Professional Documents
Culture Documents
It established in
Bangladesh under the Banking Companies Act, 1991 and incorporated as Private Limited
Company on May 20, 1999 under the Companies Act, 1994. 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. BRAC Bank will be a unique organization in 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 147
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. The Bank has already
established its network in different area of the country with assistance of BRAC.
SME Banking Division is a business division of BRAC Bank Limited that deals with
Small and Medium sized Entrepreneurs involved in different types of business. SME
banking division primarily provides loans to small and medium sized trading,
manufacturing, service, agriculture, non-farm activities and agro-based industries located
across the country.
The loan products offered by SME Banking Division are ANONNO, PROTHOMA RIN,
PROSHAR, BIZNESS LOAN, TRADE PLUS and BUSINESS EQUITY LOAN (BEL).
The SME loan range is from BDT 2 lac to BDT 350 lac (Funded: BDT 2 lac to BDT 350
lac, Non Funded: BDT 1 lac to BDT 30 lac). SME banking division offers Term loan,
Continuous (Cash covered) loan and Letter of Credit. Short Term: up to 9 months, Long
Term: from 12 to 120 months. Moreover there is also a deposit product named PRAPTTI
CURRENT ACCOUNT for the SMEs.
To avail a funded SME loan 15 to 25 days are required and for Non Funded SME loan,
the timeframe is 1 to 2 days from the date of application, if all the necessary papers are in
order. At present, loans are only given to entrepreneurs who have a running business of at
least one year. The interest rate of SME loans ranges from 14% to 17.8% on the reducing
balance method, depending on the amount and the loan scheme. Collateral is necessary
for loan amounts of BDT 10 lac and above. Generally collateral is not necessary for loan
amounts ranging from BDT 2 lac to below BDT 10 lac.
The SME loans are usually given for working capital finance, fixed asset finance and
trade finance. Loan amount is decided based on the fund requirement calculation, not on
the basis of collateral value. However, Lawyers opinion is necessary for mortgage
purpose. Registry Mortgage is necessary generally when the loan amount is BDT 10 lac
or more. At present SME Banking Division has reach in all 64 districts of the country
through 428 unit offices. The functional designation of the loan officers who operate
at the unit offices is Customer Relations Officers (CROs).
A zone is comprised of 1-6 unit offices, where the person in-charge of the zone is known
as a Zonal Manager. The reporting manager of a CRO is the Zonal Manager (ZM) or
Associate Relationship Manager (ARM). Zonal Managers/ Associate Relationship
Managers have the authority to approve a loan up to BDT 6 lac. There are 144 Zonal
offices in SME Banking at present. A Territory is comprised of 6-12 zones. There are 15
territories at present. The reporting of a Zonal Manager is the Territory Manager. The
Associate Relationship Managers however report to the Relationship Managers.
For disbursement of any SME loan a clean CIB report is required. A Valid trade license,
rental deed, and any other authorization (if necessary) are the primary documents that are
needed to get an SME loan. A number of information is required along with the loan
application form i.e. Inventory list, Accounts Receivables list, Accounts Payables list,
Buyers list, Suppliers list, and Fixed Asset list.
Minimum two guarantors are required for an SME loan, one of whom must be a third
party guarantor and another from his /her own family. A third party guarantor may be a
businessman or a service holder from the private sector with minimum wealth of 125% of
the loan amount. However, for a family guarantor the net wealth condition is not
applicable. A guarantor of SME loan can not avail a loan from BRAC Bank as long as
he/she is a guarantor.
The core competence of the BRAC Bank is to provide the fastest loans to the clients in
this country. To retain this competitive advantage BRAC Bank would provide computer
and palmtop facilities whether they can give fastest services to clients than other banks.
Also to convey the customer focus, BRAC Bank is trying to reduce collateral securities
than other banks. It provides more collateral free secured loans to capture the market.
Regarding the services by the CRO, almost all clients are satisfied by getting these quick
facilities from them. Though it is pioneer division of this bank, I tried to give an in-depth
analysis for every factor, which relates the SME division from the perspective of
customer satisfaction and dissatisfaction.
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.
An Overview of BRAC Bank Ltd.
