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Management Approaches of BRAC Bank Limited
1.1 Methodology
In the organization Chapter, much information has been collected from the secondary sources such as from annual report, different published articles, journals, brochures, web sites etc. Some information has been collected directly from organization. All the data collected for reporting purpose are systematically.
1.2 Limitation
Past and present information that are confidential could not be accurately obtained. Alike all other banking institutions, BRAC Bank is also very conservative and strict in providing managerial information. In such cases, we have relied upon certain assumptions, which are only amateur estimates. As many of the analysis on the obtained data are based on our sole interpretation, there may be some biases, as lack of knowledge and depth of understanding might have hindered our ability to produce an absolutely authentic and meaningful report.
2.1 Banking Industry of Bangladesh
The gradual improvement in the overall policy environment has enabled Bangladesh to improve its economic performance in recent years. Successive governments in Bangladesh have been confronted with the problem of stimulating the economic growth rate in a country where a substantial segment of the population lives below the subsistence level. Economic policies are still guided by five year plans. Nevertheless, some progress has been made over the years, such as self -sufficiency in food grain production, reducing the population growth rate, poverty alleviation and boosting export income. The GDP growth has been about 6.5% in 2007, lower than 6.7% in 2006.
The Banking Industry in Bangladesh is one characterized by strict regulations and monitoring from the central governing body, the Bangladesh Bank. The chief concern is that currently there are far too many banks for the market to sustain. As a result, the market will only accommodate only those banks that can transpire as the most competitive and profitable ones in the future.
Currently, the major financial institutions under the banking system includes:-
· Bangladesh Bank
· Commercial Banks
· Islamic Banks
· Leasing Companies
· Finance Companies
Of these, there are 3 nationalized commercial banks (NCB), 5 specialized banks (SB), 9 foreign banks (FB), 31 domestic private banks (PB) currently operating in Bangladesh.
Figure – 01: Schedule Banks of Bangladesh
All local banks must maintain 5% Cash Reserve Rate (CRR), which is non-interest bearing and a 20% Statutory Liquidity Rate (SLR). With the liberalization of markets, competition among the banking products and financial services seems to be growing more intense each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank.
The Banking Industry of Bangladesh at present is in the growth stage. Almost every year new private banks are coming up, new branches are opening within two to three months, and new customers are coming to open an account in different banks. As a result, according to December 31, 2007 there are 3 nationalized commercial banks, 5 specialized banks, 31 local private commercial banks and 9 foreign commercial banks operating in this country.
Market size of an industry can be measured by many ways, such as Total Revenue, Volume of production number of customers and so on. However, in case of the Banking sector the measurement of market size is quite peculiar as both the total amount of deposits and advances are taken into consideration.
The following figure shows that the percentage of total branches of all the banks in the year 2004:
Figure – 02: Total Branches of All Banks
Table 01: Schedule Banks in Bangladesh
| Name of Bank | Number of Branches | |
| Inland | Abroad | |
| A. Nationalized Commercial Banks | ||
| 1. Agrani Bank | 978 | — |
| 2. Janata Bank | 848 | 4 |
| 3. Sonali Bank | 1320 | 14 |
| B. Specialized Banks | ||
| 1. Bangladesh Krishi Bank | 836 | — |
| 2.Bangladesh Shilpa Bank (Industrial) | 15 | — |
| 3. Bangladesh Shilpa Rin Sangstha | 5 | — |
| 4. BASIC Bank ( Bank of Small Industries and Cottage) | 8 | 1 |
| 5. Rajshahi Krishi Unnayan Bank | 300 | — |
| C. Private Commercial Banks | ||
