Introduction On economic Development And the Evolving Of BRAC Bank
In terms of US Dollar, the value of GDP in current prices increased by 2.71% to US$ 62021 million in 2005-06 from US$ 60382 million in the preceding year. Per capita GDP stood at US$447 in 2005-06 compared to US $441 in 2004-05, showing an increase of 1.4%. Measured by the developments in the CPI, the inflation rate was 7.0% in 2005-06 compared to 6.5 % in 2004-05. The increase in prices as measured by GDP deflator was 5.2% in 2005-06 compared to 5.1% in 2004-05. The average depreciation of Bangladesh Taka was 11.7% in 2005-06 compared to 4.0% in 2004-05. The real wage index increased by 6.6% in 2005-06 compared to 5.9% in 2004-05.
There has not been significant structural change in the economy during the fiscal year. The share of agriculture in the GDP fell from 22.3% 2004-05 to 21.8% in 2005-06, while that of services fell marginally from 49.4% to 49.2% during the period. Compensating for the declining shares of these two sectors, the share of industry rose from 28.3% in 2004-05 to 29.0% in 2005-06. Within the broad industrial sector, the share of manufacturing in total GDP increased from 16.5% to 17.1%, that of construction rose from 9.1% to 9.2%, and that of power, gas and water from 1.6% to 1.7% during the period.
The services sector grew by 6.5% in 2005-06 compared to 6.4% in 2004-05. The growth in the services sector in 2005-06 reflects a relatively better performance of the wholesale & retail trade, transport, storage & communication, education, financial intermediation, public administration & defense, hotel & restaurants and real-estate. These sub-sectors grew varying between 4% – 9%. However, the growth of telephone and mobile sub-sector declined to 28.6% in 2005-06 from 31.78% in the previous year.
In this context a new dynamic bank emerged named BRAC Bank, a fully online scheduled commercial bank opened in 2001, is dedicated to offer its clientele truly international standard banking services. BRAC Banks customer friendly product with convenient features is all designed to meet the grouting and changing needs. Most important, The BRAC Bank has a team of expert sales persons who will take banking at the doorsteps of customers.
World Economy – An Overview
As we enter into the new millennium the process of trade liberalization and globalization have presented new challenges as well as greater opportunities. Economic boundaries of nations are being abolished and the world is gradually becoming a global village, In the beginning of the year 1999 the Euro currency started to replace the currency of eleven European union countries. In the financial service sector profound changes have been taking place globally. E-commerce is becoming the predominant mode of transactions. We are witnessing revolutionary changes in the fields of cost control, retail channels, range and delivery of services, accessibility and reach. These changes have already triggered off reorganization, amalgamation, and takeover of financial institution globally.
Top ten bank holding companies in the world ranked by profit
Figures in U.S. dollars, and as 2006
- Citigroup — 22.13 billion
- Bank of America — 21.13 billion
- HSBC – 14.55 billion
- TP Morgan Chase — 14.44 billion
- UBS – 9.79 billion
- Roval Bank of Scotland — 12.1 billion
- Goldman Sachs — 9.34 billion
- Wells Fargo — 8.48 billion
- Wachovia — 7.79 billion
- Morgan Stanley — 7.45 billion
Bangladesh Economy – An Overview
The Bangladesh economy grew by 6.7% in 2005-06, the highest ever recorded since 1989-90. The growth was stimulated mainly by the manufacturing sector, which grew by 10.4%, the highest since 1997-98. Some branches of the services sector and the normalization of production in the agriculture sector also contributed to the overall economic growth. On the demand side, a sizeable increase in remittances and exports made a significant contribution to the growth of GDP. In 2005-06, domestic demand outpaced domestic supply. The consumer price inflation during the fiscal rose to 7.0%, 0.56 percentage point above the inflation rate in 2004-05. While food inflation increased rapidly, higher oil price and the instability in the foreign exchange market were also important factors behind the higher inflation rate in 2005-06.
During the year some positive initiative were taken in the banking sector with improvements in the legal and regulatory environment to improve loan recovery but unfortunately the high quantum of non performing assets and under capitalization continued to plague the entire banking sector thus causing a major threat to the macro economic stability. The size of classified loans increased significantly which contributed to lower profitability of the banks.
Some key indicator of the economy of Bangladesh is given follows:
- Broad money recorded an increase of T k.l8805.00 crore or 10.38 percent during July February, 2006-07 against the increase of Tk.15093.30 crore or 9.96 percent during July February, 2005-06. Of the components of broad money, currency outside banks rose by Tk.3552.60 crore or 15.54 percent and deposits increased by Tk.15252.40 crore or 9.64 percent; of which, time deposits increased by Tk.14477.00 crore or 10.49 percent and demand deposits increased by Tk.775.40 crore or 3.82 percent.
