Specific Objectives
To know the SME loan activities in BRAC Bank.
To find out basic appraisal of SME loan.
To know the enterprise selection criteria to provide SME loan.
To know the terms and conditions of SME loans.
To analyze the Marketing Procedure of SME loans of BRAC Bank.
To know the internal strength of SME related services of BRAC Bank Ltd.
To know the disbursement and recovery procedures of SME loans.
To make some recommendations and conclusion to further the development of
SME loan products of BRAC Bank Ltd.
For gathering concept of SME loan, the Product Program Guideline (PPG) thoroughly
analyzed. Beside this, observation and discussion with the employee of the SME
department and loan administration division was also conducted. To identify the
implementation, supervision, monitoring and repayment practice- interview with the
employee and extensive study of the existing file was done.
Primary Data Sources:
Direct working with officials of BRAC Bank Ltd.
Face to face conversation with officials of Risk Management Department and
SME Banking Department.
Practical deskwork.
Observations from the total internship period.
Secondary Data Sources:
Prospectus of BRAC Bank Ltd.
Banks other published information.
Annual report of the bank.
Previous research books and journals.
BRAC banks website.
Chapter -2
BRAC Bank Limited is a scheduled commercial bank established under the Banking
Companies Act, 1991 and incorporated as a public company limited by shares on 20 May
1999 under the Companies Act, 1994 in Bangladesh. The primary objective of the Bank
is to carry on all kinds of banking businesses. The Bank could not start its operations till
03 June 2001, since the High Court of Bangladesh suspended the activity of the Bank.
Subsequently, the judgment of the High Court was set aside and dismissed by the
Appellate Division of the Supreme Court on 04 June 2001 and accordingly, the Bank has
started operations from 04 July 2001.
BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance
Corporation (IFC) and Shorecap International, has been the fastest growing Bank in
2004, 2005 and 2006. The Bank operates under a "double bottom line" agenda where
profit and social responsibility go hand in hand as it strives towards a poverty-free,
enlightened Bangladesh.
As a fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored
market niches in the Small and Medium Enterprise Business, which hitherto has
remained largely untapped within the country. In the last five years of operation, the Bank
has disbursed over BDT 10.70 billion in loans to nearly 70,000 small and medium
entrepreneurs. The management of the Bank believes that this sector of the economy can
contribute the most to the rapid generation of employment in Bangladesh.
Since inception in July 2001, the Bank's footprint has grown to 36 branches, 450 SME
unit offices and 19 ATM across the country, and the customer base has expanded to more
than 400,000 deposit and 50,000 advance accounts through 2007. In the years ahead
BRAC Bank expects to introduce many more services and products as well as add a
wider network of SME unit offices, Retail Branches and ATMs across the country.
Goals of BBL:
Sustained growth in Small & Medium Enterprise sector.
Continuous low-cost deposit growth with controlled growth in Retail Asset.
Corporate Asset to be funded through self-liability mobilization. Growth in Assets
through Syndications and Investment in faster growing sectors.
Continuous endeavor to increase fee based income.
Keep their Debt Charges at 2% to maintain a steady profitable growth.
Achieve efficient synergies between the Banks branches, SME unit offices and
BRAC field offices for delivery of Remittance and Banks other products and
services.
Manage various lines of business in a fully controlled environment with no
compromise on service quality.
Keep a diverse, far flung team fully motivated and driven towards materializing
the Banks vision into reality.
Objectives of BBL:
The objectives of BRAC Bank Limited are specific and targeted to its vision and to
position itself in the mindset of the people as a bank with difference. The objectives of
BRAC Bank Limited are as follows:
To value the fact that they are a member of the BRAC family committed to the
creation of employment opportunities across Bangladesh.
To mobilize the savings and channeling it out as loan or advance as the company
approve.
To establish, maintain, carry on, transact and undertake all kinds of investment
and financial business including underwriting, managing and distributing the issue
of stocks, debentures, and other securities.
To finance the industry, trade and commerce in both the conventional way and by
offering customer friendly credit service.
To encourage the new entrepreneurs for investment and thus to develop the countrys
industry sector and contribute to the economic development.
Nature of business
A fully operational Commercial Bank focuses on pursuing unexplored market niches in
the Small and Medium Enterprise Business, which hitherto has largely untapped within
the country. The Bank is also actively involved in retail banking and has a broad range of
consumer loans ranging from personal loans up to auto loans to debt & credit cards.
Furthermore the Bank has gained a strong market share in the global money transfer
market or remittance through significant tie-ups with major international money transfer
agencies. In the last two years, BRAC Bank has also participated in providing large
syndication loans in association with other National Commercial Banks in the country.
Today BRAC Bank is considered as fourth generation bank extending full range of
banking facilities by providing efficient, friendly and modern fully automated on line
service. Since its inception, it has introduced fully integrated online banking service to
provide all kinds of banking facilities from any of its conveniently located branches.
in
SME,
striving
for
socio-economic
upheaval
in
Bangladesh.
BRAC Bank Ltd does not support any finances that are detrimental to our environment.
A portion of the revenue is channeled to support BRAC schools, where children study
for free. 70% of these children are female.
Company Profile
BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance
Corporation (IFC) and Shorecap International, has been the fastest growing Bank in
2004, 2005, 2006 and 2007. The Bank operates under a "double bottom line" agenda
where profit and social responsibility go hand in hand as it strives towards a povertyfree, enlightened Bangladesh.
A fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored
market niches in the Small and Medium Enterprise Business, which hitherto has
remained largely untapped within the country. In the last five years of operation, the
Bank has disbursed over BDT 1500 crore in loans to nearly 50,000 small and medium
entrepreneurs. The management of the Bank believes that this sector of the economy can
contribute the most to the rapid generation of employment in Bangladesh. Since
inception in July 2001, the Bank's footprint has grown to 36 branches, 450 SME unit
offices and 19 ATM sites across the country, and the customer base has expanded to
250,000 deposit and 60,000 advance accounts through 2007. In the years ahead BRAC
Bank expects to introduce many more services and products as well as add a wider
network of SME unit offices, Retail Branches and ATMs across the country.
BRAC
BRAC, a national, private organization, started as an almost entirely donor funded,
small-scale relief and rehabilitation project initiated by Fazle Hasan Abed to help the
country overcome the devastation and trauma of the Liberation War and focused on
resettling refugees returning from India. Today, BRAC has emerged as an independent,
virtually self-financed paradigm in sustainable human development. It is one of the
largest Southern development organizations employing 97,192 people, with 61%
women, and working with the twin objectives of poverty alleviation and empowerment
of the poor.
ShoreCap International:
ShoreCap International Ltd. is an international private non-profit, equity company
seeking to invest in small business banks and regulated micro finance institutions in
countries with developing and transitional economies. Founded in mid 2003, ShoreCap
has a current base of $28.3 million in capital commitments and seeks to support the
growth of development finance institutions in Africa, Asia and Eastern Europe. The
institution has made investments totaling $7 million in Bangladesh, India, Cambodia,
Armenia, Mongolia and Kenya. ShoreBank is a 9% investor of ShoreCap and runs the
management company, which oversees investment activities.
ShoreCap typically invests between $500,000 and $2 million for an ownership position
of 10-25% of a company. As a minority shareholder, ShoreCap seeks financial
institutions with a strong, experienced management team and a committed set of local
development-minded investors. ShoreCap currently owns 18% of BRAC Bank Limited.