| 1. Al-Arafa Islami Bank Ltd. | 20 | — |
| 2. Arab Bangladesh Bank Ltd. | 58 | 2 |
| 3. Bangladesh Commerce Bank Limited | 25 | — |
| 4. Bank Asia Limited | 27 | — |
| 5. BRAC Bank Limited | 36 | — |
| 6. Dhaka Bank Ltd. | 9 | — |
| 7. Dutch Bangla Bank Limited | 40 | — |
| 8. Eastern Bank Ltd. | 21 | — |
| 9. Exim Bank Limited | 30 | — |
| 10. First Security Bank Limited | 13 | — |
| 11. International Finance & Investment
& Commerce Bank Ltd. (IFIC) |
55 | — |
| 12. Islami Bank Bangladesh Ltd. | 100 | 1 |
| 13. Jamuna Bank Limited | 29 | — |
| 14. Mercantile Bank Limited | 36 | — |
| 15. Mutual Trust Bank Limited | 25 | — |
| 16. National Bank Ltd. | 66 | — |
| 17. National Credit and Commerce Bank Limited | 50 | — |
| 18. One Bank Limited | 29 | — |
| 19. Oriental Bank Limited | 17 | — |
| 20. Premier Bank Limited | 20 | — |
| 21. Prime Bank Ltd. | 16 | — |
| 22. Pubali Bank Ltd. | 356 | — |
| 23. Rupali Bank | 493 | — |
| 24. Shajalal Islami Bank Limited | 22 | — |
| 25. Social Investment Bank Ltd. | 5 | — |
| 26. South East Bank Ltd. | 10 | — |
| 27. Standard Bank Limited | 05 | — |
| 28. The City Bank Ltd. | 80 | — |
| 29. The Trust Bank Limited | 16 | — |
| 30. United Commercial Bank Ltd. | 79 | — |
| 31. Uttara Bank Ltd. | 198 | 1 |
| D. Foreign Commercial Banks | ||
| 1. Bank Al Falah | 3 | — |
| 2. Citi Bank NA | 1 | — |
| 3. Commercial Bank of Ceylon Limited | 2 | — |
| 4. Habib Bank Ltd. | 2 | — |
| 5. Hong-Kong & Shanghai Banking
Corporation ( HSBC ) |
9 | — |
| 6. National Bank of Pakistan | 2 | — |
| 7. State Bank of India | 1 | — |
| 8. The Standard Chartered Bank Limited | 22 | — |
| 9. Woori Bank | 1 | — |
| Total Number of Branches | 6339 | 23 |
2.2 Profile
BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shorecap International, has been the fastest growing Bank in 2004 and 2005. The Bank operates under a “double bottom line” agenda where profit and social responsibility go hand in hand as it strives towards a poverty-free, enlightened Bangladesh.
A fully operational Commercial Bank, Brac Bank focuses on unexplored market in the SME business segment, which hitherto remained largely untapped within the country. The bank is also actively involved in retail banking and broad range of consumer loans ranging from to personal loan to auto loans to Debit & Credit cards. Furthermore the bank has gained a strong market share in the global money transfer market or remittance through significant tie-up with the most major transfer agencies. In the last five years of operation, the Bank has disbursed over BDT 1500 crore in loans to nearly 50,000 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. Since inception in April 2008, the Bank’s footprint has grown to 36 branches, 392 SME unit offices and 67 ATM sites across the country, and the customer base has expanded to 200,000 deposit and 45,000 advance accounts through 2006.
Today Brac Bank is considered as on of the fastest growing banks extending full range of banking by providing efficient, friendly and modern fully automated on-line service. Since its inception, it has introduced fully integrated online banking service to provide all kinds of banking facilities from its conveniently located branches.
“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”.
2.4 Corporate Mission
· Sustained growth in ‘Small & Medium Enterprise’ sector
· Continuous low-cost deposit growth with controlled growth in Retail assets
· Corporate assets to be funded through self-liability mobilization. Growth in Assets through syndication and Investment in faster growing sectors.
· Continuous endeavor to increase fee based income
· Keep our debt charges at 2% to maintain a steady profitable growth
· Achieve efficient synergies between the bank’s branches. SME unit offices & Brac field officers for delivery of Remittance & Bank’s other products & services
· Manage various lines of business in fully controlled environment with no compromise on service quality
· Keep a diverse, far flung team fully motivated and driven towards materializing the Bank’s vision into reality
2.5 Corporate Values
Our strength emanates from our owner – BRAC. That means we will hold the following values and be guided by them as we do our jobs.
