Report on BRAC Bank[1]

BRAC Bank – ‘Astha Obichol’ ________________________________________________________________________

1. BRAC Bank at a Glance1.1 The Evolution of BRAC Bank Ltd.: BRAC Bank Limited started its journey on the 4th of July 2001 originating from its source

BRAC – Bangladesh Rural Advancement Committee. BRAC is known as the one of the most

successful NGO in the world. Mainly, BRAC Bank originated due to successful story of BRAC

microfinance. The Chairman, Mr. Fazle Hasan Abed believed that until modern, competitive

financial services are readily available – including credit in amounts, terms and conditions that

small can access, Bangladesh will not be able to create the large middle class that is a

prerequisite to social stability. So, the BRAC Bank Limited came into existence due to the need

of mass financing, which wouldn’t have been possible with BRAC microfinance itself.

Today BRAC Bank is considered as third generation bank extending full range of banking

facilities by providing efficient, friendly and modern fully automated on-line service on a

profitable basis. 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.

1.2 Activities of BRAC: BRAC has other core activities like school education, health care, micro finance, Aarong

handicrafts, university education, BRAC Dairy and Food Products, BRAC Vegetables etc and

now with the help of the BRAC Bank financing all types of enterprises and personal loans also

extensively focusing on SME.

1.3 Shareholders of BRAC Bank Ltd.: BRAC Bank has number of investors or shareholders. They are as follows:

BRAC itself holds almost 63% share of the total stake.

International Finance Corporation (IFC) – the private sector arm of the World Bank

Group. IFC holds 19% share of BRAC Bank Ltd.

ShoreCap International Ltd. Holds almost 18% share of the BRAC Bank Ltd.

Other small investors comprise only 0.01% of the shareholding.

1.4 Model Followed by BRAC Bank Ltd.:Like ABN Ambro BRAC Bank has a centralized banking structure with online facility.

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1.5 Branches & Network of BRAC Bank Ltd.:The expansion of BRAC Bank is growing very fast. Now, in total there are 13 operating

branches and more branches will open up in the coming year. To provide a strong network across

the country BRAC Bank has 260 unit offices for SME purpose. Market Research Executive

(MRE) a new position has been created to capture the stronger market share who will work

closely with the Direct Sales Executive. BRAC Bank will open up three Sales Booths in the

major area of the city and Kiosk in the shopping malls which will cater the needs of the

customers where branches are not in close areas. These will serve in terms of opening and

closing accounts and selling products. In addition, at the initial stage BRAC Bank will also set up

three ATM machines in three main areas of the city very shortly and more ATM machines to be

set up by the mid of next year.

1.6 The Vision of BRAC Bank:The vision of BRAC Bank Ltd. is -Building 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”.

The BRAC Bank’s vision is thus aligned with those of BRAC.

1.7 The Brand Promise of BRAC Bank Ltd.:The brand promise of BRAC Bank Ltd. is – Astha Obichol. It is a Bengali word that denotes

trust on BRAC Bank remains the same no matter what in terms of quality service.

1.8 Division of BRAC Bank

BRAC Bank Limited consists of four major business divisions namely Corporate Banking Division, Retail Banking Division, Small and Medium Enterprise (SME) and Treasury. There are also other sections or divisions and they are – Sales, TRS & SRS, Marketing and Product Development, Channel Infrastructure Development, General Service Department, Loan Administration, Trade Finance, IT and so on. SME is the largest department in the bank.

1.9 The Management of BRAC Bank Ltd.:

Mohammad Ehsanul HaqueManaging Director

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Imran RahmanDeputy Managing Director

Kaiser Tamiz AminEVP & Chief Operations Officer

Shawkat HossainVP & Head of SME

Mohd. Rafat UllahKhan SAVP & Head of Credit

1.10 Board of Directors

Mr. Fazle Hasan Abed Chairman

Mr. Syed Humayun Kabir

Mr. Faruq A. Choudhury

Dr. Salehuddin Ahmed

Mr. Md. Aminul Alam

2. Findings:Findings in this report represent the training experiences, BRAC Bank’s mode of operation, the

strengths and weaknesses if any.

2.1 Objective of the Study:The main objective of the study is to share our views and experiences gained from orientation

training.

The general objectives of the study are as follows:

To learn and gain knowledge about different departments and their functions.

To learn how BRAC Bank operates and does business.

The other objectives are as follows:

To know how different departments and its personnel uphold the vision, mission and values

of BRAC Bank Ltd. and perform their day to day operation.

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To find out the way BRAC Bank Ltd. is different from other banks.

Orientation to the working environment

2.2 Scope:This report attempts to disclose the experiences gained from training. In addition, the report

states about our views and the way we look at BRAC Bank Ltd.

2.3 Limitations:Extensive workload at the work place poised as the most important barrier. Another important

limitation was the shortage of time to finish this report.

2.4 Various Findings:In this section of the report few arenas have been focused such as how BRAC Bank is different,

culture of the bank and so on.

2.4.1 How BRAC Bank is Different from Other Banks:BRAC Bank Ltd. is very different from other banks since its inception. The arenas that

BRAC Bank is different are as follows:

SME is the sector where BRAC Bank is the first bank to explore this large potential

market and started lending in large scale.

BRAC Bank is the first bank to introduce non stop banking transaction continuing till

8pm (evening banking).

BRAC Bank is also the first bank to provide 100% online banking facilities since its

inception.

Segregation of duty. This has helped the bank much in terms of monitoring and providing

quality service.

Lots of innovative retail products that has touched new sectors and found the market

potential – like teacher’s loan, InstaCash, High Flyer’s Loan etc.

The branches of BRAC Bank does retail business but provide all types of services.

2.4.2 The Culture of BRAC Bank Ltd.: Every organization has a culture of its own that describes the working environment, way the

bank operates, and so on. The culture of BRAC Bank is friendly and open where learning

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process, new ideas, team work are strongly believed and encouraged at the highest state. Its

about team work, it’s about achievement, it’s not only duties - “It’s more than a job”.

2.4.3 The Three Best Departments:From orientation training experiences three best departments has been identified. They are SME,

Internal Control & Compliance and Treasury. These departments have been identified best

because of the functions and nature of work or doing business. Like SME’s nature of doing

business and its operation is quite interesting and at the same time challenging. On the other

hand Internal Control & Compliance taught not only to prevent fraud and forgery but also to

safeguard our duties following the three P’s – Policy, Process & People. Finally, the risky

dealings of the treasury, the way funds are maintained and managed made its departments quite

challenging and interesting.