Abed is the chairman and A. E. A. Muhaimen is the managing director and CEO of the
bank. The board of directors holds meetings on a regular basis.
Margin (NIIM) during 2005 was decreased to 5.46%from 6.85 % in previous year.
Return on average asset (before provision & tax) was 3.96% in 2005 against previous
years return of 4.41%. Return on average equity (after tax) was 26.25% in 2006 (20.04%
in 2005). The above return of BBL was higher than the return of peer average.
Income portfolio of BBL is yet to be diversified. Interest income has been dominating as
single source of income in the portfolio. Contribution of interest income was 55.72% of
income portfolio in 2006 (51.76% in 2005), indicating huge dependence on interest
income.
31-12-05
31-12-04
31-12-03
500,000,000
500,000,000
405,020,000
58,396,570
19,860,550
224,490,340
70,346,259
(9,095,940)
782,886,910
590,206,809
395,924,060
1,473,608,334
1,473,391,667
568,208,333
415,650,000
Deposits And
Other Accounts
14,752,674,457
13,409,010,390
8,168,978,866
3,497,302,616
Other Liabilities
1,375,084,794
1,210,720,172
688,541,752
233,166,593
Total
17,601,367,585
16,093,122,229
9,425,728,951
4,146,119,209
Grand Total
18,612,938,470
16,876,009,139
10,015,935,760
4,542,043,269
The emergence of BRAC Bank Limited is an important event in the countrys financial
sector at the inception of financial sector reform. The authorized capital of PBL is Tk.
1000 million and paid up capital of the same bank is Tk. 500 million.
Shareholding Structure:
Shareholders
Percent
BRAC
31.74%
IFC
9.50%
8.76%
40%
Non-Residents Bangladeshis
5%
5%
Total
100%
The Chairman of the Bank is Mr. Fazle Hasan Abed. Now the Managing Director of the
bank is Mr. A. E. A. Muhaimen. The bank has made a reasonable progress due to its
visionary management people and its appropriate policy and implementation.
DESCRIPTION
Net Interest Income
Income from Investment
Commission,
Brokerage
Exchange
and
31-03-2006
31-12-2005
1,157,615,437
607,331,119
400,080,011
292,067,158
515,404,192
271,073,023
4,325,882
2,846,359
2,077,425,522
1,173,317,659
Expenditure:
A comparative operative expense position of the Bank
Description
31-03-2006
31-12-2005
1,027,018,495
592,999,647
1,050,407,027
580,318,012
344,920,600
239,413,598
125,300
544,313
705,361,127
340,360,101
Departments of BBL
Human Resource Department
This department is the heart of BRAC Bank Ltd. Ms. Tahnyat A. Karim is the Head of
HR. There are two wings of the bank one being the business and the other one being
operation. Our managing director and CEO Mr. A. E. A. Muhaimen directly looks after
the business whereas Executive Vice President and COO Mr. Kaiser Tamiz Amin directly
monitors the operations. In the top management team there are 3 senior Vice Presidents, 2
Vice Presidents, 7 Senior Assistant Vice Presidents, 2 First Assistant Vice Presidents and
about 5 Assistant Vice Presidents. With this rich management structure BBL has
continued to keep its image as the fastest growing bank for the past 3 years. The HR
department mainly deals with the supply of efficient and adequate manpower to various
departments. They religiously and tactfully undergo different innovative recruitment
processes deemed to cater the growing demands of the bank.
harassment and prove to be quite a challenge. But the efficient people of this department
face all those situation very bravely.
Corporate Department
The corporate Banking Division provides a full range of commercial banking products
and services. BBLs corporate department exists to provide both banking services and a
financial partnership with local large and medium corporate partners, trading houses and
joint ventures. The head of this department is Mr. Khwaja Shariar. BBLs corporate
segment has created its market niche by providing high quality service, value of
innovative solutions, level of trust with its clients are Debt Capital, Equity Capital,
continual relation support and financial markets.
The main object is to provide a large range of financial services professionally, efficiently
and competitively to achieve pre-eminent position in chosen market. By adapting certain
business strategies this department plans to capture the market. At this point in time they
plan to concentrate business in areas like Motijheel, Nawbabpur Gulshan, Dhanmondhi,
Uttara, Karwan Bazar and in two cities of Chittagong. They have set their target market
too and they are namely:
1.
2.
3.
Edible oil.
4.
Bulk trading.
5.
Cement.
6.
7.
8.
9.
Information Technology.
10.
11.
NGOs
12.
Import/Dealers of machineries.
13.
Educational institutions.
14.
Telecommunication.
15.
Tea.
16.
Ship breaking.
2.
Prepare financial statements like Balance a Sheet, Profit & Loss Account, Cash
Flow statement of Changes of equity, Liquidity statement etc.
3.
4.
Payment to suppliers.
5.
6.
VAT payment.
7.
8.
9.
10.
11.
Reconciliation.
12.
By definition risk is a concept used to express uncertainty about events and their
outcomes that could have a material effect on goals of the organization. Since liabilities
comes before asset so banks should constantly be aware that it is not their money or asset
that are dealing with. It is actually publics property and asset. This department looks into
different legal issues such as regularity compliance with Bangladesh Bank, internal
compliance and so on.
Types of risks for BBL defined by this department are as follows:
1.
2.
3.
4.
5.
4. Signatures scan: In the accounts opening form a card it provided for the
customers signatures. This card is taken separately and the signature of the
customers is scanned along with his/her photograph. This ensures authentication
of the customers signature and enables banks complete security against any
signature forgery.
NIL:
2.
3.
4.
5.
6.
Treasury Department
Front
The main clients of treasury are as follows:
1.
Internal
2.
SME
3.
Retail
4.
Corporate
5.
Trade Finance
6.
External
7.
This is the backbone of the bank. This department plays the vital role in success of BBL.
Mr. Rahmat Pasha is the head of Treasury. This department basically deals with two types
of market namely money market and foreign exchange market. However, one of the
major tasks of treasury is to maintain relationship with the Central Bank.
Back
The whole objective of this section is to reduce risk. It is more formally known as
Treasury operations and Financial Institution. They consider retail and Corporate as
liability departments and thus buy from these departments. Whereas sells is occurred in
SME, and so on, this section essentially monitors and controls. They go about in taking
risk in a more calculated manner. Capital Allocacy rate (CAR) is calculated and
accordingly transactions are made.
The prime roles of treasury operations are:
1.
2.
3.
4.
Cards Department
It is a department with a high target this year. It has started its journey on April 05, 2002.
Lanka Bangla formally known as Vanik does all kinds of processing and preparing cards.
BBL uses VISA cards and it got membership in October 20, 2006. Types of membership
offered to the clients of BBL are either Primary membership or Associate Membership
Credit cards charge highest charge among all the banks products. Per cards production
cast around Tk. 80. This year their target is to introduce 40000 cards in the market. This
can be achieved by offering clients of the bank in different departments like SME, FDR
or DPS holders.
Security
Reception
Dispatch
Store
Help Desk
PABX operation
GP corporate affairs
Telephone management
Opening of quotation.
