Internship ReportOnSME Banking Activities of BRAC Bank Ltd.Prepared ForMostofa Mahmud HasanAssistant ProfessorDepartment of Business AdministrationStamford University BangladeshPrepared ByAparna SarkerID No – 03712067BBA DepartmentBatch: 37 (F)Stamford University BangladeshDate of Submission: January 13, 2013
II | P a g eInternship ReportI here announce that the extensive study entitled“SME Banking Activities of BRAC Bank Limited.”Prepared in partial accomplishment of the Requirement for the award of the degreeBachelor of Business AdministrationFromSTAMFORD UNIVERSITY BANGLADESHIs my original work and not put forward forThe award of any other degree / diploma / fellowshipOr other similar term or honorAparna SarkerID No – BBA03712067
III | P a g eLetter of Transmittal13 January 2013Mostofa Mahmud HasanAssistant ProfessorDepartment of Business AdministrationStamford University BangladeshSubject: Internship ReportDear Sir,I would like to thank you for assigning me this subject to prepare the internship report.This task has been given me the opportunity to explore one of the most important aspect ofthe BRAC Bank loan which is known as SME loan. I have completed my internshippractically in BRAC bank from 3rdJune 2012 to 30thAugust 2012.The topic of my report is “SME Banking Activities of BRAC Bank Limited”, contains acomprehensive study on the small and medium enterprise loan in BRAC Bank Limited. Itwas a great pleasure for me to work on the above-mentioned subject.I tried my best to put meticulous effort for the preparation of this report. Any shortcomingsor flaw may arise as I am very much novice in this aspect. I will wholeheartedly welcomeany clarification and suggestion about any view and conception disseminated in my report.Sincerely yours,Aparna SarkerID No – 03712067Batch: 37th(F)Department of Business Administration
IV | P a g e2STAMFORD UNIVERSITY BANGLADESHTo Whom It May ConcernThis is to certify that the internee report on “SME Banking activities of BRAC BankLimited” For the degree Bachelor of Business Administration (BBA) major in Financefrom Stamford University Bangladesh carried out by Aparna Sarker, Student ID #03712067 under my supervision. No part of the internship report has been submitted forany degree diploma, title, or recognition before.Mostofa Mahmud HasanAssistant ProfessorDepartment of Business AdministrationStamford University Bangladesh.
V | P a g eAcknowledgementAll praises to almighty Allah who has created me and has given me opportunities andstrength to work with people. This internship report might never have been completedwithout the necessary practical knowledge, assistance of many books, articles, websites,and primary data. It enhanced my knowledge on SME activities as well as bankingbusiness. Thanks to all those persons, who have assisted me, providing me co-operation,books and articles? I would like to express my special gratitude to Mostofa MahmudHasan, Assistant Professor, Department of Business Administration, Stamford UniversityBangladesh for his supervision, co-operation and advises.I was placed in SME Reconciliation Department of BRAC Bank Limited to work as anintern from 3rdJune 2012 to 30thAugust 2012. The members of BBL (BRAC BankLimited) management were very co-operative and helpful. They helped me throughproviding various data, guidance and direction. I am grateful to Md. Faisal Haque, AVP &Senior Manager, Reconciliation, Central Support & Operation Helpdesk Department ofBRAC Bank Limited for his cooperation and necessary support.