B rac Bank Limited, one of the latest generations of commercial banks, which started its
journey on the 4th of July 2001 with a vision to be the absolute market leader. Brac Bank
is a commercial scheduled bank extending full range of banking facilities as per the
directives of Bangladesh bank. It intends to set standards as the absolute market leader by
providing efficient, friendly and modern fully automated on-line service on a profitable
basis. BRAC Bank in 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.
Brac Bank Limited, with institutional shareholdings by BRAC, International Finance
Corporation (IFC) and Shore cap International, has been the fastest growing Bank in
2004 and 2005. At the year end of 2005, BRAC Bank had recorded a 103 percent growth
in assets, and a 65 percent growth in liabilities, with an operating profit of 84 percent
over the previous year 2004.
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 four years of operation, the Bank has disbursed
over BDT 1200 crore in loans to nearly 32,000 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.
The Bank is mainly owned by the largest NGO in Bangladesh- BRAC .The Bank has
positioned itself as a new generation Bank with a focus to meet diverse financial need a
growing and developing economy.
The Bank has embarked with an avowed policy to promote broad based participation in
the Banish economy through the provision of high quality banking service based on latest
information technology. The Bank will ensure this by increasing access to economic
opportunities for all individuals and businesses in Bangladesh with a special focus on
currently under served enterprises and households across the rural urban spectrum. We
believe that increasing the ability of under served individuals and enterprises to build
their asset base and access market opportunities will increase the economic well being for
all Bangladeshis.
2.2 Brand Promise
Astha Obichol.
2.3 Vision
Building a profitable and socially responsible financial institution focused
on
Markets and Business with growth potential, thereby assisting
BRAC and stakeholders build a just, enlightened, healthy, democratic and poverty
free Bangladesh. Breaking barrier within 2009.
2.4 Mission
All the units are being operated in a centralized manner to minimize costs and risks.
In considering the above, one should look at the business is managed. CRO should also
consider clients previous credit history like facilitates sought and availed, loan repayment
an overdue record, if anyone checks the clients bank account and amount of balance
maintained. Managements qualification, experience, successor and maintenance of
records should provide insight in to the business.
Continuous (Cash covered) loan and Letter of Credit. Short Term: up to 9 months, Long
Term: from 12 to 120 months. Moreover there is also a deposit product named PRAPTTI
CURRENT ACCOUNT for the SMEs.
To avail a funded SME loan 15 to 25 days are required and for Non Funded SME loan
the timeframe is 1 to 2 days from the date of application, if all the necessary papers are in
order. At present generally, loans are only given to entrepreneurs who have a running
business of at least one year.
The interest rate of SME loans ranges from 14% to 17.8% on the reducing balance
method, depending on the amount and the loan scheme. Collateral is necessary for loan
amounts of BDT 10 lac and above. Generally collateral is not necessary for loan amounts
ranging from BDT 2 lac to below BDT 10 lac.
It is compulsory for a borrower to have a current A/C either with BBL or with a
correspondent bank branch if there is no BBL branch or SME sales & service center in
the locality. The City Bank Ltd, Janata Bank, Bangladesh Krishi Bank, Pubali Bank Ltd,
Agrani Bank, Rupali Bank Limited are the correspondent banks of BRAC Bank. Bank
transaction record is mandatory for Anonno (Ovedraft), Bizness Loan, Trade Plus &
Business Equity Loan (BEL) only.
The SME loans are usually given for working capital finance, fixed asset finance and
trade finance. Loan amount is decided based on the fund requirement calculation, not on
the basis of collateral value. However, Lawyers opinion is necessary for mortgage
purpose. Registry Mortgage is necessary generally when the loan amount is BDT 10 lac
or more.
Working capital finance can be maximized up to 100% of the net required working
capital or 75% of the sum total of inventory, advance payment and receivables whichever
is lower. Fixed asset finance cannot be more than 90% of the purchase price, but the debt
equity ratio in fixed assets investment in the projected year (after purchase of new fixed
assets) cannot be more than 1 (one). A customer can apply for a repeat loan when 80% of
the previous loan tenure has passed and made a satisfactory repayment. If all installments
are paid on due dates, they will also get a concession on the existing interest rate.
