Assessing Credit Operation Risk Management Policies of Frontier Provincial Cooperative Bank Limited

Abstract

The project elaborates the Credit and Operation Risk Management Policies of Frontier Provincial Cooperative Bank Ltd (FPCB). The said Bank was once a profitable institution and used to finance agriculture sector. The bank has many non performing loans on its balance sheet. The said Bank was in the state of Liquidation months back. Liquidator was appointed by the Government but later Government has rejected the proposal of Liquidation. Provincial Assembly has asked the Finance department to inject funds in the bank for its revival. Bank has got Fund of PKR 1 Billion and now is in the phase of revival. The violation of credit policy and not having proper mortgage assessment and documentation has led to increase in the NPLs. The operations risk is another element that impacts the business of the bank.

Both Primary and Secondary sources are consulted to achieve the desired results to be suggested. The project analyzes various possible options during study which address the mentioned issues. 5 Cs of Credit, Heat Map, Key Risk Indicators and criteria for mortgage assessment are among the possible options. The project suggests the Bank about credit risk management department, models to address credit risk, operational risk, and developed criteria for the better documentation and assessment of asset as collateral.