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The prime function of Frontier Provincial Cooperative Bank is to extend loan to the Cooperative Societies, to help them in agricultural development. While extending loans bank's addresses some important issues to protect it and to eliminate or to lower the effect of certain risks.

5.2) Priority Issues

The Frontier Provincial Cooperative Bank has three main issues which led to adverse situation and well functioning bank was about to collapse.

5.2.A) Credit Risk Management

The first issue is that the bank does not have any Credit Risk Management Department. The non-presence of this department had a great effect on the bank. The bank never assessed the risk of the borrowers, either they will be able to pay or will default on loan. This is what happened; large number of creditors' defaulted on the obligation which directly affected the bank.

5.2.B) Mortgages

The second issue focuses on the Mortgages as Collateral. Bank used to keep the land of the borrowers as collateral. But did not assess their values appropriately and even not investigated physically. We know that each bank before advancing loan cross checks the land existence and verify its value in the market. But here they did not follow the procedure. This issue led to increase the problems of bank's existence when they figure out that the collateral even cannot cover 1/4th of the principal amount loaned. While accepting assets as collateral the banks negligence resulted in a great failure on the banks operations.

5.3.C) Operational Risk

Operational Risk is the third issue we have analyzed and shall be discussed. Union was very strong which lead to dismissal of the person heading the Bank even if he was competent Officer. The political influence had very bad impact in the management, organization, staffing and even in controls. The internal politics also added the fuel to the fire. The bank had the incompetent person as head appointed because of the political influence. The person then issued loans to the people with whom he had any political affiliations in the past. This was the point where they had kept the finance procedure aside. This resulted in the complications they seen afterward. They lack in modern technological advancements. They still have the old manual ledger system. The Bank still do not have the proper procedure of recruitment and selection. This means they do not have HR department.

So the gap originated between the required state and the present state of the Problem. We shall generate the solutions and an action plan to address the issues discussed in the above paragraphs.

Chapter # 06: Possible Options

6.1) Possible Options to Address Credit Risk

Credit risk is the risk of default by the debtor on the agreed terms either on principal amount or on the due amoun本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。