Report on SME Banking of Brac Bank (Part-1)

1.0 Introduction

BRAC  Bank  Limited,  with  institutional  shareholdings  by  BRAC,  International  Finance Corporation (IFC) and Shorecap International, started its journey in 2001 and in just 10 years proved to country’s fastest growing bank. The Bank operates under a “double bottom line” agenda where profit and social responsibility goes hand in hand as it strives towards a poverty-free, enlightened Bangladesh. BRAC Bank Limited is a scheduled commercial bank in Bangladesh. It established under the Banking Companies Act, 1991 and its operation started on July 4, 2001 with a vision to be the market leader through providing all sorts support to people in term of promoting corporate and small entrepreneurs and individuals all over the Bangladesh.

The bank consist of major divisions named 1) Corporate banking, 2) Retail banking, 3) Treasury, 4) Small & Medium Enterprise (SME). At present the Bank operating its business by 69 branches. BRAC Bank is the first local commercial banks that proving online banking service to its customers from the very beginning of its starts.

BRAC Bank, for the first time among local commercial banks, starts providing loan facilities to small and medium trading, manufacturing and service oriented enterprises all over the country.

1.1 Origin of the Report

As a part of the Internship Program of Bachelor of Business Administration course requirement, I have been aassigned for preparing a report on the activities that I am currently doing at BRAC Bank Limited (BBL) for the period of 12 weeks started  from March 1, 2011 to May 31, 2011. At BRAC Bank Limited (BBL), I have been assigned in the SME , Finance Planning & Analysis, Finance Division.

1.2 Objective

The broad objective of this project:

1.  How BRAC BANK Ltd operates SME banking operation around the country though its extensive network

2.  Why Market concentration and product diversification are considered the main strategies for expanding the SME business.

1.2.1 Specific Objective

To support the broad objectives better we have developed some specific objectives. These are:

1. How BRAC BANK Ltd operates SME banking operation around the country though its extensive network

•  What is the Structure of SME division of BBL

•  History of BRAC Bank SME

•  SME Product Details

•  Operation Process of SME Loan Disbursement of BBL

2.  Why Market concentration and product diversification are considered the main strategies for expanding the SME business.

•  Market segmentation

•  Bases for segmenting consumer market

•  Target consumer

•  Target market

•  Differentiated marketing

•  SWOT Analysis

1.3 Methodology

The study was totally based on primary data and secondary data. As the report has three parts, the organization part and job part data was collected from secondary sources books, brochures, leaflets, files, published reports and official web site of BRAC Bank Limited. For SME related information I took short interview of the SME Department employees. Apart from this, Annual reports, magazines, financial flash back of BRAC Bank and different SME related journals used as a secondary data.

1.4 Limitations of the Report:

The sources of the report are collected from different desks, various documents of BRAC Bank Limited (BBL). Though the entire staff member remains busy all the time for their desk work they helped a lot to manage and collect the data & information. But it was very difficult to collect information on the client as it is very sensitive and secret issue for the  Bank. Every task has some limitations. So, there have also some limitations of the study. These are as follows-

Shortage of time period: This report is written within a shorter period of time since many days have passed during the training session. So the time

1. constraint of  the study hindering the course of vast area and time for preparing a report wit the mentioned period is really difficult.
2. Busy working environment: The officials had some times been unable to
3. provide information because of their huge routine work. That is why we do not gather vast knowledge about the critical issues.
4. Secrecy of Management: There some information which are confidential for collecting the data. So, some data could not been collected for confidentiality or secrecy of management.
5. Uneven Sample Distribution: The sample distribution may not be
6. even, there may be a majority of people coming from a fixed range of income level.

1.5 Scope

The report has three parts. First part is the organization part where I covered brief about the organization. Second part is the job part where I covered what I did in the office. Though I worked in SME Finance department but I also covered the reconciliation process. In the third part, this is assigned by supervisor, SME Activities of BRAC Bank Limited. In this part I covered how BRAC Bank operate SME banking through its extensive network and why market concentration and product diversification are considered the main strategies for expanding the SME business.

2.1Background of BRAC Bank

BRAC Bank Ltd, a full service commercial bank with Local and International Institutionalshareholding, is primarily drive by creating opportunities and pursuing market niches not traditionally met by conventional banks. BRAC Bank has been striving to provide “best-in-the-class” services to its diverse range of customers spread across the country under an on-line banking platform.

Today, BRAC BANK Limited, one of the latest generation of commercial banks which started its journey on the 4th of July 2001 with a vision to be the absolute market leader through providing the entire range of banking services suitable to the needs of modern and dynamic banking business as well as to promote broad based participation in the Bangladesh economy through the provision of high quality banking services. The unique strength of BRAC Bank lies in the fact that BRAC one of the world’s largest private development organization is its key shareholder and the bank’s vision are thus aligned with those of BRAC.