· Value the fact that we are a member of the BRAC Family.
· Creating an honest, open and enabling environment
· Have a strong customer focus and build relationships on integrity, superior service and mutual benefit
· Strive for profit and sound growth
· Work as a team to serve the best interest of our owners
· Relentless in pursuit of business innovation and improvement
· Value and respect people and make decisions based on merit
· Base recognition and reward on performance
· Responsibility, trustworthy and law-abiding in all that we do
2.6 Corporate Chronicle and Information
· Inauguration of Banking operation : 4th July, 2001
· First SME unit office : 1st January, 2002
· Signing with Shore Cap as investor : 29th December, 2003
· Signing with IFC as investor : 08 may, 2004
· First ATM installed : 3rd April, 2005
· Preferential share issued : 31st January, 2006
· Signing with Infosys and 3i InfoTech for changing Bank’s IT platform : 1st august, 2006
· 24×7 Phone Banking opening : 9th September, 2006
· Listing with CSE : 24th January, 2007
· Listing with DSE : 28th January, 2007
· Commencement of share trading in DSE and CSE : 31st January, 2007
· Credit Card Launching : 06th February, 2007
· Introduced Probashi Banking : 14th April, 2007
· Launching of Travel related services (TRS) : 01st November, 2007
· Launching of Omnibus with 12 member banks : 20th November, 2007
· Company Registration Number : C-37782 (2082) of 1999
· Auditor
KPMG, Rahman Rahman Huq
Chartered Accountants, 9 Mohakhali C/A, (11th & 12th Floor), Dhaka- 1212
· Legal Advisor
Law Valley
Shajan Tower, Commercial Block, Suit # 202 (1st Floor)
4, Segunbagicha, Dhaka – 1000
· Tax Advisor
Khandaker & Associates
73, Kakrail, Dhaka – 1000
2.7 Board of Directors
The number of directors in the board of the bank is 8 which are within the maximum limit as imposed by BRPD circular # 12 dated April 26, 2003 of Bangladesh Bank and notification – SEC/CMRRCD/2006-158/Admin/02-08 dated February 20, 2006 of Securities and Exchange Commission.
The names of the Board of Directors are given below:
Chairman : Mr. Fazle Hasan Abed
Directors : Mr. Syed Humayun Kabir
Mr. Md. Aminul Islam
Mr. Muhammad A. (Rumee) Ali
Mr. Quazi Md. Shariful Ala
Mr. Mark A. Coffey
Ms. Nahid Kabir
Managing Director : Mr. Kaiser Tamiz Amin
2.8 Credit Rating of the Bank
Pursuant to the Bangladesh Bank’s BPRD Circular no. – 06 dated July 05, 2006 and in order to safeguard the interest of investors, depositors, creditors, shareholders we have completed credit rating by Credit Rating Agency of Bangladesh Limited (CRAB) for the year ended 31 December, 2007.
Credit Rating Agency of Bangladesh Limited assigned “AA2” (pronounced double A two) rating to Brac Bank Limited in the Long Term and “ST-2” rating in the Short Term. Commercial Banks rated in this category is adjudged to be very strong banks, Characterized by very good financials, healthy and sustainable franchises and a first rate-operating environment. Rating in this category is characterized with commendable position in terms of liquidity, internal fund generation access to alternative sources of fund.
2.9 Corporate Governance
BRAC Bank Limited places the grater emphasis to maintain high standard of Corporate Governance. As the trustee on behalf of the shareholders of the company, the Bank’s board is fully aware of responsibilities and therefore, endeavors to safeguard the interest of all concerned.
The Board of Directors is the highest level of authority in the organization structure of BRAC Bank Limited. The board is responsible for overall direction and is ultimately accountable to the shareholders for the activities, strategies and performance of the company. In terms of the Corporate Governance principles set out by the Securities and Exchange Commission our Board of Directors has appointed an Independent Director. The prime concern of the Board is to ensure that the overall activities of the business are conducted responsibly and with focus on long-terms value creation. The Board meets periodically to transact matters placed them that require Board’s approval and directions. Board reviews the overall business and where necessary strategic guidelines one givens for onward implementation.