Business Units
There are five different business units generating business BRAC Bank Limited:
i)
ii)
Retail Banking
iii)
Corporate Banking
iv)
Probashi Banking
All the units are being operated in a centralized manner to minimize costs and risks.
clients. The Bank has also brought about major innovation in its retail and savings
products too, namely the Interest First Deposit Scheme where the client can receive the
interest on the deposit scheme upon opening the account had created a sensation when it
was launched in the market. The product details of BBL are given below. The interest rate
of these products mostly varies for clients to clients.
SME Products:
Anonno Rin
BIZNESS Account
Apurbo Rin
Pathshala Rin
Aroggo Rin
Digoon Rin
Prothoma Rin
Cash Secured Loan
Bizness loan
Proshar:
Trade Plus
Super Supply Loan
SME products are discussed in details in the Analysis of SME loan of BRAC Bank
part of this report.
Retail Banking:
Loan Products:
Salary Loan
An individual having extra 15 month's salary can get BRAC Bank Salary loan, its
a loan against ones salary. He/she should be a salaried individual working in
Bangladesh.
NoW Loan
In case one needs to purchase home appliances, furniture, computer or other
consumer durables for personal use, BBL offers the most appropriate solution
with its NoW loan.
Car Loan
BRAC Bank offers car loan scheme for purchase a brand new car or a
reconditioned car.
Teachers Loan
BRAC Bank Teachers' Loan provides a wedding or a dream holiday, financing a
business or surviving an emergency.
Study Loan
If any one wants to go abroad for study then BBL provides them the money
supply by study loan. The parents of that student should have Tk 25000 earnings
per month.
Travel Loan
An individual with minimum monthly income of TK 15,000, aged between 25 to
53 can take this loan for making a trip abroad.
Top Up Loan
BRAC Bank Top Up Loan is easy loan for good borrower. This unsecured loan is
designed to meet various personal needs without mentioning the purpose at all.
HighFlyer Loan
BRAC Bank's HighFlyer Loan is for airline, GSA & Travel Agency professionals
to make your long cherished desires an absolute reality. Minimum loan size is
BDT 50,000; loan is available up to BDT 500,000.
Secured Loan/ OD
This is a special scheme that allows people to avail cash at nominal interest rates.
This loan is for all BRAC Bank account holders aged from 21 to 65 defining all
income groups - salaried employees and self-employed business people with
security in their possession. Maximum amount of loan can go up to Tk 5 crores.
BBL even allows loans up to even 100% of the value of the clients securities
(conditions apply).
Doctor's Loan
BRAC Bank has introduced Doctor's Loan, an exclusive loan facility for the
Doctor's fraternity. Now practicing Doctor's can avail this loan very easily to meet
their professional needs.
Cards:
ATM/Debit Card:
Co-Branded Card (Aarong, Alico, DIA Gold)
Deposit Products:
Fixed Deposit
Opening Requirements
A Current Account or Savings Account
General Features
A term deposit with a guaranteed monthly return on investment
100K999K
9.00%
11.00%
11.00%
100000K
& above
9.00%
11.00%
11.00%
11.00%
11.00%
11.00%
11.00%
11.00%
11.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
100K999K
10.75%
10.75%
10.75%
10.75%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
ABIRAM
Tenor
12
months
24
months
36
months
InterestFirst
Tenor
3 months
6 months
12 months
ABIRAM
PLUS
Tenor
6 months
12
months
24
months
5000K9999K
11.50%
10000K9999K
11.50%
11.50%
11.50%
11.50%
11.50%
10.50%
10.50%
10.50%
10.50%
100000K & +
11.50%
Step Up FD
Tenor
1st year
2nd year
3rd year
SAVINGS
Maximizer
Non-maximizer
Rate
7.50%
6.50%
Corporate
FDR
Tenor
3 months
6 months
12 months
24 months
10000K49999K
11.00%
11.50%
12.00%
10.50%
50000K & +
11.00%
11.50%
12.00%
10.50%
InterestFirst
Fixed Deposit
In this scheme people don't have to wait till maturity to receive interest on Fixed
Deposit. BRAC Bank InterestFirst Fixed Deposit lets everybody draw the interest
instantly at the time of deposit.
Abiram Account
BRAC Bank 'Abiram' Account is a special type of Fixed Deposit scheme, which
offers the flexibility & comfort of having a guaranteed monthly return on the
investment. With BRAC Bank 'Abiram' Account, individuals can ensure a safe &
steady return on their investment.
EZee Account
BRAC Bank offers EZee Account, a non-cheque interest bearing account for
small savers who are in frequent need of transaction. People don't need to write a
cheque or stand in a long queue to draw their own money from BRAC Bank. they
can get an ATM card to operate their account round the clock.
DPS
BRAC Bank's Deposit Premium Scheme is a savings plan that adds value
Monthly Installment
Amount (BDT.)
500.00
1000.00
7 Years
58,650.00
117,300.00
11 Years
116,603.00
233,207.00
14 Years
179,550.00
359,101.00
Savings Account
A regular savings account offering people interests on their deposit amount.
Current Account
BRAC Bank's Current Account is a normal checking account, giving people the
option to deposit and withdraw money for their day-to-day needs.
Salary Account
BRAC Bank Salary Account is a payroll account for Employers and Employees.
Any organization can apply for Salary Account to enable easy disbursements of
salary and get other benefits.
Corporate Banking:
Corporate Loan Products:
Overdraft
Term Loan
Short Term Loan/ Revolving Loan: This scheme is to meet different short-term
fund requirements of the client. Payment of duty, Tax, VAT and other expenses
related to the release of goods from customs through pay orders in the name of
customs authority or Bangladesh Bank cheque is payable through this scheme.
Lease Finance
This is one of the more convenient long-term sources of acquiring capital
machinery and equipment. The client is given an opportunity to have exclusive
rights to use an asset, for an agreed period of time, against payment of rent.
Medium Enterprise
The products offered under this sort of financing are versatile in nature and each
product is tailored according to the need of the borrower, under certain
parameters. The range of organizations this sort of financing caters to include
Trade Finance:
NCS
BRAC Bank will collect bills through its Bills Pay Machines in the strategic
locations of the city and also at the correspondent branches, where the BRAC
Bank branches are not available and at the booths.
PTS
PTS will allow people to disburse all kinds of payments anywhere in the country
through its own branch network in Dhaka, Chittagong, Sylhet, Savar, Feni and the
partner bank branches all over the country.
Advantages to Employers
Salary Upload: Salary upload through a single cheque. All that employers have
to do is give consolidated cheque of the total salary amount to BRAC Bank and a
break-up of the disbursements to the employees in soft and hard copy format.
Multi-Location Salary: Multi-Location Salary Disbursal is possible within
BRAC Bank Network. With BRAC Bank, salaries of all employees located
across Bangladesh can be uploaded from a single point upload.
Affordability: Have anyone ever thought about how much time an organization
spend managing payroll? This equates to time taken away from revenueproducing activities. Outsourcing with the right payroll service provider will save
its time and money.
Accuracy: Even with the simplest of payrolls, it's easy to make mistakes.
Without current and on-going training in payroll compliance, a company could
face unhappy employees to boot.
Privacy: It can be embarrassing and detrimental if the wrong eyes fall on the
salary cheques. Confidentiality is much easier to maintain when payroll is
outsourced.
MIS: Payroll companies offer a wide array of standard reports along with these
invaluable reports which are neat and concise.