- Domestic credit recorded an increase of Tk.17036.10 crore or 9.58 percent during July February, 2006-07 against the increase of Tk.16491.10 crore or 11.18 percent during July
BRAC Bank provides diversified products and services to the customers. It always tries to provide distinctive and customized products, which are best matched with the customer needs and demands.
Results And Discussion room the Analysis &
Questionnaire Survey
Whenever people are interested to take loan from the bank, they will definitely compare the bank’s according to the bank’s requirements and other opportunity that banks give to the customer. From the above comparative analysis it can’t says that particular one bank that is only BBL or SCB or HSBC is best in terms of overall factors. Because each and every bank try to give the opportunity to their clients as best as possible but for different reason or due to different strategy bank’s can’t provide every opportunity to their clients. In bank’s point of view these things are vary bank to bank.
Discussion from Bank’s point of view
From the above comparative analysis it can says that in terms of interest rate comparison right now BBL offers the most attractive rate for personal loan. On the other hand SCB’s interest rate is much higher than the other two banks. So if people hard about the BBL’s interest rate definitely they will feel interest to take loan from the BBL. But if anyone who are interested to take loan and there corporate banking maintain with HSBC or SCB than they could enjoy much lower interest rate with them than BBL. HSBC and SCB charging only 13% interest rate for their corporate clients where BRAC Bank offer only 1 % less interest rate for their corporate clients.
In terms of tenure
In other scenario, if people think about the installment payment then it can says that in terms of Car loan (new brand car only) BBL give the opportunity to their clients to make installment payments within 60 months. BRAC bank offer flexibility tenure limit for their clients. For BDT 1 to 3 lac BBL tenure 3 years and more than 3 lac tenure is 5 lac.
The other important point favoring the personal loan program of BRAC Bank Ltd is account opening. Only the account holders of SCB or HSBC are eligible to have personal loan from the respective banks. But BRAC bank doesn’t have this type of requirement to enjoy the personal loan. Anybody from the two (Salary & business man) segment market mentioned earlier can avail the personal loan of BARC Bank after fulfilling the requirement of that segment. In this way BRAC bank welcomes huge potential clients who don’t feel easy to fulfill the entire requirement to account opening in SCB or HSBC. In this way personal loan of BRAC Bank makes the whole procedure easy to make people’s dream come true.
So, people can choose the bank according to their needs, banks requirements and easy loan procedure. That is how banks fulfill the peoples satisfaction to giving their best customer service.
Secured Asset
Two type of secured loan provide by BBL. These two are Car loan and Secured overdraft (SOD).
Car Loan: “Start driving not dreaming” BBL providing car loan to three different type clients salaried person, business person and Land Owner. Why toy with your dreams when you can own one’, BRAC Bank Car Loan can stop your dreaming and Start driving
Whether you want to purchase a brand new car or a reconditioned one, we have the most customer-friendly car loan scheme available for you.
SOD: A special scheme that allows you to avail cash at nominal interest rates. Your security is kept untouched in the Bank’s custody as the value grows.
Unsecured asset
Ten types of unsecured loan provides by BBL these are given below:
Salary Loan: Keep an extra 15 month’s salary in your pocket. You can get BRAC Bank Salary loan, Loan against your salary. If you are a salaried individual working in Bangladesh, Please read on. Because Salary Loan from BRAC Bank has been designed with just you in our minds.
Exclusive Club Loan (ECL): ECL provides only salaried person those who get monthly salary minimum BDT 30,000 and there employment must be follow under A type.
NoW Loan: ‘You choose while we pay’!! Life is good making it better when you can enjoy BRAC Bank NoW Loan. In case you need to purchase home appliances, furniture’s, computer or other consumer durables for personal use, we offer you the most appropriate solution with our NoW loan.
Teachers’ Loan: ‘Honest profession, Honest Service’. BRAC Bank Teachers’ Loan provides a wedding or a dream holiday, financing a business or surviving an emergency, Teachers Loan can be yours just within three days of application!
Study Loan: ‘Your gateway to the world’ BRAC Bank Study Loan gives your child deserves the best education and you have planned it ahead. But worried about financing? BRAC bank has the perfect solution for your child’s future.
Travel Loan: ‘It’s time to fly’, BRAC Bank Travel Loan opens the door for planning to take a trip abroad and worried about financing? Before you start packing your bags for vacation abroad, you have too many things to take care. Leave your money- matters to us while you pack your bags. Our fast and easy loan processing will simply add excitement to your travel plan.