VI | P a g eExecutive SummaryBRAC Bank Limited is a scheduled Commercial Bank in Bangladesh. It established inBangladesh under the Banking Companies Act, 1991 and incorporated as Private LimitedCompany on May 20, 1999 under the Companies Act, 1994. Its operation started on July4, 2001 with a vision to be the market leader through to providing all sorts of support topeople in terms of promoting corporate and small entrepreneurs and individuals all overthe Bangladesh. At present the Bank operating its business by 69 Branches. BRAC Bank isthe first local commercial banks that proving online banking service to its customers fromthe very beginning of its starts. BRAC Bank, for the first time among local commercialbanks, starts providing loan facilities to small and medium trading, manufacturing andservice oriented enterprises all over the country. The Bank has already established itsnetwork in different area of the country with assistance of BRAC.BRAC Bank is trying to develop economic condition of the country. So the bank providesloan facility 3 to 30 lacs taka to that small and medium enterprise that has no easy accessto banks/financial institutes. The bank already established 91 Zonal offices and 429 unitoffices all over the country and 1309 Customer Relation Officers (CRO) providing door-to-door service to clients. Till April 2009, the bank provides loan facilities to 265,000clients which amount is Tk. 10,000 core. The success of SME will largely depends on theselection of a business and man behind the business. BRAC Bank provides this facility tothose whose business operation is minimum one year and environment friendly business. Itprovides no loan facility to tobacco business. The business should be legally registered andmust have valid trade license. The entrepreneur should be physically able, preferablybetween the ages 25 to 50. Entrepreneur must have the necessary technical skills to run thebusiness and acceptable social standing in the community i.e. people should speak highlyof him/her. BRAC Bank gives equally important to the guarantor to getting the SMEfacility. The guarantor must have the ability to repay the entire loan and is economicallysolvent. The guarantor should know the entrepreneur reasonable well and shouldpreferable live in the same community.SME loan can be repaid in two ways, 1) in equal monthly loan installment with monthlyinterest payment. 2) By one single payment at maturity, with interest repayable a quarterends residual on maturity. Customer relation officers search new potential customer by
VII | P a g eproviding door-to-door service. They talk with clients and monitor their manners, activitiesof their business and provide the loan to the potential customers. The customer relationofficers also monitor the borrower’s activities after the loan disbursement. Monitoring alsofacilitates the build up of an information base for future reference.Bank has to prepare the periodic reconciliation statements to identify any mismatch.Reconciliation is the process of systematically comparing the balance of bank statementwith the balance as per the company’s ledger and explaining any differences and takingnecessary measures to correct the wrong entries. It is an important internal controlmechanism of the bank.The responsibilities of reconciliation of BRAC Bank are centralized and given to CentralOperations. There is a separate devoted team under the Central Operations for identifyingthe unmatched items, analyzing the same and guide to the initiating departments to do therectification. Reconciliation section of Central Operations prepares and submits a statusreport on monthly basis and the same to all concerned departments and Operational RiskManagement Departments for their information and monitoring. Also submits a statusreport to MD & CEO and DMD, CIO and Head of Operations for their information.The core competence of the BRAC Bank is to provide the fastest loans to the clients in thiscountry. To retain this competitive advantage BRAC Bank would provide computer andpalmtop facilities whether they can give fastest services to clients than other banks. Also toconvey the customer focus, BRAC Bank is trying to reduce collateral securities than otherbanks. It provides more collateral free secured loans to capture the market. Regarding theservices by the CRO, almost all clients are satisfied by get these quick facilities from them.In the survey it is found that most of the clients give a suggestion to decrease the interestrate so I think BBL management look after this things from the view point of customer.They also look after the remuneration packages of CRO and entry level employees andpromotional activities regarding SME because it is low and incompetent compare to othercontemporary bank. Though it is pioneer division of this bank, I tried to give an in-depthanalysis for every factor, which relates the SME division from the perspective of customersatisfaction and dissatisfaction.
