Introduction Internship provides the job exposure to the

 Introduction

Commercials
banks are very important for any nation’s economy. That’s why every nation has
a central bank to monitor their commercial banks and set the banking rules and
regulation. Bangladesh Bank is the central bank of Bangladesh. This report is
an Internship Report prepared as a requirement for the completion of the BBA
Program in North South University. As the student of BBA I have attached with Bangladesh
Bank to do my internship program. I have chosen the Off-site Department of
Bangladesh Bank to know their activity in my intern period. Internship provides
the job exposure to the student and gives opportunity to implement theoretical
knowledge in real life situation. The purpose of the report is to demonstrate
the experience of the 10 to 12 weeks’ internship program and analyze the
activities and performances of Bangladesh Bank.

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Objective of the Report

The purpose of
this report is to portray my understanding of the work done and experience
gathered during the entire phase of the internship program. It aims to find out
how effective this learning experience had been in preparing an individual
intern for the intense challenges those are about to emerge in the real life
corporate world. Therefore, this report has been prepared to reflect the
overall knowledge and understanding gathered during the internship period.

 

Overview of the
Organization:

In most of the countries, banks and non-bank
financial institutions are supervised by their respective Central Banks with an
aim to protecting depositor’s interest and also ensure the financial soundness
of the banks and financial institutions. The process of supervision differs
from country to country, depending on type, nature, dimension and intricacy of
its financial systems. In Bangladesh, Bangladesh Bank is the
central bank of Bangladesh.

As
central bank of Bangladesh, it has the authority to regulate and supervise the
whole banking system and money market. Bangladesh Bank regulate and supervise
the banks operating in Bangladesh under the article-7A (f) of Bangladesh Bank
Order 1972 and section 44 of Bank Companies Act, 1991 (amendments up to 2013).
It has 10 branches whole over the nation. It regulates the supervision of banks
from two prospective: On-site supervision and off-site supervision perspective. Department of Off-site supervision (DOS) and
Foreign Exchange Operation Department run off-site supervision activities. DOS
performs its activities through CAMELS rating, liquidity and capital adequacy
monitoring, statements section, Statutory Reserve monitoring section, risk
management monitoring section, large loan section, special statistics section,
banking supervision specialist-1 to 6.

CAMELS is a
technique to assess the financial soundness and operating performance of the
banks; CAMELS ratios are used as a supervisory tools to find out the overall
position of an  individual bank so that
Bangladesh Bank can take necessary actions where it is necessary.

Department and the People:

Off-site
Supervision Department is responsible for the off-going monitoring of banks to
ensure financial soundness of institutions. The department also ensures
effective enforcement of regulatory and supervisory policies, monitors risk
profiles, evaluates financial performance of individual banks on solo and
consolidated basis, prepares off-site risk reports, suggests enforcement
actions and follows up on the institution’s compliance with the corrective
measures. DOS has eight sections such as off-site section, liquidity and
capital adequacy monitoring sections, statements section, Statutory Reserve
monitoring section, Risk management monitoring section, large loan section,
Special statistics section, banking supervision specialist-1 to 6. Each section
has five members. There are approximately 45 members in this department. Mr.
Shoaib Ali, General Manager, is the head of department. Each section has
separate head. Mr. Arifuzz Zaman, Deputy General Manager is the head of
Off-site section where I was appointed as an intern. Off-site sections main
function is to prepare CAMELS rating. All employees in this department are very
friendly and co-operative.

My Contribution to Bangladesh Bank:

As
an intern I was appointed in CAMELS rating implementation section under the
Off-site department. Among different models to assess the financial strength
and weaknesses of financial institutions CAMELS model is popular. CAMELS is the
model which measures the financial performance of banks in terms of five
features such as Capital adequacy, Assets quality, Management, Earning quality,
and Liquidity. CAMELS rating is done to- Diagnose of Banks’ financial health,
Provide meaningful and concise information of banking companies, and to
Identify those banks that are having problems and require close supervision. It
is basically a very effective tool of supervisory system of Central bank.

Throughout
my internship period, I calculated and fill out the CAMELS paper. Calculation
process is mentioned below:

Capital Adequacy.

Calculation
Process:

There are two parts of Capital Adequacy. One is ratio part
which weight is 70% and other one is questionnaire part which weight is 30 %.
Weight is fixed by Bangladesh bank. Ratio parts calculation are given below and
questionnaire pattern are attached with the appendix section

Table 1
Ratios to determine Capital Adequacy Rating with example     

Ratio

Rating

Weight

Weighted Average

Capital/RWA

2

.15

.30

Tier 1 Capital / RWA

3

.15

.45

Tier-1 capital to Total Regulatory Capital

2

.10

.20

Non-Standard Loan excluding bad/loss –Provisions
on these Assets to Total Regulatory Capital

3

.10

.30

Net Capital Market Exposure to Total Regulatory
Capital

3

.10

.30

Highest Exposure 
to a Single Sub-sector  to  Total Capital

2

.10

.20

Total Large Exposure to  Total 
Regulatory Capital

3

.10

.30

Total Off-Balance Sheet Items to Total Regulatory
Capital

1

.10

.10

Revaluation Reserve(Eligible part of Capital) to
shareholder Equity

2

.10

.20

Sum of Weighted Rating (a)

 

70%*2.35

.235

70% of Sum of Weighted Rating (b= a*70%)

 

 

1.645

Questionnaire Rating (c)

2

.30

.60

Sum
of  b and c

 

 

2.24

Capital Adequacy Rating

 

 

Satisfactory

 

 

Asset Quality:

The asset quality rating reflects the
quantity of existing and potential credit risk associated with the loan and
investment portfolios, other assets, as well as off-balance sheet
transactions.  The ability of management
to identify, measure, monitor, and control credit risk is also reflected
here.