The Management Committee of BRAC Bank Limited is engaged to implement the decisions of Board of Directors and supervisions of day-to-day business affairs of the company. The committee is also responsible for achieving the business plan. The Committee consists of functional heads of different operating/business segments and is headed by Managing Director and CEO. In conformity with the Corporate Governance principles set out by the Securities and Exchange Commission, the Board of Directors constituted an Audit Committee.
2.10 Registered / Head Office and Branches
BRAC Bank Limited
1, Gulshan Avenue, Gulshan – 1
Dhaka – 1212, Bangladesh
Telephone : 01819230000, 01819260000
Website : www.bracbank.com
There are 36 Branches of BRAC Bank including the registered branch around in Bangladesh. In these, 12 branches are in Dhaka city and other 24 are outside Dhaka city.
2.11 Reach of the company
· 392 SME Unit Offices
· 36 Branches
· 67 ATMS
· 14 Cash Deposit Machines
· 700 POS Terminal
· 1900 Remittance Delivery Points
2.12 Regulatory & Legal Compliance
The bank complied with the requirements of following regulatory and legal authorities:
· The Bank Companies Act, 1991
· The Companies Act, 1994
· Rules and Regulations issued by Bangladesh Bank
· The Securities and Exchange Rules, 1987
· The Securities and Exchange Ordinance, 1969
· The Securities and Exchange Commission Act, 1993
· The Securities and Exchange Commission (Public Issue) rules, 2006
· The Income Tax Ordinance, 1984
· The Vat Act, 1991
BRAC Bank has a strong and active management department. The department is divided in 19 divisions which have sub-divisions and many more features. Each of the divisions is now discussed briefly below.
3.1 Small Medium Enterprise (SME) Banking Division
SME Banking division of Brac Bank Limited has ascertained with the specter to establish itself as the market leader in SME financing and to assist country’s economic development, serving different productive and contributing sectors in a focused way by mobilizing fund from urban to rural areas. In line with BRAC Bank’s vision, the SME Banking division’s objective is to achieve a two folded bottom line i.e. to build a profitable organization by contributing to the society as well as the economy through creation of an entrepreneur class in the society eventually eliminating poverty from the country. The deposit collected through the branches of BRAC Bank, which are mostly located in urban Bangladesh, are distributed nation wide to small & medium entrepreneurs through our dedicated SME unit offices located across the country.
Lifting the country’s banking practices to a newer dimension, BBL has introduced a challenging platform wherefrom, it serves a customer base, which, previously was not acquainted with banking products & services along with the micro finance graduates who were in dilemma with regard to the access of credit towards enhancement of their business activities further. BRAC Bank Limited is the first bank to address the needs of “missing middle” in a focused way. BBL attempts not only to provide financial products and services to this segment but also help them to be educated & get aware, so that it can be easier for them to acclimatize themselves with the ever changing business world. BRAC Bank has brought a momentous change in the lifestyle of their clients and has significant economic and social contribution in poverty alleviation by upgrading the standard of living by generating employment. According to a research, BRAC Bank has contributed in generating more than 6,00,000 jobs over the last five years.
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SME Banking division has so far covered 113,00 customers mark and is fully dedicated to
Boost the customer base by reaching the doorsteps of small and medium enterprises involved in different business sectors and located in different parts in 64 districts of the country . Brac Bank has long been serving the fund requirements of traders, manufactures, importers, traders, suppliers and distributors, women entrepreneurs and other service providers like medical institution & educational institutions in a focused way. SME Banking division has also introduced a unique way of reaching the clients, spread throughout the country with 2000 efficient & dedicated people deployed in 392 unit offices.