2.4.4 The Four Best Trainers:Identifying three best trainers was not very easy and four best trainers identified are as follows:

SME – Mr. Md. Shabu Munshi (Principal Officer).

Treasury Front Office – Mr. Pasha (In charge of Treasury Front Office)

Internal Control & Compliance – Mr. Amzad Hossain (Head of ICC) & Mr. B.B.

Chowdhury (Manager, Internal Control & Compliance).

2.5 Departmental FindingsIn this section of the report departmental training and findings have been discussed. This

discussion includes departmental functions and the goals of both department and organizations.

2.5.1 Information Technology Department:Information Technology department plays a very vital role in this bank as all its operation are

100% automated since its inception. The findings and learning from this department has been

discussed as under.

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Servers & Links: All the services of BRAC Bank Ltd. are running on IBM midrange

Servers. The servers are installed branch wise and there is one main server in the IT department

where all the braches has to log in through. Within Dhaka all the links are Radio link through

which branches connect. Outside Dhaka branches use fiber optic to connect.

Software: The banking software is called Millennium Banking System (MBS) provided by

South Tech Limited. To work in MBS staffs or employees are provided user name and ID branch

wise. The bank cheques are all marked with barcodes that makes each cheque unique and

disallows it to be duplicated preventing from forgery. The system helps signature and photograph

of the customer to be verified from any branch in Bangladesh. This software is used by all the

departments of the bank to perform day to day operations.

Security: To support fully online System with 100% Security BRAC Bank has its own

country wide Private Network System. To provide up most level of security the bank’s system is

using PIX Firewalls with 168 Bit Encryption.

Network: All networking Devices are from CISCO. In addition, BRAC Bank is powered by

windows2k, Linux, SUN Solaris.

Disaster Recovery Plan: Disaster Recovery Plan is very vital for any organization

specially one that is automated. As stated BRAC Bank IT department has Disaster Recovery

Plan and it has not yet been implemented but it keeps back up of all the servers.

Internet Banking & Internal Communication: To meet the interest of the

customers BRAC Bank Ltd. will soon start internet banking and this will help the customers to

check the balances of their account. The staffs or employees of the bank communicate through

Lotus Mail System internally.

Website: The website of BRAC Bank is informative and it provides information about the

bank and its products. It also informs about the coming up new products and current hot news of

the bank.

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ATM: BRAC Bank soon (end of Feb. 2005) will set up ATM machines for the convenience of

the customers. Initially, there will be three ATM machines in three prime locations namely –

Dhanmondi, Gulshan and Banani. The ATM machines (hardware) are made up GRG China and

the ATM software was made up TPS Pakistan.

2.5.2 Marketing & Product Development Department:Effective marketing strategies & campaign can help an organization to reach its goal. For a bank

both its product (designed to cater the needs of the customers) and services (exceptional

customer services) are equally important. BRAC Bank mainly does two types of marketing – one

is product and other one is service. In a bank products are its – loans, types of accounts that have

been designed in a manner to cater the needs of the customers. Services mean superior customer

service giving the customers a feeling of satisfaction that makes the customers loyal and have

trust on the bank. Today, BRAC Bank is at its position through effective campaign and

promoting its products and services.

Marketing Channels: BRAC Bank Ltd. believes promoting its bank and its products &

services at the highest possible level. It does almost everything starting from newspaper

advertisement to mass mailing to promotes its product and make it successful. Decorating the

branches and offices is also one of the effective channels and a way to reflect its brand image.

Products and its Development Stages: At present BRAC Bank has 10 products

and they have been promoted in a number of ways ending with quality customer service. Every

product that has been launched came through different stages of product development. The

stages have been described below in short:

↓

↓

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Identifying the needs of the customers

Research the market to find out how big is the market for the new product

Shaping the ideas with organizational goals and marketing strategies


↓

↓

↓

Activities: The activities of marketing department are as follows:

New product ideas and product development.

Promotional activities.

Designing banners, signs and so on

Designing, developing and distributing communication materials.

Branch decoration from marketing point of view.

Participating in the social campaign.

LOGO: 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 means the “sonar

bangle”, rising line means the rising BRAC Bank, and blue is the beautiful sky where sun is

shining brightly.

2.5.3 Central processing Center (CPC) Department:CPC process some operation centrally. Main areas of CPC are:

a) Clearing

b) Cheque book printing

c) Corporate Salary

d) A/C Opening

e) Sanchaypatray Issue ( only for clients)

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Designing the product

Product launch with effective marketing campaigns to reach the

target market

Selling the products and getting response


Clearing: The cheque clearing process is managed by Bangladesh Bank and Sonali Bank

(where Sonali Bank acts on behalf of Bangladesh Bank), through clearing houses responsible for

the various districts.

The 66 clearing Houses in the country clear only cheques that are drawn on banks / bank

branches that are the menders to specific Clearing Houses (generally bank branches within

municipal area of the town/city).

The Dhaka Clearing House holds two sessions of clearing on each working day. The first session

(popularly known as “FIRST HOUSE”), held around 10a.m., is for handling over cheques drawn

on other banks and receiving cheques drawn on us. (clearing). The second session (popularly

known as “RETURN HOUSE”), held around 4 p.m., is for exchanging return cheques

(Settlement).

On the basis of the clearing process described above, cheques deposited by customer on a given

day (Day 0) would be presented at clearing house on the next working day (Day 1). The clearing

account of the branch is credited / charged for the net value of outward / inward cheques, value

the date of presentation at the clearing house. Similarly, the return house results in a net credit /

debit to the clearing account of the branch, value the date of clearing.

Same-day Clearing: is almost same to the normal clearing procedure except that it deals

with the cheques amount of Taka five Lac and above. And also within the bank branches around

the Motijheel area. Customer may use the fund on the same-day.

CPC receive the cheques from different branches by courier. CPC capture data in the Bangladesh

Bank Clearing package “NIKASH” and process cheques in the following manner:

a) Consider each deposit as a branch with the deposit slip total as the batch total

b) Input cheque level detail-

Drawee Bank-Branch

Cheque Number

Cheque Date

Cheque Type

Cheque Amount

Drawer’s A/C No.

