Analysis Of The Environment Of The Situation.docx

 Analysis of the environment of the situation: Mr. Hamid belongs to a very reach family, he studied and served in London for about 20years, recognizes that his family and social profile is quite rich. He formed a company and came to the bank for loan. Bank after studying the papers and investigating sanctioned tk=20 lac loan to the company. But the Company failed miserably and therefore was not able to pay the installments. Gradually the loan amount accumulated to tk=120 lacs. In such situation borrower company gave a proposal to the bank for rehabilitation of the project in expectation to run operations profitably. Bank approved the proposal, the assets of the company is mortgaged to the bank as security of loan amount. But The Company failed to make profit, and still the company’s performance is below the break even. Under this situation the company failed to keep its commitment, and the loan amount increased to tk=340 lac.  Main issue of the problem: The main issue of the problem is the recovery of such a huge amount of loan. The Company has not been able repay the loan installments. The project is found to be as a loss project. Company’s liability is getting higher day by day. Bank is planning to take legal actions against the borrowing company, so the main concern is how to recover the amount.  Main actors in connection with the problem:  Mr. Hamid  Mr. Hamid’s family members as a owners of Hamid Textile Mills ltd.  Hamid Textile Mills Ltd.  Main Causes or determinants of the problem:  Managerial incapability.  Resource stringency  Over capitalization towards eventual creation of in-operative assets.  Site selection was not appropriate in consideration with the nature of the firm.  Delay in implementation due to shortage of equity.

 Inadequate monitoring by the Bank.  Delay in implementation due lack of vision.  Alternative solutions of the problem:  Taking Legal Actions.  Rescheduling the loan and installments.  Participating in managerial decision making process to make the firm profitable, through experienced personnel.  Increase the monitoring by the bank.  Recommendation: At first bank should increase its monitoring over the overall activities of the company. If it does not work then they should try to reschedule the loan with the company, so that the investment could be recovered in the view of the overall industry is profitable and in growth stage, therefore proper policy and decision making, could make the Company profitable. At last but not the least, if these things don’t work, then the Bank should move to the Court and take Legal Actions for recovery of the loan.