SME Banking division’s core competency is a combination of providing loans that are collateral free and offering a service that is quick, prompt and without any hassle. By doing this, the SME Banking division has helped to create a social revolution in the banking industry and also has served those who were not bankable to other banks. At present The SME Banking division of BRAC Bank Ltd. Offers collateral free loans up to BDT 10 Lacs or US$ 14,000. As of 2007, the SME loan portfolio stands at BDT 1,908 crore or US$ 272.57 million out of which approximately 95% is collateral free. SME Banking division is actively involved in providing facilities to the sectors that were mostly underserved by the banking sector and has enabled these borrowers to enjoy banking facilities instead of borrowing money from local moneylenders at extremely high rates.
In 2007, BRAC Bank has excelled in SME Banking operation in almost the same volume that it has achieved from 2002 to 2006. The exceptional growth has been possible for continuous support of the stakeholders.
Brac Bank’s SME Banking is continuing its journey of serving the MSE’s as can be observed from the tremendous growth in client base by 88% from 2006 to 2007. The strength of BRAC Bank’s SME Banking division behind the success of growth is as follows:
- Dynamic Human Resource
- Countrywide distribution network & coverage
- Continuous development in creating innovative products
- Unique loan approval process & monitoring
- Robust risk management system
Till 2006 the bank was a SME lender, but from 2007 onwards BRAC Bank Limited took a deliberate strategic approach to be the SME banker. Hence, The bank has participated in countrywide road shows and has entered into strategic alliance with national & international chamber bodies to build awareness and opted to provide with both deposit & loan products along with various other Banking services coupled with state of art & technology.
Now that the Bank has expanded its businesses across the country, the need has arisen for a segment-oriented approach to SME Banking. The different niches within the same market need to be approached individually. Therefore, SME Banking division of BRAC Bank has well equipped itself with market focus units, with exclusive products & new strategies to serve varying banking requirement of the diverse Small & Medium Enterprises across the country specially the funding part.
3.1.1 Women Entrepreneur Cell (WEC)
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Women Entrepreneur Cell (WEC), one of its kinds in the banking industry of Bangladesh, was launched in 2006 under SME Banking division with an objective to offer access to formal finance along with training and technical assistance to the women entrepreneurs across the country. Women entrepreneurs were overlooked by the traditional banking sector, although they are sincere to repay, makes proper utilization of credit facilities and portray better repayment behavior as has already been proved in Micro Credit Programs. BRAC Bank is the pioneer to understand the need and credit requirement of this underserved sector, which has long been deprived of funding in a focused manner and thus instigated this business unit with “PROTHOMA RIN”, a customized loan product.
In the small span of operation, WEC has already satisfied the financial need of 1,343 women entrepreneurs throughout the country. Women Entrepreneurs Cell (WEC) has excelled incredible in BRAC Bank is the pioneer in the banking industry of Bangladesh to conduct a need based training for women entrepreneurs through its Central Training Department as was committed by the WEC. In addition, WEC has organized training programs in collaboration with other trade bodies and institutions like Dhaka Chamber of Commerce and Industries (DCCI), Junior Chamber International Bangladesh (JCI) etc.
3.1.2 Manufacturing Business Unit (MBU)
As a nation matures from an under-developed to a developing country, the needs to satisfy its demand with available resources also increase. Thus a manufacturing sector develops gradually and the nation turns from a trading-based economy to a manufacturing-based economy.
The Bank has identified Manufacturing Enterprises as a potential niche and launched the Manufacturing Business Unit in August 2007 under SME Banking division. The objective of launching this unit is to better serve the manufacturing sector by providing sector-focused loan & other services with regard to financial needs as well as addressing any other needs of this sector such as training facilities & advisory services.
3.1.3 Commercial Credit Unit (CCU)
The Commercial Credit Unit (CCU) was launched in October2007 with the sole objective of providing financial services in the Trade Finance sector. As many existing clients of SME Banking are importers and have taken SME loans from the bank, the objective of CCU is to provide them with a one-stop banking service along with providing them with pre & post import facilities.
All these products are part & parcel of a composite facility known as “Trade Plus”, a specially designed product for the import oriented business for import & incurring day to day expenses.