Deposit A/C No.

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c) Affix clearing stamps, endorsement stamps etc., as appropriate and have

endorsements signed.

d) Print drawee bank-branch wise schedules from NIKASH.

e) Attach cheques to appropriate printout.

The next day a person designated by CPC take all the cheques and a soft copy of the NIKASH

data and go to Bangladesh bank Clearing House. In the return procedure, process the return

cheques in the NIKASH System. The person designated by CPC takes the cheques and soft copy

of NIKASH RETURN data and go to the Bangladesh Bank Clearing House.

Inward Clearing: All incoming cheques will be processed and entries on the same-day

before the second clearing session (Return House) the BRAC Bank MBS system. Cheques drawn

on ourselves will be accepted by the clearing representative, at the first house. On arrival at the

branch, the CPC department honors or returns the cheques after checking. With the return

cheques, related schedules and a soft copy of the return data in NIKASH to the second house of

Bangladesh Bank.

Cheque Book Printing: CPC also take Printing of Cheques for the new accounts and

also for the new requisition of the old accounts. For the old accounts the Branch issue the cheque

book and then CPC take the printout of the cheques.

Account Opening: CPC Put the data of new account open in the MBS system and also

check the relevant document. Branch Open the account with the account no., then the entire

document sent to CPC.

Sanchaypatra Issue (only for our clients): CPC also issue Sanchaypatra for the BRAC bank’s

Customer.

2.5.4 Remittance Department:Remittance means flow of funds. It would be within a country or outside of the country. This is

one of the profitable departments of BRAC Bank.

Instrument used for Remittance:a) Demand Draft (DD)

b) Pay Order

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c) Telegraphic Transfer

d) Cheques

e) SWIFT

f) Telex

Type of Remittance:1) Inward Remittance

2) Outward Remittance

SRS is one of the Products of remittance. SRS means Secured Remittance Services. The

procedure of the product is:

Foreign Exchange Company provides sufficient cover fund to their accounts with BRAC

Bank.

Sender comes to Exchange Company to remit money.

Exchange Company sends tested payment details instructions to BRAC Bank Head office

through e-mail / fax.

BRAC Bank’s remittance Department decodes the test number to check authenticity of

the message.

Issue and dispatch pay order to the beneficiary’s bank or send payment instruction to

BRAC field office nearest to the beneficiary for making payment.

BRAC field office issue and dispatch account payee cheque to the beneficiary’s bank or

make the beneficiary in cash.

Remittance department processes the SRS system manually. If they process the system

automatically, then it helps us to avoid the error of beneficiary’s details. It will be same as the

Exchange Company sent us. The automation also helps for quires.

Remittance department issue Foreign Draft for Outward Remittance. Open Student file for

Bangladeshi Student reading abroad by taking some fees and VAT from customer processing

inward remittance for NGOs and other Organization.

2.5.5 Credit Department:

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Lending money is one of the main functions of a commercial bank. In the lending process,

selection of borrower is the most crucial and vital job for a banker. Before a customer enjoys

credit facilities it is important that the applicant should qualify five Cs.

The five Cs are: Character – Intention to pay back the loan.

Capacity – Borrower’s competence in terms of utilizing the fund profitably and

generate income.

Capital – financial strength to cover the risk.

Conditions – general business condition between two parties.

Collateral – implies additional securities.

Objectives of the credit department are as follows: Managing credit exposure of the bank.

Managing credit risk.

Compliance of BRAC Bank Ltd.

Compliance of Central Bank Ltd.

Recovering or collecting dues of retail loans or advances

Present Structure of Credit Division:

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Managing Director


Source of Borrower Study: Loan application.

Financial statement

Study of account.

Market reputation.

Bangladesh Bank.

Different banks.

Personal interview.

Personal visit.

Net worth position.

Other source: Registration Office, Press report, Registered Joint Stock Company (RJSC)

and so on.

At present credit division performs following activities:

Credit Approval Process:

Corporate Credit

Retail Credit

Collection and Monitoring Activity:

Recovery

Risk management

2.5.6 Loan Administration Department:Loan Admin. serves as the bank’s last line of defense. This department does the following job:

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Head of Credit

Credit Analyst Legal Officer In Charge –Recovery & Risk Management

Support Officer & Executive Recovery

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To mitigate all loan portfolio risks before disbursing the loan.

To ensure effective control and monitoring of securities and documentation process.

Activities: Loan admin. department work in terms of the Credit Risk Management guidelines

of Bangladesh Banks distinguished under the following two broad categories.

Disbursement and Monitoring: Obtain client’s clean CIB report.

Check and obtain all securities and documents as per sanction terms.

Legal correspondences are done by bank’s panel lawyers.

Pass voucher entries in MBS for loan disbursement and recoveries.

Adequate loan loss provisioning.

Monitoring of due loans, limit, expiry and deficiency.

Custodian & Compliances: Safe keeping of all securities and documents in locked archive

Obtain periodic stock reports and insurances (renewal copy where applicable).

Timely prepare and submit all MIS and Bangladesh Bank returns.

Assist auditors (external/internal) and ensure compliance audit queries in a timely

manner.

Loan Cycle

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Other activities: Create charges with RJSC and mortgage at sub – registrar’s office.

Obtain certified copy of registered mortgage from sub – registrar’s office.

Prepare and circulate division wise irregularity reports.

Initiate and implement cost time effective process re-engineering.

Provide orientation and training to fresher SME staffs.

Redesign and simplify Oshadaron loan process.

Issue pay orders and FDRs from Loan Admin.

Retail loan security review and monitoring.

2.5.7 Treasury Department:

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Business Division (Recommendation)

Client (loan application)

Loan Administration(checking, disbursement & custodian of security)

Credit Division

(Approval)

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Treasury is responsible for organization, sales, structuring and trading activities across a wide

range Capital markets, Foreign market and Money market products. It aims to provide its clients

with sophisticated and innovative financial solution to theirs business requirement, delivering the

highest quality products and services. Treasury based operation improves the quality and

stability of earnings, thereby enhancing the competitive position of the bank and facilitating its

long term survival.

Definition: Treasury is a place where all funds are kept and disbursed i.e. matches the inflow

and outflow of sources and applications of available funds in a way that maximizes the return

and minimizes the risk level.