Professionalism: What better way to show employees that their company is
professional and secure? By outsourcing payroll coupled with all benefits of
BRAC Bank savings accounts will enhance its successful image and will make
employees happy.
Probashi Banking:
Probashi Products:
Probashi DPS
To secure Probashi Bangladeshis hard-earned money, BRAC Bank introduces
the ideal saving scheme for Probashi Citizens.
management. The branches are linked with optical fiber or radio links. However, some
limitation has been found in MBS Banking Software for increasing demand of IT
support. The board already sanction fund for acquiring new powerful integrated banking
software from abroad.
Target Customer
As the main product of BRAC Bank Ltd is SME, BRAC Bank has a strong SME focus
and has developed a wide range of SME business products, these are customized for
specific localized small and medium business across the country. The SME loan products
cover a range of rural, semi-urban and urban financial needs in the market. Besides them,
industries, transport business, education institutions, medical centers, marine business,
any other high worth companies, individuals, etc are also the main customers of the bank.
The bank has the ATM card and Credit card facility, so the users of the same are also in
target.
Chapter -3
SME Banking
The most valuable natural resource of Bangladesh is its people. As a nation we struggled
for our independence and now the attainment of economic uplift is the main goal. Micro
lenders are working here in the financial field, providing very small amount and on the
other hand regular commercial banks have been providing bigger amount of loans to
larger industries and trading organizations. But the small and medium entrepreneurs were
overlooked. This missing middle group is the small but striving entrepreneurs, who
because of lack of fund cannot pursue their financial uplift, as they have no property to
provide as equity to the commercial banks. With this end in view-BRAC Bank was
opened to serve these small but hard working entrepreneurs with double bottom line
vision. As a socially responsible bank, BRAC Bank wants to see the emancipation of
grass-roots level to their economic height and also to make profit by serving the interest
of missing middle groups. 50% of our total portfolio usually collected from urban areas,
are channeled to support these entrepreneurs who in future will become the potential
strength of our economy. BRAC Bank is the market leaders in giving loans to Small and
Medium Entrepreneurs.
SME Products:
Anonno Rin
Anonno Rin is a business loan designed to finance small scale trading,
manufacturing and service ventures, especially to help small and medium
entrepreneurs to meet their short-term cash flow shortages and bridge the fundflow gaps.
Eligibility
Entrepreneurs with
Business must be a
Loan Limit:
Features
BIZNESS Account
Bizness Account is an interest bearing current account for sole proprietorship
business Entrepreneur.
Eligibility
Small and medium sized business entrepreneur
Opening balance only BDT-10, 000.00
Features
Apurbo Rin
Apurbo is a loan facility for Small and Medium business. Apurbo loan has been
designed and targeted for relatively bigger business units requiring loan above Tk.
8 lacs to 30 lacs.
Eligibility
Entrepreneurs having a minimum of 3 years of some business
A business which must be a going concern for 3 years
activities
Loan Limit:
Features
Simple loan processing for expanding your business
Quick disbursement
Disbursement in one or two installments
Flexible monthly repayment plan
Pathshala Rin
Pathshala Rin is a loan designed to meet the needs of small and medium sized
private educational institutions, such as kindergartens, schools and colleges etc.
Eligibility
The
The
Loan Limit:
Minimum
Features
Loan upto 9.5 lacs without Mortgage
Loan for purchasing fixed assets
Easy monthly installment
Minimum documents
Easy & faster processing
Flexible interest rate based on security and loan amount
Aroggo Rin
Aroggo is a loan allowed to various Health service Provider like private clinics,
diagnostics centers and doctors' chambers. The product offers fixed assets
purchase financing under equated Monthly Installments.
Eligibility
Minimum 2(two) years in operation
Health center must be located in the same address for at least 6 months
Health center must be a profit making concern
Doctors having 5 years of experience can avail the loan in his/her personal
name
Loan Limit:
Minimum
Features
Loan upto 9.5 lacs without Mortgage
Minimum documents
Easy loan processing
Loan repayment schedule is spread up to 3 years
Flexible interest rate based on security and loan amount
Digoon Rin
This is a double loan on your deposit. Now you do not need to encash your
savings rather you can take double amount of loan on your deposit for your
business expansion.
Eligibility
Entrepreneur
Loan Limit:
Minimum
Features
Double amount of loan on your deposit
Attractive return against the deposit
Flexible repayment plan in monthly installment and single installments
Quick disbursement
Prothoma Rin
"PROTHOMA RIN" is a loan facility for small and medium sized business,
which are operated by women entrepreneur. The product offers terminating loan
facilities for the purpose of working capital finance and/or fixed assets purchase.
Eligibility
Entrepreneurs with minimum 2 years experience in the
Minimum 1(One) year of continuous business history
Loan Limit:
From minimum
Features
Loan without Mortgage
Easy repayment system
Minimum documents
Easy & faster processing
For excellent borrowers who have paid or are paying in due times, we offer
discounted rates
"Cash Secured Loan" is a loan facility for small and medium sized business.
There are two types of loan facility in the product i.e. Secured Loan and Secured
Overdraft. These facilities are fully secured by fixed deposit of BRAC Bank.
Eligibility
6 (Six) months experience in the same line of business
BRAC Bank FDR minimum 100% of loan amount
Loan Limit:
From minimum
Features
Loan against FDR
Flexible interest rate based on FDR interest rate and loan value
Loan for starting new business
Bizness loan
Bizness loan is an equated monthly loan facility for all types of business who
have healthy bank transactions for the purpose of working capital finance and/or
fixed assets purchase.
Eligibility
Healthy bank transactions
Minimum 3 (three) years of continuous business history
BRAC Bank FDR 50% of the loan amount for new loan
Features
Loan against FDR value
Monthly installment system up to 60 months
Borrower having loan with other financial institute can also avail Bizness Loan
Attractive rate of interest on FDR
Proshar loan
"Proshar" is a loan facility for small & medium sized manufacturing business. The
product offers loan facilities for working capital finance and/or fixed assets
purchase.
Eligibility
Entrepreneur
Features
Without Mortgage up to Taka 9.50 Lacs
Easy Monthly Installment
Favorable Interest Rate based on amount and security
Easy & Faster Processing
Trade Plus
Trade plus is a composite facility for small & medium sized import-oriented
businesses to meet their trade finance requirements.
Eligibility
An
Loan Limit:
LC (One-Off): BDT 3.00 Lac BDT 30.00 Lac
LC (Revolving): BDT 5.00 Lac BDT 30.00 Lac
LATR: BDT 3.00 Lac BDT 30.00 Lac
Revolving Loan: BDT 5.00 Lac BDT 30.00 Lac
Overdraft: BDT 5.00 Lac BDT 30.00 Lac
Features
Two types of Letter of Credit Facilities One Off LC and Revolving LC
loan
Loan Limit:
From minimum
Features
Composite fatality of both Overdraft and Revolving limit
Customer can withdraw revolving loan amount as desired
Convenient repayment system of Revolving limit i.e. equal monthly installment
and single installment.
6. The business must be located ideally close to the market and the source of its raw
materials/suppliers. It should have access to all the utilities, skilled manpowers
that are required.
7. Any risk assessed by the management in turn will become a credit risk for the
bank. So effort should make to understand the risk faced by the business.