3.1.4 Supplier & Distributer Finance (SDF)
The significance of linkage industry is inevitable for proper functioning of trading & manufacturing concerns. Linkage industry extensively contributes in manpower creation, economic development & financial acceleration. Creating a fresh financial market for this sub-sector is simply a diversification of the banking product. Due to this reason, BRAC Bank has moved into this area from September, 2007 as a part of new business development.
Supplier & Distributer Finance unit was launched by introducing “Super Supply Loan”, a customized & composite facility of both overdraft & revolving limit for small & medium sized suppliers. BRAC Bank Limited proved its success in global SME financing sector by becoming one of the four most profitable and sustainable SME banks in the world, rated by Council of Microfinance Equity Funds (CMEF), USA following a global research. The other three renowned banks are Bank Rakyat Indonesia (BRI), Bank Compartamos (Mexico) and Equity Bank (Kenia). The success of SME Banking division extensively depends on the customer’s success in achieving goal with the required & timely assistance.
SME Banking division is confident enough to continue it’s over increasing growth to take the bank ahead of its imagination and to erect newer and startling milestones in banking industry.
SME Network Coverage of BRAC Bank
3.2 Retail Banking Division
“Retail Banking Unit” has further strengthened its position as a major channel of business by stretching its horizon with its unique offer of personal banking across the country. This unit takes foremost funding responsibility of the bank and is committed to offer multifarious services to entire customer base of the bank through Branch’s Alternative delivery channels, Premier banking services and literally Retail banking products to doorsteps through Direct Sales force.
The year 2007 marked as a series of exciting events and achievements for retail banking unit. At the very onset, the year started with the challenge of establishing a new core banking software platform and Retail team played a very vital role to make the ‘FINACLE’ implementation a big success in all branch networks across the country.
3.2.1 Retail Distribution
“Retail Distribution” unit takes care of all branch activities, this unit ensured a seamless operation in all b ranches throughout the year and also organized inauguration of 10 new Branch’s ; 2 in Dhaka, 1 in Chittagong and rest 7 in Barishal, Bogra, Dohar, Monohordi. Tongi, Potiya & Cox’s Bazar. Out of these 10 new branch’s 6 branch’s started operation in urban areas in different divisions / districts and 4 branch’s in different rural areas. This thoughtful placement of branch’s helped Retail Distribution team to offer a total banking solutions and services through its facilities to customers of these new regions. BRAC bank now has a total of 36 branch network in the country.
Ensuring convenience for our valued customers always had been a priority to the management and in 2007, 3 major branch’s were relocated to convenient locations. These are Gulshan branch in Dhaka, Agrabad branch in Chittagong and Sylhet Milleneum branch in Sylhet. The new premises are quite spacious with extended facilities which ensure comfort to our valued clients.
“Retail Distribution” also initiated evening banking facilities in three more branchs last year. Mirpur & Uttara in Dhaka and Moulovibazar in Sylhet. Response from respective neighborhood was observed to be overwhelming.
3.2.2 National Sales’ Initiative
“National Sales” under Retail drives entire direct sales force for bringing in new business for the bank. This unit took a number of initiatives to create opportunities for people from all sectors to bank with BRAC Bank Limited. Some of the initiatives are briefed below :
· Door to Door campaign in Monohordi, Potiya, Tongi, Halishahar neighborhood
· Tie up with ‘Global Brand (Pvt) Limited’ to offer consumer loans at discounts for purchase of personal computer, laptop
· Arranged road shows at different corporate bodies
· Tie up with car showrooms for joint promotion
A phenomenal growth in terms of new customers was registered by Retail team and a graphical comparison of last 3 years is given below:
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3.2.3 New Products
Some new products and special business offers were also designed from Retail National Sales unit, these are:
· ECO – a special package for salaried individuals working in multinational and local corporate bodies
· “Quick Loan” was another brainchild from National Sale’s unit, this product was designed for businessman to meet their immediate needs
· “Medical Loan” was launched to arrange loans for people going abroad for treatment.