Objective of Treasury: There is some pre determined and specific objectives are

prevailing in every banking system. These objectives are:

Managing mandatory liquidity (i.e. 16% SLR including 4% as CRR) and foreign

exchange exposure of the bank.

Maximizing return from fund management with minimizing risk.

Minimizing the cost.

Matching between Asset & Liability (Interest & Maturity)

Providing services to satisfy the customer’s need.

Generating profit from intermediary functions.

Treasury Products: Treasury is the lifestyle to various products and services offered by bank to

its customers. Common products under treasury’s function as follows:

Spot foreign exchange

Forward foreign exchange

Currency swap

Forward rate agreement

Overnight deposit

Term deposit

Coupon securities

Discounted securities

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Functions of Treasury: Treasury plays a vital role in the survival and success of a bank.

The following is the common functions of treasuries:

Statutory management, Limits monitoring and management.

Adherence to various internal as well as regulatory policies.

Minimizations of risk and Optimization of risk return through specialization.

Monitoring & management of various foreign exchange and money market positions.

Monitoring & management of various cash flows and cash positions.

Funding of the Balance sheet at optimum prices and propose interest rate matrix to the

management committee.

Propose various investment options to the management committee and analyze various

economic trends and propose Balance Sheet Strategy to the management committee.

Quotation of various foreign exchange rates to customers and Deal in foreign exchange

for position covering as well as for own account trading.

Various funding activities through currency swap and Close liaises with regulators.

Provide structured treasury solutions to customers and remain vigilant for any arbitrage

opportunities

Marketing activities for the future business growth and Proposal/renewals for various

internal limits

Estimate daily P& L and work with reporting unit in resolving any difference.

Record/maintain all foreign exchange and money market position and check for

differences with system generated/back office reports

Producing daily MIS report for Management of the Bank, Preparation and submission of

Bangladesh Bank returns.

Preparation of various other statistical data and ratios.

Functions of Front Office: Front office usually performs their work in two different

markets. They are given below:

Money Market: The money market is a network of financial institution, linked by a

telecommunication network, which exist for the purpose of facilitating the lending and

borrowing of short-term money. Short term implies that the tenor of money market transaction

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do not stretch beyond a year. Money market transaction covers overnight deals to deals that

mature in twelve month’s time. Main functions of Money Market are given below:

Maintenance of statutory Reserve i.e. 16% of total in deposit in the form of SLR & CRR

Meeting Branch/Division fund requirement.

Call Loan taking & placing.

Term taking & placing.

Market Analysis & information gathering.

Foreign Exchange Market: It is the organization framework within which individuals

firms and banks buy and sell foreign currencies or exchange one currency for another. Functions

of Foreign Exchange Market are given below:

Circulation of exchange rate & interest rate on FX deposit.

Maintenance of daily exchange position within the limit.

NOSTRO funding/ Bangladesh Bank FC Account.

Forward Quote.

Functions of Treasury Back Office: There are many functions Treasury Back Office

performed for the bank, but the key functions in BRAC Bank are given below:

Mid Office Monitoring: Regulatory Limits:

50% holding of FC balance with Bangladesh Bank against Bank’s total FC assets

4% CRR maintenance.

12% SLR maintenance.

Overnight FC open position maintenance

Daily Nostro reconciliation.

Credit Limits: Counter party Credit Limits- Forward & settlement.

Monitoring of total stop loss limit through VAR( Value At Risk)

Monitoring of IRR (Interest Rate Risk) and liquidity gaps through EAR.

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Nostro Fund Movement:Back Office- Processing: There are some functions happened in Back Office in two different

markets, these functions are described below:

Money Market Deals: Call Money deals with Banks/NBFI

Term deals with Banks/NBFI

Investment in Private Securities- Bonds, Shares and Debentures

Bangladesh Bank Re-Financing Fund.

Repo & Reverse Repo (Repurchase order)

Forex Market Deals: Inter-Bank Forex deals.

In addition to Back Office also provide other MIS report, these are –

Regulatory Reporting

Calculation of Transfer Pricing.

Correspondences Banking:There is also a vital function operated by BRAC Bank Back Office and it is known as

Correspondences Banking. Some of its major features are given below:

Monitoring of Funds

Transfer of Funds

Collection of Funds

Preparation of Cheques and TT

Accounting entries

Customer query handle.

2.5.8 Corporate Banking DivisionBRAC Bank Limited a scheduled commercial Bank commenced its business operation in Dhaka,

Bangladesh on July 4 2001.The Bank is mainly owned by the largest NGO in Bangladesh-

BRAC. The Bank has itself as a new generation Bank with a focus to meet diverse financial

needs of a growing and developing economy.

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The Bank has embarked with an avowed policy to promote broad based participant in the

Bangladesh 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 business in Bangladesh with a special focus on currently

underserved enterprises and households across the rural-urban spectum. We believe that

increasing the ability of underserved individuals and enterprises to build their asset base and

access market opportunities will increase the economic well being for all Bangladeshis.

BRAC Bank has a centralized banking structure through on line banking system that resembles

the ABN AMRO model. It consists of four major divisions namely Small and Medium

Enterprises (SME) division, Retail Banking, Corporate Banking and Treasury division.

We received an extensive orientation session on 4th December 2004 delivered by Mr. Shariar

Head of Corporate Banking and shared a lot of discussion with him. Now we are going discus

about some main features of Head of Corporate Banking that are given below.

Why Corporate Banking: BRAC Bank’s corporate Banking team exists to provide both

banking services and a financial partnership with local and medium corporate, trading houses

and venture. As the financial partner of choice for the corporate sector, BRAC Bank is disguised

by our:

Quality of service

Value of innovative solutions

Level of trust with our clients

Customers knowledge

Though the team our clients have access to a wide range of financial services including:

Debt capital

Equity capital

Ongoing relation support

Financial markets

Objectives: To provide wide range of financial services professionally, efficiently and competitive to

achieve pre-eminent position in chosen market.

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Diversify revenue stream through product innovation.

A well-diversified credit portfolio, which produces a reliable and consistent return to

investment.

Values: Services to our customers

Quality in everything we do

Competitiveness and a will to win.

Growth and development of our people

Continuous productivity improvement.

Professionalism and ethics in all our actions.

Growing profit for our stakeholders.