VIII | P a g eTable of ContentsChapter -1Introduction1.0 Background of the Study1.1 Rationale of the Study1.2 Objective1.3 Scope of the Report1.4 Limitations1.5 Methodology1222334Chapter -2Organization Part2.0 Overview of the BRAC Bank Limited2.1 BRAC Bank: At a Glance2.2 Shareholding Structure2.3 Corporate Information2.4 Organizational Structure2.5 Management Team:2.6 Hierarchy2.7 Products and Services7911151515161717Chapter -3Departments of BRAC Bank LimitedA. Corporate Banking Division:B. Retail Banking DivisionC. Small And Medium Enterprise (SME)D. Foreign Trade & Treasury3.1. A: Corporate Banking3.1. A.1 Values3.1. A.2 Business Concentration (Area Wise)3.1. A.3 Target Market3.1. A. 4 Target Customer Group3.1. A.5 Product/Service Objectives3.1. A.6 Corporate Product222223232324242425252626
IX | P a g e3.1. A.7 Commercial Banking Unit3.1. B: Retail Banking3.1. B.1 Alternative Delivery Channel3.1. B.2 Business Intelligence Unit (BIU)3.1. B.3 Service Quality3.1. B.4 Cards Department3.1. C: Small & Medium Enterprise Banking Division3.1 C.1 General Business Unit3.1. C.2 Women Entrepreneur Cell3.1. C.3 Large Business Unit3.1. C.4 Manufacturing Business Unit3.1. C.5 Supplier & Distributor Finance Unit3.1. C.6 Commercial Credit Unit3.1. C.7 Vehicle Financing Unit3.1. C.8 Product Development & Research Unit3.1. C.9 SME Operational Risk Management Unit3.1. C.10 SME Products2627272828293132323333333333333334Chapter -4Products And Services4.1 Products And Services4.1. A. Deposit ProductDifferent Types Of Account4.1. A.1 Current Account4.1. A.2. Savings Account4.1. A.3. Short Term Deposit Account4.1. A.4. Term Deposit Account4.1. A.5. Foreign Currency Account4.1. B. Loan Products4.1. C. Card Products3636373737373838394141Chapter -5Job Part5.1 Job Description5.2 Key Responsibilities5.2.1 Ensuring First Hand Services To The Guest:46464747
X | P a g e5.2.2 Keep Observing The Service Activities5.2.3 Guiding Lost Guests To Have Proper Services:5.2.4 Having Customer Suggestion And Complaints5.2.5 Ensuring Customer Solution And Quality Services5.3 Different Aspects Of Job5.4 Critical Observations & Recommendation5.5 Reconciliation – Process Flowchart5.6 Description Of Process Flow Chart5.6.1 Statement Collection5.6.2 Reconciliation Process5.6.3 Analysis & Adjustment5.7 Bangladesh Bank Reconciliation474747484849505151515153Chapter -6Project Part6.0 Definition Of SME6.1 SME History Of BRAC Bank6.2 Importance Of SME6.2.1 Support Small Enterprise6.2.2 Economic Development6.2.3 Employment Generation6.2.4 Profit Making6.2.5 Encourage Manufacturing6.2.6 Spread The Experience6.3 SME Products6.4 The Process Of SME Loan6.4.1 Anonno Rin6.4.2 Apurbo Rin6.4.3 Pathshala Rin6.4.4 Aroggo Rin6.4.5 Digoon Rin6.4.6 Supplier Finance6.5 Terms And Conditions Of SME Loan6.6 Procedure Of BRAC Bank SME Loan6.7 Analysis Of SME Loan Repayment Behavior545556575858585859595959606061616262636468
XI | P a g eRelationship Of Recovery Rate6.7.1 Age Of The Borrowers6.7.2 Education Of The Borrowers:6.7.3 Experience Of The Borrower:6.7.4 Amount Of Loan Taken:6.7.5 Term Of Loan:6.7.6 Income Of The Borrowers:6.7.8 The Personal Asset Of The6.7.9 The Nature Of Business:6.8 SME Network Coverage6.9 Highlights Of SME Banking Divitions6.10 Obstacles And Challenges Faced BRAC Bank Limited In SME6.11 Steps Taken To Overcome The Obstacles6.12 Different Business Wings Of SME Banking6.13 Selection Of Potential Enterprise For SME6.13.1 Enterprise Selection Criteria6.13.2 Entrepreneur Selection Criteria6.13.3 Guarantor Selection Criteria6.14 SME Loan Process Flow6.15 Terms And Condition Of SME Loan6.16 Monitoring6.16.1 Importance Of Monitoring6.16.2 Area Of Monitoring6.16.3 Monitoring System6.17 Closing Procedure Of SME Loan70707071717272727374757576787979798080818383838485Chapter -7Modern Marketing Concept7.0 SME Relates With Modern Marketing Concept7.1 Marketing Processes Relate to SME7.2 Target Consumer7.3 Target Market7.4 Differentiated marketing7.5 Developing Marketing Mix87888890919192
XII | P a g eChapter -8Comparative analysis8.1 Criterion for Sample Selection:8.2 Portfolio Size of Six different banks in SME Sector95100102Chapter -9SWOT ANALYSIS OF BBL9.1 Strengths9.2 Weaknesses9.3 Opportunities9.4 Threats102102104104104Chapter -1010.1 Findings10.2 Recommendation10.3 Conclusion106108111BibliographyAppendix
XIII | P a g eList of FiguresChapter Particular Page No.2 Hierarchy 172 Probashi Banking 204 CARD PRODUCTS 425 Reconciliation – Process Flowchart 505 Process flow for Reconciliation Project 535 Importance of SME 566 SME Network Coverage 726 Highlights of SME Banking Divisions 736 SME Loan Process Flow 797 Modern Marketing Concept of SME 867 Market Segmentation of SME 877 Factors Influencing BBLs Marketing Strategy 898 Portfolio Size of Six different banks in SME Sector 100
XIV | P a g eList of TablesChapter Particular Page No.2 Shareholding Structure 152 Board of Directors 162 Management Team 162 Loan Products 182 Deposit Products 182 Cards 192 Wholesale Banking 214 Deposit Account 364 Current Account 364 Savings Account 374 Short term Deposit account 384 Term Deposit Account 384 Broad Classification 394 Transactional Accounts 405 Definition of SME 566 Relationship of recovery rate 69-738 Comparative Analysis of SME Credit Scheme of SixDifferent Banks98