3.2.4 Non Funded Business & TRS
Non Funded Business (NFB) unit under “Retail” concentrates on fee income for the bank. This unit runs a student centre where from all student files are processed for onward remittances for the purpose of studying abroad. This unit a MOU with VFS and IOM and through this agreement, all visa processing fees of a number of foreign embassies are being collected by this team in Dhaka, Chittagong and Sylhet. Its worth to be mentioned here that BRAC Bank is the only nominated bank in Bangladesh which may receive UK visa fees.
Travel Related Services (TRS) is a new venture which was introduced as a wing under Non Funded Business of Retail Banking.TRS is launched with the aim to provide a one stop travel solutions and to cater to the needs of the traveling class of the country, with a parallel objective to improve the sales of FCY / TC of the bank. Strategic partnerships were made with top travel agencies of the country and through them, a fast, hustle-free service to our clients being ensured. TRS team, in partnership with leading travel operators, is equipped with online air and hotel reservation system, experienced travel guides and visa processing counselors for our clients convenience. “Travel Loan” specially designed for travelers has also been relaunched which can be availed up to BDT 3 Lacs at a very affordable rate. The services provided through TRS centers are :
· Travel Loan
· Visa Processing / Expediting
· Air Ticketing
· FYC / TC endorsement
· Hotel reservations
· Tourism package
3.2.5 Premium Banking
“Premium Banking” unit ensures service excellence to highnetworth (HNW) customers of the bank through a team of dedicated Relationship Managers. This unit is committed to offer personalized services to HNW customers and arranges home delivery services at customer doorstep. Relationship Managers suggest appropriate investment opportunities to Premium customers and ensures a mutual benefit.
3.2.6 Alternative Delivery Channel
“Alternative Delivery Channel” has been created to facilitate 24 hours cash transactions and other enquiry services throughout the year customers. This unit offer options for customers to use self operated electronic channels – ATM (Automated Teller Machine) and CDM (Cash Deposit Machine) of the bank to do cash deposits and withdrawals at any hour of the day. Alternative Delivery Channels drives operations of all ATM’s and CDM’s, Phone banking, SMS banking and Internet banking. In 2007, a large number of ATM’s and CDM’s were added to BRAC Bank’s network and the numbers are as below:
· Number of ATM’s in 2006 – 22
· Number of CDM’s in 2006 – 05
· New ATM’s in 2007 – 32
· Mew CDM’s in 2007 – 09
· Total Number of ATM’s in 2007 – 54
· Total Number of CDM’s in 2007 – 14
· Total volume of cash dispensed through ATM’s in 2007 – 953.70 crore
· Average volume of dispensed per ATM (@ 54 ATM’s) – 17.66 crore
· Average volume of cash dispensed through ATM’s per day in 2007 – 2.61 crore
· Total volume of cash received through CDM’s – 71.70 crore
· Average volume of cash received per CDM (@ 14 CDM’s) – 5.12 crore
· Average volume of cash received through CDM’s per day in 2007 – 19.64 crore
3.2.7 Phone Banking
Phone Banking is another important unit under Alternative Delivery Channel (ADC) which became n essential part of account relationship immediate after opening of personal accounts. Major services that are being offered through Phone Banking are :
· Activation of cheque book and ATM card
· Account balance
· Last few transactions
· Cheque book requests
· Stop payment of cheque and ATM / Debit cards etc.
3.2.8 SME Banking
This is a unique facility for customers to enquire their account balance, last few transactions etc through their cell phone. Customers also receive SMS information’s on following occasions:
· Any transaction exceeding 1 lac
· On maturity of fixed deposit
3.2.9 Service Quality
Of many deliverables, “Retail” concentrates mostly to ensure ‘Service Excellence’ across all points of services, initiates regular research works through “Service Quality Unit” and tailors superior service propositions for valued customers. Some remarkable initiatives of Service Quality Unit are briefed below for perusal:
· Campaign “Say Yes” among branch teams helped to create a very positive and pro active attitude in handling customer queries in branch’s
· “World Class Customer Service Training” helped to increase service skills of branch officials
· “Service Quality Unit” designed dress code for front line officers working in branch’s
Apart from the above-mentioned initiatives, service quality department is involved in solving customer complaints, customer queries and regular performance evaluation of front line employees through Score Card and Co-coordinating Mystery Shopping survey al the year round.