Business Concentration (Area Wise): In line with our corporate strategy initially

we will concentrate our business focus to the following locations:

DHAKA CHITTAGONGMotijheel Agrabad Nawabpur and old parts of Dhaka City KhatungonjGulshanDhanmondiUttaraKarwan Bazar

Target Market: Pharmaceuticals, Toiletries, Chemicals and Pesticides

Power Generation, oil exploration, Industrial and household gases (Liquid, Petroleum

Gases etc.)

Edible oil, Bulk Trading –Essential Commodities, Industrial Raw Materials,

Agricultural Inputs, Cement.

Garments, Textiles and related backward linkages industries including spinning,

Knitting, Yarn, Garment accessories etc.

Food Processing and Beverage Industries.

Cable and Cable wire, Information Technology.

Leasing Companies/Non Banking Financial Institutions.

Health service Industry, Non Governmental Organizations.

Importers/dealers of machinery, Industrial, Electrical equipment

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Education Institutions, Bone china, Ceramics, Melamine, plastic products.

Manufacturing and Trading of Consumer Durables, Telecommunication, and

Contractor Finance.

Ship Breaking, Re-rolling Corrugated Iron (CI) Sheet Mfg and related business.

Air Lines, Shipping Lines, Freight Forwarders, Testing Inspection agencies, Footwear

and Leather.

Tobacco products and Tea.

Target Customers Group: Leading Domestic Corporate and Trading Houses.

Local medium and large corporate.

MNCs’

NGOs’

Educational Institutions.

Product/Service Objectives: The Corporate Banking Group would try to serve the financial

market of the country with the following objectives

To develop and sustain mutually beneficial customer relationships based on high

quality service and innovative products.

Maintaining a diverse and quality asset base & pursue a sustainable growth strategy.

To pursue a management style that contributes to the well-being and development of

a fully responsible and accountable workforce under a high corporate standard and

business ethics.

To provide and deliver services in a cost effective manner.

Products/Services: BRAC Bank provides a comprehensive range of innovative corporate

financial solutions tailored to suit each company’s needs. At the center of client’s relationship

with BRAC Bank is an experienced and professional Management team with extensive industry

knowledge. The Relationship Management team works closely with the client to understand and

solve the financial requirements of the company. Our knowledge is about effects on the

industries and the business cycles and insight into market activity within this sector. Following

are some of the products that we offer our corporate clients:

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Loano Short Term Loans

o Mid Term Loans

o Long Term Loans

Letter of Credit

Lease Financing

Guarantee

LTR

LBP

Overdraft

Security: For security against the various facilities we usually take cross-corporate guarantee

and personal guarantee of the Directors of the private companies. In case, if sufficient collateral

is not available, we create floating charge on present and future assets of the company with

Registrar of Joint Stock Companies, equitable/registered mortgage etc.

Corporate Banking Structure: The Corporate Banking Division has a centralized

structure through on line banking system. Any credit facility is processed at the Corporate

Banking Division, Head Office. After sanctioning of the facility, the limit is put on line and the

customer can enjoy the facility from any of the BRAC Bank branches.

Strict adherence to internal control guidelines and other legal and statutory compliance are

followed. The credit approval process involves separate Credit Division, the Managing Director

and finally the Board.

Other departments such as Foreign Trade, Treasury, Credit Administration etc. plays the support

role for a comprehensive range of service to the corporate Banking Division.

2.5.9 Retail Banking Division

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Retail Banking is known as general banking where the individual customers get services from

the local branches of the larger commercial banks. In BRAC Bank Retail section has been

divided into two parts – Distribution and Sales. Distribution – Serve the acquired customers

while Sales – business acquisition. They both are interdependent and work closely with each

other. Retail offers different types of competitive banking products to the customers. The retail

division of the BRAC Bank also offers some special types of deposits and loan scheme for the

customer attention. The present structure of the bank is as follows:

No of deposits Volume of deposits No. of loans Volume of loans42143 450 4374 110

Retail Deposit Products: Deposits

Current Account

Saving Account (Maximize and Normal Saving Account)

Deposit Premium Scheme (DPS)

Short Term Deposit (STD)

Normal FDR

Abiram (A hybrid of Fixed Deposit with pays internal on a monthly interval)

Retail Loan Products Life Style Loan

Unsecured Personal Loan

Secured Over Draft

Teachers Loan

High Flyer Loan

Premium Term Deposit (PTD)

InstaCash

Shahaj Loan (For Bank Staff only)

Ashadharon (For Bank Staff only)

_____________________________________________________________________ 24


Maximizer Saving Account: Maximizer is the special type of saving account which

offers an opportunity to receive the highest rate of interest plus other added benefits on ordinary

saving account. Here, interest is paid on a daily balance method and is given for each day far

whatever balance is maintained in the account on that day.

Other Benefits of A/C holders: Customers are eligible to apply for the personal loan packages and can also open other

additional accounts such as fixed deposits with this bank.

They will receive adequate services in the time of processing loan applications.

Customers will receive discounts on remittance commissions.

Lockers: Among all the special services Locker service one of them which can be maintained

by an individual / by two or more persons jointly / partnership firms / limited company / societies

etc. for keeping their valuable and confidential documents to protect from fire and thefts. A

customer can hire a locker by opening an account on specific firm and untested stamped

agreement of specific value.

Life Style Loan: This loan is foe the purpose of customers to buy durable items such as

electronic device, furniture, music system, transport, machines and other household items.

Unsecured Personal Loan: This is a special kind of package designed for the salaried

employees and is disbursed without any security.

Secured Over Draft: This loan allows the customers to avail cash at minimal interest rates. The

given security is being kept untouched in the bank’s custody and there is an easy installment

option.

Teachers Loan: This product is one of its kinds and is specially designed to the teachers of

different educational institutions of Bangladesh (Schools, Colleges, and Universities). BRAC

Bank is the first bank that introduced this type of loan in Bangladesh. For this reasons this

product is very popular to the teachers.

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High Flyer Loan: High Flyer Loan is a loan facility for the individual salaried staffs of

reputable airlines, airline General Sale Agents (GSA) and travel agencies. It is also an unsecured

personal loan and is different for its characteristics.

Premium Term Deposit (PTD): It is a monthly savings scheme for a period of years

with the initial investment of 20% on the total amount interested to invest. When the rate of the

interest is going down everyday you can earn the fixed higher rate against your small deposits.