The reason BRAC Bank is in business is to build a profitable and socially responsible financial institution focused on markets and businesses with growth potential, thereby assisting BRAC and stakeholders build a “just, enlightened, healthy, democratic and poverty free Bangladesh”. BRAC Bank fulfills the purpose by reaching for high standards in doing everything for their customers, shareholders, associates and communities upon, which the future prosperity of their company rests.

BRAC  Banks  envisages  providing  mass  financing  by  increasing  access  to  economic opportunities for all individuals and business in Bangladesh with a special focus on currently under-served enterprises across the rural-urban spectrum BRAC Bank is surviving in the large banking arena through its unique and competitive products  and it is the only local bank providing 100% integrated on-line banking services.

BRAC Bank Limited consists of four major business divisions namely Corporate Banking Division, Retail Banking Division, Small and Medium Enterprise (SME) and Foreign Trade & Treasury.

Corporate Division provides full range of commercial banking products and services to any potential corporate clients including multinationals, large or medium local corporate, NGOs, institutional bodies.

Retail Division offers a wide array of lucrative and competitive banking products to the individual customers of the bank. Currently there are six lending products and a number of other attractive new products will be launched shortly. It also offers different types of term deposit scheme and attractive STD & Savings deposit schemes giving interest on daily balance.

BRAC Bank Limited, hereinafter called BBL, is a first growing third generation-scheduled commercial bank incorporated on 20^th May 1999 as a public limited company under Companies Act, 1994 with multinational collaboration including IFC of The World Bank Group & Shore Cap. BBL started its operation on 4^th July 2001. The main sponsor of the bank is the BRAC. The Bank is pioneer and focused on pursuing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped. BBL believes, this sector of the economy can contribute the most to the rapid generation of employment in Bangladesh. BBL caters the banking services to its rapidly growing customers through 69 branches and 421 SME Unit Offices.

Shareholding Structure of Brac Bank Limited

As on 31.12.2010

Corporate Chronicle & Information

• Registered office: 1, Gulshan Avenue, Gulshan-1, Dhaka-1212
• Company Registration Number: C-37782(2082) of 1999
• Inauguration of Banking operations: 4^th July 2001
• First SME unit office: 1^st January 2002
• Signing with ShoreCap as investor: 29^th December 2003
• Signing with IFC as investor: 8^th May 2004
• First installation of ATM: 3^rd April 2005
• Issuing of Preferential share: 31^st January 2006
• Signing with Infosys and 3i Infotech for changing Bank’s IT platform: 1^st

August 2007

• 24×7 Phone Banking opening:9^th September 2006
• Initial public offering of shares held in 2006
• Listing with CSE: 24^th January
• Listing with DSE: 28^th January 2007
• Commencement of share trading in DSE and CSE: 31^st January
• Credit Card launching: 06^th February
• 2500 remittance delivery point
• Introduction of Probashi Banking: 14^th April 2007
• Launching of Travel related services (TRS): 20^th November 2007
• PDB collection via mobile banking: 15^th October 2009
• Launching of Probashi Biniyog: 4^th May 2010
• Off-Shore Banking launched: 21^st June 2010
• Co-branded ATM booth launching with Rupali bank Limited: 25^th September 2010
• Launching of Planet Card: 23^rd Oct 2010

Corporate Vision

Building a profitable and socially responsible financial institution focused on Market and Business with growth potential, thereby assisting BRAC and stakeholders to build a “just, enlightened, healthy, democratic and poverty free Bangladesh”.

Corporate Mission

• Sustained growth in “Small & Medium Enterprise” sector
• Continuous low-cost deposit growth with controlled growth in retail assets
• Corporate Assets to be funded through self-liability mobilization. Growth in assets through syndications and investment in faster growing sectors
• Continuous endeavor to increase non-funded income
• Keep our debt charges at 2% to maintain a steady profitable growth
• Achieve efficient synergies between the Bank’s branches, SME unit offices and BRAC field offices for delivery of Remittance and Bank’s 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 Bank’s vision into reality

Core Values

• Value the fact that we are a member of the BRAC family
• Creating an honest, open and enabling environment
• Have a strong customer focus and build relationships based on integrity, superior service and mutual benefit
• Strive for profit & sound growth
• Work as a team to serve the best interest of our owners
• Relentless in pursuit of business innovation and improvement
• Value and respect people and make decisions based on merit
• Base recognition and reward on performance
• To be responsible, trustworthy and law-abiding in all that we do

The Brand Promise of BRAC Bank LTD :

The brand promise of BRAC Bank LTD is “Astha Obichol”. It is a bangle word that denotes trust on BRAC Bank remains the same no matter what in terms of quality services.

The logo of Brac Bank has been made keeping in mind the goal of the organization, the square structure of the logo means solid and strong, the golden color in the lower portion of the logo means the ‘Golden Bangladesh    & her fertile  land, The Blue color in the upper portion means ‘the sky with enormous & unlimited opportunity’. The white colored curve means ‘Growth and Progress’. White circles in the blue color mean the flashing sun that gives light to everywhere.