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Assignment # 1

BRAC Bank Ltd.

Sources & Uses of Funds

Prepared for

Syeda Mahrufa Bashar

Assistant Professor
Institute of Business Administration
University of Dhaka

Prepared by

Group 4
Tanzim Tahmim Roll 16, MBA 55D
Faisal Amin Tusher Roll 26, MBA 55D
Md. Shahed Faisal Roll 27, MBA 55D
Syed Fuad Hussain Roll 34, MBA 55D
Muhammad Tanvirul Islam Jony Roll 39, MBA 55D

Institute of Business Administration

University of Dhaka

Date of Submission

February 23, 2017

BRAC Bank Limited (BBL) is a fully operational commercial bank that was founded in
July 2001 by BRAC NGO, one of the largest development finance institutions in the world.
The bank’s objectives include providing comprehensive commercial banking services and
building a profitable and modern, full-service financial institution and to achieve these
objectives BBL needs to collect adequate funds from different sources and use those funds

Sources of Funds

BRAC Bank Limited has mainly two main sources of funds:

1. Bank’s Own Fund

2. Borrowed Fund

Sources of Fund

Own Fund Borrowed Fund

Figure: Sources of Funds

1. Own Fund: Bank’s own funds are mainly of three types:

a. Paid-up Capital
b. Reserve Fund
c. Profit

a. Paid-up Capital: Paid-up capital is the amount of money a company has received
from shareholders in exchange for shares of stock. Paid-up capital is only created
when a company sells its shares on the primary market directly to investors.
b. Reserve Fund: Reserve fund is another internal source of fund maintained by
BRAC Bank. A certain portion of profit is transferred to the reserve fund at the time
of declaring dividend.
c. Profit: Profit is another source of fund. Profits signify the credit balance of the
profit and loss account which has not been distributed.

2. Borrowed Fund: Borrowed capital is a major and important source of fund for BRAC
Bank Limited. The largest source of funds for any commercial bank is deposit. BRAC
Bank has offered various deposit schemes to meet the demand of its clients. BBL is
now offering some depository products for mobilizing the savings of the general
a. Savings Account
b. Current Account
c. Fixed Deposit Account

a. Savings Account: It is a deposit account that provides principal security and a

modest interest rate. BRAC Bank offers various kinds of savings deposits like
Savings Classic, Triple Benefits Savings Account, Future Star Account, Aporajita
Account and Audommo Savings Account.
b. Current Account: It is a deposit account without a specified maturity date.
Current Classic, Current Plus Account, Ezee Account, Campus Account and Salary
Account are the current deposits offered by BBL.
c. Fixed Deposit: It is a deposit that cannot be withdrawn for a certain period of time.
DPS, Fixed Deposit General, Flexi DPS, Interest First Fixed Deposit, Abiram Fixed
Deposit and Unit Fixed Deposit are offered by BRAC Bank Limited.

Probashi Banking

Probashi Banking division of the Bank caters the non-resident Bangladeshi not only by
disbursing remittance but also offering 'One Stop Banking Solution' by creating a favorable
environment and opportunity for the NRBs to make long-term financial contributions in the
socio-economic progress of the nation.
Uses of Funds

Funds are mainly used in lending activities. A small portion of it is used in investment and
other activities.

Lending Activity: It is the most profitable use of the bank’s funds. Loans are given to
individuals, brokers, industries, house building companies etc. Different types of loans are
offered to attract various kinds of entities.

SME Loan

Today, with over 220,139 million of loans disbursed, BRAC Bank is country’s largest SME
financier. For SME loan operation, BRAC Bank Ltd. has in total 900 unit offices, 80 zonal
offices, 12 territories and 1800 Customer Relationship Officers. These CROs work for the
Bank to converge clients for getting the SME loan. Some of the SME loan products of BBL

 Anonno Rin
 Apurbo Rin
 Prothoma Rin
 Shomriddhi Rin
 Shompod Rin
 Durjoy
 Shokti Rin

Corporate Banking

Corporate division of BRAC Bank Limited offers mainly two types of services – a. Funded
Services and b. Non-funded Services. BRAC Bank offers following funded services to
different corporations and institutions:

 Overdraft
 Short Term Loan
 Lease Finance
 Loan Against Trust Receipt (LATR)
 Work Order Finance
 Emerging Business
 Syndication
 Term Loan
 Project Finance
 Bill Purchase

Retail Banking

BRAC Bank is offering the following loan and advance product to the client for financing
different purpose that fulfill the requirements of the bank and have good return to the
investment as well as satisfy the clients. The loan and advance products are:

Figure: Retail Loan Products

Other Activities

BRAC Bank also uses its funds in activities besides giving loans to the clients. It has to invest
a certain portion of its fund to govt. approved securities and it earns interest from those
securities. It has to keep some portion of its fund as reserve. It also lends its funds to other
financial institutions as call money. Sometimes it needs to use its funds to purchase fixed
assets including lands, buildings, equipment cars etc.
Learning outcomes of the assignment:

1. We have learned about the various sources and uses of funds of a local commercial
2. We have seen how a bank gathers its capital from its own and borrowed funds.
3. We have also come to know about different types of lending activities of a bank in
SME, corporate and retail banking which are the main sources of its revenue.