1. The guarantor must have the ability to repay the entire loan and is economically
solvent ( Check his net worth)
2. The guarantor should be aware about all the aspect of SEDF loan and his
responsibility
3. Govt. and semi-govt. officials can be selected as a Guarantor such as
schoolteacher, college teacher, doctor etc.
4. Police, BDR and Army persons, political leaders and workers, and Imam of
mosque can not be selected as a guarantor.
5. The guarantor should know the entrepreneur reasonable well and should
preferably live in the same community.
a. Management and personal aspects: During the appraisal prosecute the Customer
Relation Officer (CRO) should endeavor to obtain details about the prospective
borrowers, some of which are:
i.
ii.
Credit History
iii.
Liquidity Information
iv.
Management Background
In considering the above, one should look at the business is managed. The CRO should
also consider clients previous credit history like facilitates sought and availed, loan
repayment an overdue record, if any, etc.
One should also check the client bank account and amount of balance maintained.
Managements qualification, experience, successor and maintenance of records should
provided insight in to the business.
b. Technical Aspects: From a business perspective, this aspect deals with design of the
system in place, the operation of the business, the different type of physical resources
used, the technology used, the capacity to handle business and all other inputs (labor, raw
materials, utilities etc.)
Among the technical factors to be investigated during an appraisal are:
Location of projects
c. Marketing Aspects: A CRO should consider the following factors of a business before
making any loan commitment with a customer:
Total demand and supply of the products in the market that the business operates
in growth of sales and
d. Financial Aspects: This aspect allows us to check the financial health of a business,
through an analysis of the profit and loss account, balance sheet, cash flows, ratios and
requirement of working capital. If the collection of the financial data can be done
properly, then it may be able to make a somewhat realistic picture of the business
financial position. How ever, all the data collected must be cross-checked as much as
possible with the physical features of business.
The following things are considered and determined at the time of verifying the financial
feasibility of the business:
Current years profit/Loss of the business and probable profitability of business
after taking the loan
Determination of assets, liabilities and net worth of the manufacturing/ trading /
service institution before and after taking loan
Present net cash flow of the business after disbursement of loan is determined
The cash position of the institution
The source of income, production and other expenditure of the business probable
financial risks of the business
e. Socio Economic Aspects: Here the analyst like to observe the contribution of the
business to the countrys GDP, the employment generated, the sort of adverse impact of
the business on the environment, if an other benefit to the country.
f. Security Aspects: Along with observation of different aspects and views of the
projects, the CRO also see closely the aspects of the projects and ensure about the
reliability to the mortgaged property/assets.
Securities
The following listed securities may be obtained from borrower against loan to
enterprises, either individually or in a combination. It is really depends on the situation
and up to the bank what they would like to accept as security from the borrower as not all
the securities stated below are suitable:
Mortgage of loan and other immovable property with power of attorney to sell
Lien of Fixed Deposits receipts with banks and other non-banking financial
institutions, lined, these have to confirmed by the issuer ( Now these are rarely
accepted)
Pledge of goods (Banks are akin to stay away from such securities now a days)
Lien of work orders, payment to be routed through the bank and confirmed by the
issuer.
Bhaya Dalil or Chain of Documents which signifies that the conveyance of titles
has been proper and legal.
Mutation Certificate if Khatian which signifies that the title if the land has been
duly registered in the Government/Sub-registerars records.
Mouja Map
The lawyer will then carry out a search at the Sub-registrar of lands office to check if the
proffered land is actually registered in the name of the proposed mortgagor and whether
the said land is free from any encumbrances. The Sub-registers office, which means that
the land or immovable property can be mortgaged to the bank, then the lawyer will
provide his own opinion on the acceptability of the property, whether it is legally held
and explain the chain of ownership.
If all are acceptable, the lawyer will draw up the Mortgage Deed that will be registered,
the irrevocable power if attorney to sell the land and the Memorandum of Deposit of Title
Deed.
The lawyer will have the borrower or the Mortgagor, if different or 3rd party, sign the
documents in front of the Sub-registrar of land to register the mortgage, The CRO must
ensure that the receipt for the original Mortgage deed must be signed off (Discharged) at
the back of the receipt so that the bank may obtain the originals in the future. The
borrower will bear all the charges and will pay directly at the Sub-Registrars office
including the cost of the stamp paper required.
The cost of the lawyer will also be realized from the borrower be an account payee
cheque in favor of the lawyer and handed over to the lawyer straight away. The charges
related to the creation of mortgagee and other associated costs are incorporated in a
separated sheet and are attached herewith.
The CRO will have all other security documents, as sent by SME HO, signed by the
borrower and hand carry all the security documents including all the original land
documents and deliver those to the credit administration officer who will check the list of
documents and receive those through a check list in writing. The credit administration
officer once satisfied will prepare the disbursement memo to disburse the loan.
Registered Mortgage
It is created by an execution of a Mortgage Deed registered irrevocably in favor of the
bank at the Sub-Registrar of lands office. This virtually gives the bank the right to
posses and self if accompanied with a registered irrevocable power of attorney to sell
the property executed by the owner of the property, in case of default.
All documents shall be stamped correctly and adequately before or at the time of
execution. An un-stamped or insufficiently stamped document will not form basis of suit.
Stamps are of 4 (Four) kinds. These are Judicial, Non judicial, Adhesive and Embossed
impressed.
Documents to be executed (Signed) by the borrowers concerned must be competent to do
so in official capacity. Following precautions should be taken at the time of execution of
the security documents:
The signature on the documents should be made in the presence of the CRO. The
CRO should sign as witness on all charge documents.
If the document consist more than I page, the borrower should sign on each page
After stamping and execution of documents, the question of registration comes up.
However, not all documents are required to be registered.
For the extension of any type of credit/loan facility, the following loan documents, which
are considered basic, should be obtained from all borrowers:
Letter of Continuity ( This is not always taken if there is only loan disbursement)
Letter of Arrangement
Letter of Disbursement
This is a right given by the borrower to the bank to cancel the facility at any time without
having to assign any reason. This is also an acknowledgement by the borrower that the
credit facility has been approved in his favor and the borrower has to execute all
necessary documents to avail credit facility.
v) Letter of Disbursement
This is simple a letter requesting disbursement of the loan/credit facilities at the agreed
rate of interest.
ii) Letter of Hypothecation of Goods & Stocks and Book Debt and
Receivable:
These letters Hypothecation are actually two different sets of documents but because of
their similarity, these are being explained together. These documents create an equitable
or floating charge in favor of the bank over the goods and services and/ or book debts and
receivables that are being financed where neither the ownership nor the possession is
passed to the bank. Under this agreement, the borrower undertakes to keep the percent
stock of goods and that which may increase from time to time in future in good condition.
This hypothecation gives the bank the power to possesses and sell the mentioned goods
and stocks or claims the book debts directly from the debtors in order to settle the
borrowers dues to the bank.
This agreement gives the bank the right to possess goods and other assets in rented or
leased premises of the borrower despite the fact that owner or the premises may be
unable to realize dues from the borrower himself.
The potential borrowers and enterprises have to fulfill the selection criteria
SME will impose loan processing fees for evaluation / processing a loan
proposal as following;
Loan Amount
Tk 5,000
3 lacs to 5 lacs
Tk 7,500
Tk 10,000
Tk 15,000
Loan may have various validates, such as, 3 months, 4 months, 6 months, 9
months, 12 months, 15 months, 18 months, 24 months, 30 months and 36
months.