Generally SME only provides business loans in the enterprises name. However, loan can
be sanctioned in the personal name of the borrowers, if the tenant borrower cannot obtain
trade license showing his name as owner of the business due to the conditionality
imposed by the market committee/owner. Fire insurance is mandatory to avail a loan
except for a few concerns like poultry, fishery, farming & wood business (preserve under
water).
Process:
For disbursement of any SME loan a clean CIB report is required. A Valid trade license,
rental deed, and any other authorization (if necessary) are the primary documents that are
needed to get an SME loan. A number of information is required along with the loan
application form i.e. Inventory list, Accounts Receivables list, Accounts Payables list,
Buyers list, Suppliers list, and Fixed Asset list.
Guarantors:
Minimum two guarantors are required for an SME loan, one of whom must be a third
party guarantor and another from his /her own family. A third party guarantor may be a
businessman or a service holder from the private sector with minimum wealth of 125% of
the loan amount. However, for a family guarantor the net wealth condition is not
applicable. A guarantor of SME loan can not avail a loan from BRAC Bank as long as
he/she is a guarantor.
3.3 Fees & Charges
Stamp cost:
It is the cost that will be needed in future for legal procedures. For an SME loan the
stamp cost is BDT 620 only.
Loan Application Fees:
The borrower has to pay BDT 200 and 15% VAT thereon as the loan application fees at
the time of loan disbursement.
Loan Processing Fees:
Loan Processing Fee of SME loan ranges from 1% to 2.5% plus VAT of the loan amount.
Early Settlement Fees:
Early settlement fees of 1% to 5% plus VAT thereon will be charged on the outstanding
amount for early settlement of EMI loans of SME Banking. There is no early settlement
fee for Non EMI loans. If a client misses the installment date, he/she will have to pay
day-wise interest on the outstanding amount.
3.4 Repayment
EMI:
EMI stands for Equated Monthly Installments. It is the system where installments are
paid in equal amount on a monthly basis.
Single payment system:
It is the system where interest is paid monthly and the total principle is paid at maturity
(except for Anonno loan). For Anonno loan 70% repayment of the principal will be
realized in the following month of the highest sales/cash collection and the rest 30% will
be realized in the following second month.
Distribution:
At present SME Banking Division has a reach in all 64 districts of the country through
429 unit offices. The functional designation of the loan officers who operate at the
unit offices is Customer Relations Officers (CROs).
A zone is comprised of 1-6 unit offices, where the person in-charge of the zone is known
as a Zonal Manager. The reporting manager of a CRO is the Zonal Manager (ZM) or
Associate Relationship Manager (ARM). Zonal Managers/ Associate Relationship
Managers have the authority to approve a loan up to BDT 6 lac. There are 144 Zonal
offices in SME Banking at present.
A Territory is comprised of 6-12 zones. There are 15 territories at present. The reporting
of a Zonal Manager is the Territory Manager. The Associate Relationship Managers
however report to the Relationship Managers.
SME Sales and Service Center has added new dimensions in catering SMEs with both
loan and deposit products i.e. a complete banking solutions.
3.5 Units of SMS Banking Division
Small Business
This largest business unit of SME Banking Division has long been providing loans to
Small entrepreneurs. This business wing offers varying products. SME entrepreneurs
mostly require small finance that this business unit has successfully been offering to all
level of SME borrowers.
Medium Business
This business unit meets the financing requirements of medium entrepreneurs. Special
products have been designed to serve the customers of this segment.
Product Development
This unit develops customized and need based products for small and medium
entrepreneurs. Product Development wing also develops campaign and takes initiative to
design merchandises, with the help of the creative and communication division.
SME Administration
This unit is comprised of several wings one of which is Compliance Reporting which
ensure compliance of internal policies & Bangladesh Bank regulations to the unit offices,
deals with client requests and queries. Another wing named Coordination maintains
liaison of SME Head office with SME unit offices & other departments. Legal guidance
and assistance is also extended to personnel at SME unit offices through this unit.
Monitoring unit reviews prevailing processes of SME Banking Division & ensures
meticulous business reporting for smooth operation.
TRADE PLUS: This product offers both funded & non funded loan facility to import
oriented Small & Medium Entrepreneurs and constantly supports them to smoothly
operate their import activities.
