This internship report is submitted in a partial fulfillment of the requirements for the degree of Bachelor of Business Administration,2012.Cataloged from PDF version of Internship report.Includes bibliographical references (page 74).IDLC finance Limited is a major NBFI who is playing vital role for SME financing in Bangladesh. SME plays a very important role in economic advancement of Bangladesh. As major business of IDLC Finance Limited is providing SME loan facilities to the business along with various types of loan to individual and organizations therefore risk is associated with each and every product they are offering. Risk is the element of uncertainty or possibility of loss that prevail in any business transaction in any place, in any mode and at any time. In the financial arena, enterprise risks can be broadly categorized as Credit Risk, Operational Risk, Market Risk and Other risk. Credit risk is the possibility that a borrower or counter party will fail to meet agreed obligations. Thus managing credit risk for efficient management of a FI has gradually become the most crucial task. IDLC finance has its own process to mitigate credit risk. They make an appraisal report which shows the strength of the borrower and possible risk related to the loan how the risk can be mitigate. Besides the appraisal report IDLC maintain information about past borrower in a software named “Flexccube”. So whenever these past borrower come to collect refinance, IDLC cross check the information with “Flexccube “information. Moreover IDLC gives highest priority to the CIB (Credit information bureau) report. If the report is not good and does not reflect the strength of the business than IDLC does not finance in that business. This report contains the full function of credit risk management in SME financing and at the end I provided some recommendation for better performance of credit risk management department of IDLC Finance Department.Md. Tanvir AlamB. Business Administratio