The borrower must open a bank account with the same bank and branch where
the SME has its account.
Loan that approved will be disbursed to the client through that account by
account payee cheque in the following manner: Borrower name, Account
name, Banks name and Branchs name.
The loan will be realized by 1st every month, starting from the very next
months whatever the date of disbursement, through account payee cheque in
favor of BRAC Bank Limited accounts. With Banks named and branches
name.
The borrower has to issue an account payable blank cheque in favor of BRAC
Bank Limited before any loan disbursement along with all other security.
The borrower has to give necessary and adequate collateral and other
securities as per banks requirement and procedures.
SME, BRAC Bank may provide 100% of the Net Required Working Capital
but not exceeding 75% of the aggregate value of the Inventory and Account
Receivables. Such loan may be given for periods not exceeding 18 months.
Loan could also be considered for shorter periods including one time principal
repayment facility, as stated in loan product sheet.
In case of fixed asset Financing 50% of the acquisition cost of the fixed asset
may be considered. While evaluating loans against fixed asset, adequate grace
period may be considered depending on the cash generation after the
installation of the fixed assets. Maximum period to be considered including
grace period may be for 36 months.
Monitoring
Monitoring is a system by which a bank can keep track of its clients and their operations.
So monitoring is an essential task for a CRO to know the borrowers activities after the
loan disbursement. This also facilitates the build up of an information base for future
reference.
Importance of Monitoring
Through monitoring a CRO can see whether the enterprise invested the sanctioned
amount in the pre-specified area of his business, how well the business is running, the
attitude of the entrepreneur, cash credit sales and purchase, inventory position, work in
process and finished goods etc, This information will help the CRO/BRAC Bank to
recover the loan accruing to the schedule and to take the necessary decisions for repeat
loans. Moreover, monitoring will also help to reduce delinquency. Constant visit over the
client /borrower ensures fidelity between the bank and the borrower and tends to foster a
report between them.
Area of Monitoring
The purpose is to know the entire business condition and all aspects of the borrowers so
that mishap can be avoided.
a. Business Condition:
The most important task of the CRO to monitor the business frequently, it will help him
to understand whether the business is running well or not, and accordingly advice the
borrower, whenever necessary. The frequency of monitoring should be at least once in a
month if all things are in order.
b. Production:
The CRO will monitor the production activities of the business and if there is any
problem in the production process, the CRO will try to help the entrepreneur to solve the
problem. On the other hand the CRO can also stop the misuse of the loan other than for
the purpose for which the loan was disbursed.
c. Sales:
Monitoring sales proceed is another important task of the CRO it will help him to
forecast the monthly sales revenue, credit sales etc. which will ensure the recovery of the
monthly loan repayments from the enterprise as well as to take necessary steps for future
loans.
d. Investment:
It is very important to ensure that the entire loan has been invested in the manner
invented. If the money is utilized in other areas, then it may not be possible to recover the
loan.
Monitoring System
a. The CRO can consider the following things for monitoring:
The CRO monitors each business at least once a month. He/she makes a monitoring plan/
schedule at beginning of the month
During monitoring the CRO must use the prescribed monitoring from and preserve in the
client file and forward a copy of the report to SME head office immediately.
Purchase Receipt
Delivery Memos
Quotations and
f. Statement file
All types of statement sent to SME head office will be kept in this file
chronologically.
All kind office instruction and guidelines related to operating should be kept in
this file
Banking
Every SME unit office will have a current account with a designated bank in the
area of a unit office. This bank account will be opened and operated by SME head
office.
To meet petty expense such as stationary, entertainment and other incidental
expense, all unit office will be allowed patty cash of Tk 2000/=.
The cheque of this patty cash will be issued from SME head office in the
beginning of the month. All vouchers relating to such expenses should be send to
the accounts from SME head office.
All the clients must open their account with the same bank account on the same
day after receiving those from the borrowers, who should given a received as
prescribed.
Cheques should be deposited to the SME unit office bank account on the same
day after receiving those from the borrowers, who should given a receipt as
prescribed.
Any loan installment credit should be transferred to the SME head office account
in Gulshan, Dhaka on the same day as per agreement with bank.
Every CRO should have an individual account in the same bank branch for their
personal use and to receive their salaries and other benefits.
Payment of lease rentals, utility bills and cheque drawn on the SME unit office
bank account and issued by SME head office should pay other expenses (Large
amount). If these bills are small amount, they should be paid from the patty cash
and replenished later.
All the financial accounting entries will be passed at the SME head office and will
maintained separately on the basis of the unit office.
Competitors
Identifying the banks competitors
In terms of world bank advice, most of the private banks are now ready to provide small
or micro credit loan facility to the clients because small loans are less risky than the
corporate loan. At the recent trend, many banks like Standard Chartered, Islami bank of
Bangladesh, Southeast Bank, Datch Bangla Bank Limited etc are going to take many
aggressive steps in terms of small loan to clients.
Determining the competitors objectives
In our country, to provide big loans or long term loans are risky because Bangladesh
Bank is carrying out lots of defaulters list. So most of the banks are now interested to
provide small or micro credit lending in terms of small and medium enterprise business.
The objective of the competitors is to capture in the market by providing small loans
regarding and manufacturing business. But everyones common objective is economic
development of this country.
Identify the competitors strategy
Standard chartered bank already sent marketing troops surrounding the cities for
providing loans and deposits. CITI Bank is going to start retail service business for
capturing the market. So competitors analysis is important factor to carry out in the long
run business for any organizations. Among these banks, many of them have lower interest
rates but lots of hidden costs and services.
In terms of SME, a sample comparison between BRAC Bank Limited and Islami Bank of
Bangladesh has shown below:
BRAC Bank Ltd.
Provide online banking & services
Officers provide door to door services
Islami Bank
Provide manual banking services
Clients have to go to branch & then talk with
officer
BRAC Bank has 265 unit offices to bring It has almost 50 brunches around the country
clients
BRAC bank depends on other banks for Disburse the loan from its own brunch
disbursements
Collateral free 2-5 lacs
It has only term loan system
Networking with BRAC, IFC & Shore bank
It has goodwill & flexible interest rate
It has vast field employees to reach each and
satellite business. Though in our country there is not much manufacturing organization,
so most of the demands go for trading business. Though it is a small and medium
enterprise therefore it focus on small loan clients that is small types of business like
trading , manufacturing and service. Basically manufacturing clients take medium or low
amount of loan during short period of time.
Trading
Whole sell
Retail
Garments
Departmental stores
Manufacturing
Mills
Bakery
Press
Retail
Factory
Service
Pathology
Satellite
Hospital
Fast food
Marketing Analysis
Product
Marketing
Control
Price
Target
Consume
r
Place
Marketing
Plan
Promotion
Marketing Implementation
Market Targeting
the process of evaluating each marketing segments attractiveness and selecting one or
more segments to enter. In terms of SME, the scope is specified which the target market
is small and medium enterprise. But SEM is restricted on leather, jewelry and alcohol
business.
Market Positioning
Arranging for a product to occupy a clear, distinctive and desirable place relative to
accomplish products in the minds of target consumers. Formulating competitive
positioning for a product and detailed marketing mix. To meet the customer demands,
SME already establish different offices across the country. Before taking the loan CRO
clearly defines to the clients regarding SME policies and repayment schedules. To
positioning in the market, SME not only provide loan but also they give some valuable
ideas to enhance the clients business and for economic development.