InstaCash: It is a revolving overdraft facility to individuals who have credit cards with any

local bank with sound track record. It is a clean and unsecured overdraft facility. This is the hot

cake of BRAC Bank and has made a different market in the retail division.

Sahaj Loan and Ashadharon: These two loans are designed to the bank staffs with minimum interest rate whose duration of service time is minimum 2 years.

2.5.10 Sales Department: Sale Department is another division of Retail. Sales Department manly promotes the products

and boost up the sales of the bank in terms of bringing in deposits and selling different loan

products. The Sales Department is mainly run by different positions within the Sales Team. They

are:

_____________________________________________________________________

Head of Sales

Sales Manager

Sales Team Leader

Direct Sales Executive Market Research Executive

26


Market Research Executive (MRE) a new position has been created to capture the stronger

market share who will work closely with the Direct Sales Executive and report to them on day to

day work. MRE will be monitored by both DSE and Sales Team Leader BRAC Bank will open

up three Sales Booths in the major area of the city and Kiosk in the shopping malls which will

cater the needs of the customers where branches are not in close areas and this will be looked

after the Sales Department. These will serve in terms of opening and closing accounts and selling

products.

Bank’s Sale: Bank’s sale is different to other because bank does not sell goods. They sell

financial services. Bank is a business deals in money and credit with people, customers. Bank

collects deposit from their customer by selling their different type of liability product. At the

same time sell lending product with different names, criteria to serve the different group.

Sales Division of BRAC Bank: BRAC Bank has two types of Sales. One is Branch

Sale and the other is Direct Sales. When people come to the branch and open an account it goes

in branch sale portion. Branch also sale their service after opening the account like cash

deposit/withdrawal, pay order issue, statement request etc. In that sense branch salesl has two

parts-

Product Sale

Service Sale

Direct Sales: Direct Sales is defined as non-branch sales and business development where

products are sold directly to the customer (i.e. at there home or office).

Direct sales first identifies the benefits of establishing a direct sales unit. Direct Sales unit have

been successfully used in financial services to provide additional distribution capacity, leverage

branch network and build customer base quickly. These sales units have traditionally been asset

or liability focused through it is possible to have the sales people selling the mixture of asset,

liability, and investment products. The responsibilities of Direct Sales unit vary from operation

to operation but are generally tasked with the responsibility of meeting the customer at their

office or home. They advice the customer of the relevant features and benefit of our product

range, help them to select the right product and assist with the completion of the application

forms and collect the appropriate supporting documents. Once the sales have been completed the

relationship is generally transferred to another unit within the bank, to process the applications

_____________________________________________________________________ 27


and provide ongoing banking support for the day to day running of the account. The Direct Sales

representative should not be burdened with a heavy administrative workload that would inhibit

their selling time.

2.5.11 Channel Infrastructure Department (CID):In BRAC Bank one of the important departments is CID. On 8/12/04 we introduced with Mr.

Tarique Aziz, SPO & Manager of CID. The main task of CID is site feasibility studies. The

location of BRAC Bank’s branch will have very important implication in future, as it can directly

affect profitability, convenience for employees and customers, as well as influence the general

performance of the branch. CID proceeds to find out which areas in the city can be short-listed,

and when that is done, the ideas are presented to Management Committee that will conduct a

detailed discussion & analysis. The core responsibilities of CID are as follows.

Development Channel Infrastructure or point of Sales (POS).

Carrying-out extensive research before a new branch location/area is selected.

Opening of new branches, Kiosks, ATM machines etc.

2.5.12 General Service Department (GSD) On 8/12/2004 Mr. Waleed Morshed FAVP & Head of IT & GSD oriented with GSD. This

Department actually provides dedicated service to al employees & of the BRAC Bank. Every

Department of bank depends on General Service Department for every kind of service. These

may include stationers, providing maintenance and transport facilities arranging securities etc.

Some of the major responsibilities performed by the GSD are the following:

Administer the cost.

Full-fill the requirement

Maintaining the quality of service

Ensure the security

Procurement

Logistics.

2.5.13 Human Resource Department (HRD):This department is very essential & important department for every organization. This is the

place where the employees get the opportunity to get trained and all other human resource

related services are dealt. This department is not directly involved with Bank business but

_____________________________________________________________________ 28


working with those persons who directly & indirectly involved with Bank business. The major

responsibility of HRD is employee’s recruitment, posting, transfer, increment, Bonus, provident

fund, confirmation, training, hire & fire and so on. Welfare of all departmental employees is on

HRD. Therefore, HRD should be judicious, compassionate and rewarding to all employees.

2.5.14 Small & Medium Enterprise Department (SME)The biggest operational division of BRAC bank is the SME division. SME is directly related to

business of the bank. BRAC Bank extends loans to potential small and medium trading,

manufacturing and service enterprises. This loan is able to provide quick and quality banking

services to targeted business at any places of the country. Potential women entrepreneurs will

also get the facilities of SME loan; this initiation is to play a role in the socio-economic

development of the country by expansion of business as well as creation of employment.

( Official website of BRAC Bank). BRAC Bank was titled to be the fastest growing bank in

2004, and it had a profit of 14 crore taka. The profitability of the bank came mostly from the

SME sector. The amount of loan given by SME is 530 crore. The borrower usually gets the loan

within 12-15 days.

SME division is enriched with more than 700 staffs and it has 262 unit office all over the

country.

Structure of SME division:

_____________________________________________________________________

SMEField Level

CRO, ZO, TM QAO

Head Office LevelCredit, Loan Adm., Fin. Admin., Recov. & MIS

29


The reporting line in SME:

CRO

ZO

TM

Field Level – In the field level there are three types of designated BRAC Bank staff operates.

They are Customer Relation Officer (CRO), Zonal Officer (ZO) and Territory Officer (TM).

CRO: Customer relationship officers. There are about 600 CRO working all over the country in

262 unit offices. CRO are assigned to spot potential entrepreneurs through out the country and

motivate them to take loan from BRAC Bank. Each CRO falls under their assigned territory and

they have to perform their job within that. They are under direct supervision of the Zonal

Officers (ZO). CRO goes to people, identifies their need and according their need, suggest them

to avail loan from BRAC Bank. CRO are responsible for evaluating the trust worthiness of the

client whether they are capable to repay the loan or not. To provide loan and ensuring loan

repayment are the two main tasks done by the CRO.

