring and 5 C’s model being the most often used. In addition, private commercial banks made certain that their borrowing guidelines and procedures were adhered to while making credit to clients. Following the lending principles and practices to grant loans to customers help the commercial banks increase its profitability and decreases the amount of loan default. Unique Contribution to Theory, Practice and Policy: Due to the complexities of the economic climate, it is recommended that banks should utilize a variety of lending approaches to analyze requests for loans. To help decrease and limit the risk of bankruptcy, different commercial banks ought to offer consulting assistance to lenders to verify that the loans are spent properly and for their stated reasons.

Suggested Citation

  • Md. Moslah Uddin, 2023. "Lending Principles and Practice in the Banking Sector: A Case Study of Some Selected Private Commercial Banks in Bangladesh," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(11), pages 1276-1291, November.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:11:p:1276-1291
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    References listed on IDEAS

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    1. Cole, Rebel A. & Goldberg, Lawrence G. & White, Lawrence J., 2004. "Cookie Cutter vs. Character: The Micro Structure of Small Business Lending by Large and Small Banks," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(2), pages 227-251, June.
    2. Ezekiel Oseni, 2023. "Assessment of the Five Cs of Credit in the Lending Requirements of the Nigerian Commercial Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 13(4), pages 58-65, July.
    3. Imran, Kashif & Nishat, Mohammed, 2013. "Determinants of bank credit in Pakistan: A supply side approach," Economic Modelling, Elsevier, vol. 35(C), pages 384-390.
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