Once a company has decide which segments of the market it will enter, it must decide
what positions it wants to occupy in those segments. A products positioning in the way
the product is defined consumers mind relative to competing product. Main head office of
SME is in Dhaka city and rest of its unit offices are spread out surrounding the country.
Each unit office consist of 2 or 3 CRO who provides door to door services, they even
work at night. Many banks have field officers but could not carry out the unit office
facilities. So BRAC bank can reach to the potential clients at anywhere in the country.
The CRO of SME never say to the customer at the first impression that interest rate is
24%. They try to make understand to the clients mind that 2% per month or equal
monthly payment as well as many benefits.
Unique Selling Propositions:
Facilities- the main facility of SME is to provide quick service to the clients, which might
take 15 to 20 days. Hypothecation loans are collateral security free which other banks
take securities. If any clients got serious problem in business after taking SME loans then
it gives reschedule to repay the clients loan. While taking repeat loan SME provide
various facilities to the clients.
Different features- IFC and Shore banks are going to carry out equity participation with
BRAC bank. It will deposit more funds to provide more loans to the clients, which cover
around the whole country
Different services- to get the loan, client do not have to go in bank directly. All sort of
work are done by the CRO for clients to have the loan quickly. In terms of necessities
CRO go to clients home and bring repayments of the loan. In favor of clients, CRO also
work in holidays.
b. Price- is the amount of money customers have to pay to obtain the products. In terms
of SME of BRAC bank, clients have to pay a certain amount of processing fees and
stamp costs to get the loan. One of the factors that affect the companies own pricing
moves. For example- many banks have processing fees with 1% or 2% additional charge
and other miscellaneous costs. But BRAC bank has withdraws other costs and charges to
carry out in the competitive market.
Costly- BRAC bank SME interest rate is 24%. So it is little bit of costly by the
competitive edge but the client gets this loan within very short period of time. In
this situation client can not think about the interest rate because at the right time
they get the loan which they can exercise in their business can yields profits.
Easy sanction- If the CIB (Credit Information Bureau) is being cleared from
Bangladesh Bank and all information is being transparent from client then the
loan is become sanctioned in favor of client.
All time consultancy- without taking any money, the officer of this bank give
moral advices to clients to develop the business.
SWOT analysis
SWOT analysis is an important tool for evaluating the companys Strengths, Weaknesses,
Opportunities and Threats. It helps the organization to identify how to evaluate its
performance and scan the macro environment, which in turn would help organization to
navigate in the turbulent ocean of competition.
Strengths
Company reputation: BRAC bank has already established a favorable reputation in the
banking industry of the country particularly among the new comers. Within a period of 5
years, BBL has already established a firm footing in the banking sector having
tremendous growth in the profits and deposits. All these have lead them to earn a
reputation in the banking field
Sponsors: BBL has been founded by a group of eminent entrepreneurs of the country
having adequate financial strength. The sponsor directors belongs to prominent resources
persons of the country. The Board of Directors headed by its Chairman Mr. F H Abed.
Therefore, BBL has a strong financial strength and it built upon a strong foundation.
Top Management: The top management of the bank is also major strength for the BBL
has contributed heavily towards the growth and development of the bank. The top
management officials have all worked in reputed banks and their years of banking
experience, skills, expertise will continue to contribute towards further expansion of the
bank. At BBL, the top management is the driving force and the think tank of the
organization where policies are crafted and often cascaded down.
Facilities and equipment: BBL has adequate physical facilities and equipments to
provide better services to the customers. The bank has computerized and online banking
operations under the software called MBS banking operations. Counting machines in the
teller counters have been installed for speedy service ant the cash counters. Computerized
statements for the customers as well as for the internal use of the banks are also available.
]
Impressive branches: This creates a positive image in the minds of the potential
customers and many people get attracted to the bank. This is also an indirect marketing
campaign for the bank for attracting customers. 13 branches of the bank are impressive
and are compatible to foreign banks.
Interactive corporate culture: BBL, has an interactive corporate culture. Unlike other
local organization, BBLs work environment is very friendly, interactive and informal.
There are no hidden barriers or boundaries while interacting among the superior or the
subordinate. The environment is also lively and since the nature of the banking job itself
is monotonous and routine,BBLs likely work environment boosts up the spirit and
motivation of the employees.
Team work at mid level and lower level: At BBLs mid level and lower level
management, there are often team works. Many jobs are performed in groups of two or
three in order to reduce the burden of the workload and enhance the process of
completion of the job. People are eager to help each other and people in general are
devoted to work.
Weaknesses
Advertising and promotion of SME loan: This is a major set back for BBL and one of
its weakest areas. BBLs adverting and promotional activities are satisfactory but it SME
loan is not advertised well. It does not expose its SME product to general public and are
not in lime light. BBL does not have neon sign or any advertisement for SME loan in the
city. As a result people are not aware of the existence of this bank.
NGO name (BRAC): BRAC is one of the largest NGO of the world and it is operating
its activities in Bangladesh. BRAC bank is not a NGO bank but many people of them
country consider it as a NGO bank like Grameen bank which is not correct.
Low remuneration package : The remuneration package for the entry and the mid level
management is considerably low. The compensation package for BBL entry level
positions is even lower than the contemporary banks. Under the existing low payment
structure, it will be very difficult to attract and retain higher educated employees in BBL.
Specially CROs are not satisfied with compensation package provided to them.
Opportunities
Diversification: BBL can pursue a diversification strategy in expanding its current line
of business. The management can consider options of starting merchant banking or
diversify in to leasing and insurance. By expanding their business portfolio, BBL can
reduce their business risk.
Product line proliferation: In this competitive environment BBL must expand its
product line to enhance its sustainable competitive advantage. As a part of its product line
prolification, BBL can introduce the following products.
ATM: This is the fastest growing modern banking concept. BBL should grab this
opportunity and take preparation for launching ATM. Since BBL is a local bank, they can
form an alliance with other contemporary banks in launching the ATM.
Threats
Multinational banks: The emergence of multinational banks and their rapid expansion
poses a potential threat to the new growing private banks. Due to the booming energy
sector, more foreign banks are expected to arrive in Bangladesh. Moreover, the already
existing foreign banks such as Standard Chartered is now pursuing an aggressive branch
expansion strategy. This bank is establishing more branches countrywide and already
launched is SME operatin. Since the foreign banks have tremendous financial strength, it
will pose a threat to local banks.
Upcoming banks: The upcoming private local banks can also pose a threat to the
existing private commercial banks like BBL. It is expected that in the next few years
more local private banks may emerge. If that happens the intensity of competition will
rise further and banks will have to develop strategies to compete against an on slaughter
of foreign banks.
Contemporary banks: The contemporary banks of BBL such as Dhaka bank, prime
bank and Dutch Bangla are its major rivals. Prime bank and other banks are carrying out
aggressive campaign to attract lucrative clients as well as big time depositors.
Default culture: This is a major problem in Bangladesh. As BBL is a new organization
the problem of non-performing loans or default loans is very minimum or insignificant.
However, as the bank becomes older this problem arises and the whole community
suffers from this chronic diseases. BBL has to remain vigilant about this problem so that
proactive strategies are taken to minimize this problem if not elimination.