ZO: There are 36 Zonal Officers .These ZO controls the CRO. They visit the spot that the CRO

already located. Each and every enterprise will be visited by ZO. ZO has the authority to

sanction loan highest up to taka 3 lakh.

TM: There are 4 team Managers. They supervise the ZO.

QAO: There are 12 Quality Assurance Officer. They perform the job of monitoring. They

supervise the ZO and TM.

Head Office Level:Credit:

The Credit limit varies depending on the rank.

ZO has the authority to sanction up to highest 3 lakh.

TM has the authority to sanction up to highest 5 lakh

_____________________________________________________________________ 30


If the credit limit exceed taka 10 lakh it goes to Credit Committee

If the credit limit exceed taka 20 lakh it goes to the Board.

Loan Admin - The posting is done in the system (MBS) in the Loan Admin. Then Loan

Admin sends requisition to Fin Admin.

Fin Admin: Fin Admin take care of the other expenses.

Recovery: Recovery Dept. prepares an overdue report and informs the TM. Recovery dept. keeps track of the money. Legal notices are given to the defaulters.

MIS: MIS dept. keeps the total record of loan from its sanction to repayment.

SME Loan Product developed by BRAC Bank:BRAC Bank extends loans to potential clients and provides quality banking services to targeted

business at any places of the country. Potential women entrepreneurs will also get the facilities of

SME loan; this initiation is to play a role in the socio-economic development of the country by

expansion of business as well as creation small and medium trading, manufacturing and service

enterprises. This loan is able to provide quick of employment.

(Source: www.bracbank.com )

Name of the Product - ANONNO - is a business loan provided to entrepreneurs.

Loan Ceiling - 3 lakh to 30 lakhs.

Purpose of Loan - Loan is provided for purchase of fixed assets, inventory and on receivables

Fixed Asset Purchase

Working Capital

Repayment System of LoanLoan can be repaid by two options.

By equal monthly installments (with interest).

By one single payment at maturity.

_____________________________________________________________________ 31

http://www.bracbank.com/


Guarantor Selection Criteria: 2 guarantors are required. The following aspects will

be considered in selection of guarantor:

The guarantor must be financially sound and ability to repay the loan in full.

The guarantor must be aware of the rules of “ANONNO” loan and his/ her responsibilities.

The guarantor must know the entrepreneur well. Preference will be given where both the

guarantor and the entrepreneur reside in the same area or come from the same community.

Age of Business:

Above 1 year.

Sectors: Trading, Manufacturing, Agriculture & service.

Tenor: 3 month to 36 month. Loan terms are of different term like 3, 4, 6, 7, 9, 12, 15, 18, 24, 30, and 36 months. In case of fixed assets purchase more than 18 months term is applicable.

Prohibited Enterprise/person: There are some sectors of services where opening account or

providing loan is restricted. They are Shrimp business, Tannery business man, Political figure,

police, army, lawyer, kazi and so on.

Project Evaluation Charge: The Borrower will have to pay project evaluation charge

on the amount of loan borrowed at the following rate:

Loan Amount Project Evaluation Charge

Up to 2 to 3 lakh 5000




Collateral: In case of Collateral 2 to 8 lakhs loans are provided - no mortgage. On the other hand, in case of 8 to 15 lakh –equity mortgages are required. Then for 15 to 30lakh registry mortgages are required.

_____________________________________________________________________ 32


Interest: Rate: Annual interest is determined on the basis of reducing balance method at the

competitive market rate. Flat rate of interest is 13.34%. Interest will be paid quarterly and

residue at maturity along with principal. The interest rate in SME is little higher, as there is no

requirement of collateral.

Bank Account The entrepreneur will have to open a bank account in the same bank branch where there is the

account of SME loan, which is named ANONNO.

Application Procedure The entrepreneurs require filling up a prescribed “Loan Application Form”. In this respect both

the entrepreneur and guarantor will have to submit one copy of photograph each and necessary

papers related to the business.

Security and Necessary Legal Papers against Loan The entrepreneurs will have to furnish necessary and adequate security as per rule and

requirement of the Bank. The potential entrepreneurs will have to fulfill the following

conditions:

Enterprise Selection Criteria:

The following aspects will be considered before sanction of any loan:

The business must be in operation for at least one year.

The business must be legally valid, i.e. have valid trade license, income tax or

VAT registration (Wherever applicable).

The business must have all necessary in a structural facilities and adequate

work force.

The business must have a defined market with clear growth potentials.

_____________________________________________________________________ 33


Entrepreneur Selection Criteria: The following aspects will be considered for

evaluating the qualification of manpower and efficiency of the entrepreneur:

Special features of SME:

Collateral Free

Door Service

No A/C Maintenance

No cost before approval

2.5.15 Financial Administration Division (FAD):The accounting documentation activities of the bank are performed under this division.

Activities of Fin Admin are as follows:

Manage the overall books of accounts for the bank Balance sheet

Income statements

Cash flow statements

Statement of Changes in Equity

Liquidity Statement

Notes to Financial Statement

Preparation & Finalization of Final Accounts

Salary Payment to Employees

Payment to Suppliers

_____________________________________________________________________

The Entrepreneur must be physically able and between 25-50 age group.

The entrepreneur must have necessary knowledge and experience on the

business, i.e. academic or vocational training, relevant work experience in

other institution or a few years of experience in the same line of business.

The entrepreneur must have clear-cut and specific source of income and

ability to save.

The entrepreneur must be socially acceptable.

34


Tax Issues for the Bank Corporate Tax

Personal Tax

Value Added Tax ( VAT) payment

Inspection & Audit Bangladesh Bank Inspection

BRAC Audit

Internal Audit

External Audit

Financial MIS Business at a glance

Flash Result

Branch Position

Division wise Performance

Cost Control

Business Growth

Cost of Deposit

Competitor Analysis

Budgeting & Financial Planning Revenue & Capital Budgeting

Short Term & Long Term

Compliance of GAAP and other relevant Rules & Regulation

Ensure Audit Compliance Related Books of accounts

Periodic Bangladesh Bank return submission Weekly Position

Form IX

SBS 2

SBS3

Monthly Financials

Annual Financials

Capital Adequacy

_____________________________________________________________________ 35


CRR & SLR Report

Accounts Reconciliation Inter Branch Reconciliation

Inter Office Reconciliation

Nostro Account Reconciliation

Corresponding Bank Reconciliation

Guide branch offices to maintain their Books of Accounts Correctly & Timely.