Business Equity Loan (BEL): Business Equity Loan is the loan facility for SME
entrepreneurs to meet their short or long term cash flow requirement or bridge the fund
flow gaps.
3.7 Organizational Layout of BRAC Bank SME Loan
Credit Division
Business Development Division
MIS Division
SME Loan process flow is shown belowWhen a client comes for a loan request, first he meets a CRO, then the following process
take
place:
5.3 Terms and Conditions of SME Loan
The SME department of BRAC Bank will provide small loans to potential borrower
under the following terms and condition:
The potential borrowers and enterprises have to fulfill the selection criteria
The loan amount is between Tk. 2 lacs to 30 lacs.
SME will impose loan processing fees for evaluation / processing a loan proposal
as following;
Loan Amount
2 lacs to 2.99 lacs
3 lacs to 5 lacs
Tk. 15,000
Loan can be repaid in two ways:
a)
b)
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 months, starting from the very next months
whatever the date of disbursement, through account payee cheque in favor of
BRAC Bank Limited A/C . 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 will install a signboard in a visible place of business of
manufacturing unit mentioned that financed by BRAC Bank Limited.
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.
5.4 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 buildup of an information base for future
reference.
The purpose of this loan is the economic development in our country, which might divert
the clients mind after having the loans for expansion. Many clients have ambition to
expand from trading to manufacturing business to generate more profit. When a CRO
would visit a business, the client must provide the proper and right information and show
the right documents for justifying a good client. If any CRO feel bad smell in the
business then the CRO reject that client without concerning the management. So clients
should be feel comfortable to provide proper information to have the loan. Regarding the
service by the CRO, getting these quick facilities from them satisfies almost all clients.
Though it is pioneer division of the bank, client should be fully satisfied by having this
facility.
The bank has incorporated double bottom line approach in its operation -
Economic development of a country largely depends on the small and medium seal
enterprises. Such as, if we analyze the development history of Japan, the development of
small & medium scale enterprises expedite the development of that country.
3.2.3 Employment Generation
The bank gearing employment opportunities by two ways: Firstly, by providing loan to
the small enterprises expanding, these businesses require more workers. Secondly, Small
& Medium Enterprise (SME) program requires educated and energetic people to provide
support to entrepreneurs.
3.2.4 Profit Making
SME program is a new dimensional banking system in the banking world. Most of the
CROs are providing door-to-door services to the entrepreneurs. Entrepreneurs are
satisfied by the service of the bank and make profit.
3.2.5 Encourage Manufacturing
The focus of BRAC Bank is to encourage manufacturing by the entrepreneurs who
produce by purchasing various types of materials. CRO try to educate them to produce
material if possible because if they can produce in line of purchase profits will be high.
3.2.6 Spread the Experience
Another reason of BRAC Bank is to spread the knowledge on the importance of SME
banking regarding various businesses. The customer services officer share their
knowledge from various businesses and tries to help the entrepreneurs who have shortage
of the gathered knowledge. CROs who are the driving force of SME division of BRAC
Bank also gather knowledge about various businesses and make stronger knowledge
base.
3.3 SME Products
BRAC Bank, being the youngest bank, took a step to break away from usual tradition and
tapped into the true suburb entrepreneurial initiatives.
Today, with over 10,000 cores of loans disbursed till date, BRAC Bank is countrys
largest SME financier that has made more than 265,000 dreams come true!
If you have a dream on which you trust, let us make it true together.
Loan products
Annono RinApurbo RinAroggo Rin
Deposit Products
Prapti Current Account
Digoon Rin
Prothoma Rin
Trade plus
Business Equity Loan
Proshaer Rin
Business Loan
Supplier Finance
3.3.1 Anonno Rin
This is a small scale loan designed to finance small scale trading, manufacturing and
service ventures, especially to aid the purchase of fixed assets and to finance working
capital.
Eligibility
Maximum Amount
Features
BRAC Bank offers APURBO. It caters to the need of entrepreneurs who are operating in
trading, manufacturing, service, agriculture, non-farm activities, agro- based industries
and other sectors of our economy.
Eligibility
Maximum Amount
A small & medium educational institute that is in operation for minimum 3 years
The institution should be sole proprietorship, partnership, private limited
company or society
The educational institute must be a profit making concern
Maximum Amount