Select potential enterprise: For SME loan, in this step the CRO conduct a survey
and identify potential enterprise. Then they communicate with entrepreneurs and
discuss the SME program.
Open clients accounts in the respective bank: When the CRO decided to
provide loan to the client then he/she help the client to open an bank account
where BRAC bank has a STD a/c. BRAC bank will disburse the loan through this
account. On the other hand the client will repay by this account. Although there is
some exception occur by the special permission of the authority to repay by a
different bank account.
Filled up CIB form: CRO give a CIB ( Credit Information Burue) form to the
client and the client fill and sign in it. In some case if the client is illiterate then
the CRO fill the form on behalf of the client. Then CRO send the filled and signed
form to the SME, head office.
Sending CIB to Bangladesh Bank: The SME, head office collect all information
and send the CIB form to Bangladesh Bank for clearance. Bangladesh Bank
return this CIB form within 10-12 days with reference no.
CIB report from Bangladesh Bank: In the CIB report Bangladesh Bank use any
of the following reference no:
NIL: if the client has no loan facility in any bank or any financial
institution then BB (Bangladesh Bank) use NIL in the report
UC (Unclassified): if the client has any loan facility in any bank or
financial institution and if the installment due 0 to 5.99 then BB use
UC in the report
SS (Substandard): if the client has any loan facility in any bank or
financial institution and if the installment due 6 to 11.99 then BB use
SS in the report
DF(Doubtful): if the client has any loan facility in any bank or
financial institution and if the installment due 12 to 17.99 then BB use
DF in the report
BL (Bad lose): if the client has any loan facility in any bank or
financial institution and if the installment due 18 or above then BB use
BL in the report. This report indicates that the client is defaulter and
the bank should not provide loan the client.
Loan decision considering CIB report: Considering CIB report, BRAC bank
decide whether it will provide loan the client or not. If the bank decide to provide
loan then the SME of head office keep all information and send all papers to the
respective unit office to apply with all necessary charge documents.
Loan Sanction: The respective unit office sanction loan to the client if it is 2 to 5 lacs
and the send the sanction letter including all necessary charge documents to the loan
administration division for disbursement the loan. If the amount higher than 5 lacs then
the respective unit office send the proposal to SME, head office for sanction. The head of
SME sanction the loan and send the sanction letter including all documents to the loan
administration division for disbursement and inform the respective unit office regarding
sanction of the loan.
Charge documents checking: The loan administration division checks all charge
documents. following charge documents are checked:
Money receipt (Risk fund)
Sanction letter
Demand promising note (With stamp of Tk 20/=)
Letter of arrangement (With stamp of Tk 150/=)
General loan agreement (With stamp of Tk 150/=)
Letter of undertaken (With stamp of Tk 150/=)
Letter of stocks and goods (With stamp of Tk 150/=)
Letter of hypothecation book debt and receivable(With stamp of Tk 150/=)
Letter of disbursement
Photocopy of trade license (attested by CRO)
Insurance (Original copy)
Blank claque with signature (one cheque for full amount and others same
as no of installment on Favor of BRAC bank, no date, no amount)
Two guarantors ( one must be Spouse/parents)
If the loan provide for purchase of fixed assets or machineries and if the
loan amount is over Tk 50,000/= then the stamp of a certain amount is
require)
Documents deficiency and problem resolving: If there is any error found then it
informed to the respective CRO. If the application form is not filled properly then
the file send to the CRO to fill the application properly. If any document error
found then the loan administration division asked the CRO to send the require
documents and the file stored to the loan administration division.
Prepare disbursement list: The loan administration division lists all new
sanctioned clients details and send a request to the treasury through internal mail.
Disbursement of the amount: Sending the list to the treasury of BRAC bank for
disburse the amount, the treasury disburse the amount to the client through the
mother account of the clients bank. BRAC bank disburse amount through any of
the following banks corporate branch nearer the BRAC bank head office and the
corporate branch of the respective bank send the amount to the client account in
the respective branch. These banks are:
BRAC Bank Limited
The City Bank Limited
Janata Bank
Bangladesh Krishi Bank
Pubali Bank
Agrani Bank
Message sent to the unit office: Completing the disbursement, loan administration
division sent a SMS to the respective CRO informing the disbursement of the sectioned
loan.
Initial ID generation: After sending the list to the treasury, the loan
administration division generates an initial ID against the borrower. Entering
required information, the banking software MBS automatically provide a ID no
for the borrower.
Loan account opening: According to the ID, the loan administration division
open a loan account in MBS against the borrower. Entering all required
information, the MBS automatically give an account no. for the borrower.
Cost center assign: The loan administration division enter the following
information in MBS:
Security details set-up
Guarantor details set-up
Loan other details set-up
Risk fund collection: The loan administration division opens a different account
risk fund of the client. This is known as loan processing fees. Receiving the risk
fund, the loan administration division print voucher and posting the voucher in the
MBS. The amount of risk fund is not refundable.
Document stamp cancellation: The loan administration division cancels all document
stamps. In future if any client found defaulter and the bank file sued against him then
stamps of these document help to get the judgment favor of the bank. But If these stamps
are not canceled then the judgment may not on favor the bank.
Send the loan file to archive: completing all activities, loan administration division
sends the loan file to the archive for future requirement. In future if any document of the
loan account require then the bank can collect the file from archive and get the necessary
document. If the client take repeat loan then it is not require to apply all documents
because his all documents stored to the bank.
Cross Check SMS/Fax and solve problems (If any): The loan administration is
responsible for all entry in MBS. If the there is any error found in future then the
respective officer who is entering these information in MBS will be liable for it. It will be
easily identified by user ID. So they always aware to ensure the correct entry. Completing
the entry of information, they print a hard copy and cross check it with the SMS/Fax. If
there any error found then it is solved and ensure the correct information entry.
Repayment voucher check and posting: If it confirmed that all entering information are
correct and there are no error, then the responsible officer of the loan administration
division post it to MBS. If one time posted, it is not rectifiable without permission of the
higher authority. So the loan administration is always aware regarding the recovery
procedures of SME loan.
sleeps are re-checked. Then the loan administration division calculates the total balance
of the loan account (Ledger balance + buffer interest +Excise duty)
SMS sent to concerned CRO: Loan administration division sent an SMS to the
concerned CRO informing the current balance of the requested loan account.
Receive and print closing SMS/Fax checking & freezing: The concerned CRO send a
final SMS to loan administration division informing that the respective borrower cleared
all his liabilities regarding the loan. The loan administration division takes paper print of
the SMS, check it and finally close the loan account.
MBS entries for loan closing
Pre closing data entry: Completing the manual activities, the loan administration
division enter some information to MBS for future requirement and complete
following tasks:
Interest/provision charging & print voucher
Charges collection & print voucher
Final repayment entry & print voucher
Final repayment entry checking
Repayment voucher posting
Activate account closing in MBS: Completing above mentioned tasks, the loan
administration division finally close the requested loan account in MBS.
disburse loan which will minimize risk. If the client asks to return security then the loan
administration releases security completing following tasks:
Documents photocopy before security release
Closing certificate issuing and security release
Daily MIS updating for loan closing:
administration division update the banking software MBS (Millennium Banking System)
by closing the respective loan account.
Bibliography:
Hemple, George H. Bank Management, 2nd edition, 1986, John Wiley & Sons.