2.5.16 Transaction Sales & Secured Remittance Service (TRS & SRS)On December 2004, we had the opportunity to meet with TRS (Transaction Sales & Services)

and SRS (Secured Remittance Services) Division of BRAC Bank. Mr. Tareq Sami Rahman,

Business Development Officer of TRS and Mr. Sibly Sadek, Executive of SRS conducted the

training respectively. It was really cordial and interesting because both the training co-

coordinators did their job very nicely. Now discuss briefly what we have learnt about TRS &

SRS.

Transaction Sales & Services (TRS): The major responsibility of BRAC Bank’s

TRS Division is to support their Corporate Customer with the combined network covers Dhaka,

Chittagong, Sylhet & Savar presently. TRS offer the no cost on line banking facility through 13

branches BRAC Bank. They offer cash deposit and withdrawals, cheque deposits, and money

transfer facility, account enquiries, give cheque book requisition and Account Statement with

their following type of account:

Current Account

Short Deposit Account (STD)

Fixed Deposit

Savings Account (for corporate employees)

Convertible Account

FC Account

TRS division also has Priority Service System for their Corporate Customer which manages their

business finance and cash resources very conveniently. Priority Service Banking includes the

following special services:

_____________________________________________________________________ 36


Pick-up & Delivery Services

Auto fax Report

Corporate Help Line

Inward Remittance Information

Express Payment

FX & Money Market Info

3. Recommendations:The recommendations here have been divided into few categories. They are as follows:

_____________________________________________________________________ 37


3.1 From Customers’ Point of View: Cheque is a sensitive and valuable

material. Customers like to have an acknowledgement of the cheques deposited in the

drop box like seal or receipt and hold a copy of such as an evidence of the cheque

deposited. (Recommended by Fahim Ahmed, Officer Treasury Back Office)

3.2 New Product Ideas: (1) Multi-access Card (Debit Card with a VISA option) - BRAC Bank can launch an ATM or debit card with a VISA sign

which would work exactly like credit card debiting the money from the customers

account directly every time a customers purchase something. Customer will select credit

option instead of saving whenever customer swipes the card while purchasing. It would

work like a credit card and here credit limit would be the account balance of the

customers. On the other hand this will work as a debit card when inserted in the ATM

machine. This card is very useful where debit card cannot be used or customer out of

cash but where credit card is accepted. The best example of this sort would be St. George

Bank Visa Debit card and this had been very popular in Australia. This card will attract

those customers who are not interested about credit card and also those who had been

unable to obtain credit card. The bank can charge a fee may be once for the card

requested by the customers. (Recommended by A.K. M. Needar Hasan, CSO)

o

(2) Gift Voucher – a special type of savings account – Bank can

introduce gift vouchers for the customer to purchase and use this as a gift. The final

recipient (the person who received this voucher as a gift) of the voucher can bring in to

any branch of BRAC Bank to open a special type of savings account, DPS or as such.

The voucher will not be encashable but its condition would be to open an account and

_____________________________________________________________________ 38


make him or her new customer or account holder. The minimum amount of the voucher

could be Tk.1000 and maximum can be anything more than Tk. 1000 depending on the

purchaser of the voucher. If the final recipient of the voucher already holds an account

with BRAC then he or she will be able to deposit the voucher into his or her account.

This idea of gift voucher will help the bank to bring in more customers / new account

holder and thus more deposit. In addition, bank can introduce (push sales) more products

and services to this new account holder or customer. (Recommended by A.K. M. Needar

Hasan, CSO)

Authority of the Sales Executive: It is a common phenomenon that DSEs are

introducing the customer’s account by signing the introduction section. This is mainly

happening due to target they have been given. In most of the case it is seen that DSEs are

introducing the customers whom they do no know properly just by signing the

introduction section of the account opening form to. This way KYC (know your

customers) policy is getting hampered. So, the DSEs should not have authority to

introduce the customers by signing the introduction section of the account opening form

and of course they will be credited for the account they bring in. (Recommended by

Fahim Ahmed, Officer Treasury Back Office)

3.3 Training Recommendations: The training schedule should have at least

one day training about the bank’s products and services making the trainees more

knowledgeable about the products & services available. This would help the trainees to

learn about the products and services in details and which in turn will help the trainees to

sell the products or services more efficiently. There should also be customer service

training for the fresher or those who are new in this customer service sector.

(Recommended by the team)

3.4 Website: For the convenient of the customers BRAC Bank website should have

product application form available on the website. From website the customers can find

_____________________________________________________________________ 39


about the products of his or her choice and then download the application form to

proceed. This will also help the customers to know the requirements of opening an

account or applying for a loan and take the necessary documents along when walking in

to the branch and take the desired product. Next, the website should declare at least 15

days earlier about the new product that would launch. This declaration should be

highlighted as “Coming up new product” or as such. In addition, bank’s major events

should also be declared on the website – say opening up of new branch and declaring

about setting up of ATM machines with an approximate dates and location.

(Recommended by A.K. M. Needar Hasan, CSO)

3.5 Display of all the Brochures: All the branches should have all the

brochures of all the products and they should be displayed. Not that only InstaCash

brochure all over the branches. A new walk in customers and existing customers likes to

know what products and services that bank is offering. (Recommended by the team)

3.6 Security Measures for Phone Banking: Customers are often given the

account balance information over the phone and this is usually done by the CSM. The

customers are only asked to answer about his or hers date of birth, address, and account

no. But it is very much possible for others to know someone’s name, address, and as

such. So, in order to strengthen the privacy of the customers and in order to protect the

account information bank can ask the customers to set a password or secret question for

phone banking. A customer will be asked his or her password or secret question in order

to avail the phone banking service or account information. (Recommended by A.K. M.

Needar Hasan, CSO)

4. Conclusion:

_____________________________________________________________________ 40


The orientation with different department was a great opportunity to learn about bank, its

vision, strategies, objectives and the activities of the departments. The trainers in this

orientation session were different departmental heads and their valuable time really

appreciates able. This training was also valuable as it gave us basic knowledge of banking

and in building & shaping the vision as of the bank. Operations of different departments are

interdependent and each plays vital role to meet the objective of the bank. This training also

taught about staying in compliance of the bank in everyday service with the bank.

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Documents

Report on BRAC Bank[1]