Credit Card Loan: When you have a credit card sky is your limit with BRAC Bank.
Now, a credit card is all you need to get a loan from BRAC Bank. Loan can be used for any reason from buying consumer goods, automobile to vacation expenses. Just decide what to do and start planning for it.
Top Up Loan: Is your loan track record playing smooth? 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. Just apply according to your requirements
High Flyer Loan : Enjoy life to the fullest and take benefit of the varied opportunities it offers you. BRAC Bank’s HighFlyer Loan is for airline, GSA & Travel Agency professionals is to makes your long cherished desires an absolute reality.
Doctor’s Loan : BRAC Bank introducing 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. So prescribe yourself a dream today. Anti-Headache solution for Doctor’s.
Recommendation & SUGGESTIONS TO improve the Consumer Loan Service
Strictly monitoring Verification team: Few cases verification team doesn’t go clients working or living places for verified documents they do it by sitting office over phone so sometimes they doesn’t get the actual information about the clients. So, credit department should strictly monitor them.
Early CIB status: To know CIB status credit department takes minimum six working days though it is depend on Bangladesh bank but if BRAC Bank introduce freedisbursement before getting CIB status for small amount of loan that clients will be benefited.
Show Flexibility to approve loan: if credit department find a little bit miss-match clients documents with the BBL PPG than they directly decline the files without inquiry. So they should attitude positively towards the clients.
Interest rate: BBL charging 18.5% effective interest rate that is higher than local other competitors so they should decrease their interest rate otherwise they couldn’t keep the customer.
Increase Corporate Clients: I faced some difficulties when I approached some one for loan who is working with big company. Because most of the corporate houses are taking banking facilities from HSBC or SCB so they providing loan to them with lower interest rate than BBL. So BBL should increase corporate clients by offering some exclusive product and services.
Branch Support
The personal loan department of BRAC Bank Ltd is totally centralized in their Head Office. All the loan application is processed in the head office. The Direct Sales Executive (DSE) is used to market the personal loan on a fixed commission basis. It has been observed that these DSE don’t get much logistic support from the branch level. As they are not the permanent employees of BRAC Bank Ltd, they have not been given much attention from the branch level. As a result these negative attitudes from the branch level create a bad impression on the customers mind and which is a one of the prime factor for the slow expansion of personal loan of BRAC Bank Ltd. Branch should provide all kind of logistic and infrastructure support to these direct sales Executives for the better management of personal loan.
Processing Time
Longer processing is one of the prime factors for customer dissatisfaction with the personal loan.
Interest Rate
Within very short period of time BRAC Bank Ltd has performed well in personal loan program. But still the major market share has been occupied by the two leading foreign banks -The Standard Chartered Bank & the Hong Kong and Shanghai Banking Corporation Limited. The other local private commercial banks are coming up with diversified personal loan products and lower interest rate on the products. The market is becoming more competitive day by day. So BRAC Bank will have to reduce the interest rate for their personal loan products other wise it would be difficult for them to survive in this competitive market.
Processing Fee
BBL’s personal loan processing fee is comparatively higher than the other two bank that is Standard Chartered and HSBC.
Easy Procedure
To arrange all the required documents and to follow all the procedure of having personal loan from BRAC Bank makes the customers in uncomfortable situation. The whole procedure should be easy and customer friendly. For business person they have to have own house in Dhaka city that’s very unfair because most of the business person still living rented houses in Dhaka so only for this requirements they can’t able to take the loan from BBL.
Introduce new features in the loan products
Introducing new features in the product may attract the customer to take loan from the BBL. The new features may be minimum loan amount, maximize installment payment, may offer attractive gift and so on. People will more flexible if they get the maximum opportunity from the Bank.
Conclusion
BRAC Bank is the fastest growing bank in the country. It’s also going to be a multinational financial institute very soon. It’s already started its operation in Afghanistan and going to operate chii%UI)ubai and South Africa. But BRAC bank has to be more diversified and have decrease its interest rate otherwise they couldn’t maintain their growth rate because more banks are coming up and banking law has been becoming more rigid for the banks. Money laundering, loan defaulter, corruption, volatile capital market, classified loan, unstable world economy, terrorist attack, all these issues are becoming very crucial for the banks to make their vision, mission, policy, procedure. That’s why all the banks in the world are now diversifying their business introducing new products and services and increasing their productivity and efficiency. Therefore, BRAC Bank Ltd will have to bring more customized technology and improve their quality of service if they want to make a stable position in this market. The happiest thing is that BRAC Bank already started world most expensive and effective banking software FINACLE.