3.3 Corporate Banking Division
Being a major business unit of the bank, Corporate Banking division has been playing a significant role to achieve the overall objectives of the bank. Since the starting, the division is continuously striving to provide more customer focused products for its valued corporate clients. In this process, the division has segmented itself into various units which cater the associated customer segment. The year 2007 will be marked as a milestone for the Corporate Banking division as it has financed several large projects in this year. Last year, Corporate has been the lead arranger of several big syndicated financed loans and also it has attained significant expertise in Cash Management and Corporate Liabilities. Corporate Banking helps its customer to fulfill their objectives by carefully listening and analyzing their ideas, providing necessary expertise and composite products. The business unit operates through the following five major wings:
· Structured Finance
· Local Corporate Unit
· Leasing & Instruction Unit
· Medium Enterprise unit
· Cash Management & Corporate Liabilities
3.3.1 Structured Finance
BRAC Bank is equipped with technical expertise to provide one stop solution for Large Scale Project finance. Its aim is to provide the right partnership for successful project implementation. This section arrange fund from banks / financial institutions through syndication. As Lead Arranger, the bank provides service for documentation. Execution and administration of the syndicated finance. Besides, Structure Finance unit provides the following services to its clients:
· Corporate Advisory Service
· Debt Raising
· Quasi Equity Instruments
· Equity Participation
· Project Counseling
3.3.2 Local Corporate Unit
Local Corporate Unit focuses on end-to-end services as per large corporate clients, mid-sized companies, and international trade finance businesses and institutional customers and government entitles / agencies demand. It offer a wide range of products and services, technologies to leverage them anytime, anywhere and the expertise to customize them to client-specific requirements.
Our dedicated Team of Relationship Managers along with wholesale Operation unit, Extensive Line of Corresponding Banking Network support client’s local and international business by meeting Working Capital / Team Loan requirements as well as export and import financing. The bank emphasize on providing full-length services and products covering from suppliers to the ultimate consumers of our Corporate Clients.
3.3.3 Leasing and Institutions Unit
The Leasing and Institutions Unit furnishes financial solutions for all institutions and provides lease financing facilities for all corporate bodies. Its products offerings are suited to fast and timely availability of credit facilities to serve purposes of acquiring capital machineries, equipments and vehicles among others. Despite the apparent rigorousness of lease financing its product portfolio caters to customers funding for institutions. In view of the fact that not all of its target customer institutions are slowly aimed towards profit maximization but has significant impact on the development of the economy. Its target market segments including NGOs and other development organization, health service, industry, Non banking financial institutions, Micro finance institutions and educational institutions along with other corporate bodies that require support for building their business infrastructure. It believes in building long lasting relationship with its clients by collaborating in the journey to their growth and not just overseeing it.
3.3.4 Medium enterprise Unit
Medium Enterprise Unit serves medium enterprises having facility requirements alike large corporate in nature, but in smaller volumes. In order to reach specific market segments the unit has designed products like CommerZ loan, Supplier Finance, MFI Receivables Finance, Light Engineering Finance etc. Its clientele can be proprietorship concerns, private limited companies suppliers of corporate houses, chain super shops, educational institutions as well as NGOs.
Facilities may include fund based like overdraft, short term loan, revolving loan, term loan, lease finance, LATR, bill discounting etc or non fund based like letter of credit (L/C) and letter of guarantee as well as composite credit facility that includes various corporate products. At present, Medium Enterprise Unit has a solid clientele base with a portfolio mix of about 100 crore funded facilities and 25 crore non-funded facilities.
3.3.5 Cash Management & Corporate Liabilities
Cash Management & Corporate Liabilities unit under corporate Banking division provides corporate fund management solutions along with a number of investment opportunities to large corporate clients. It offer tailored cash management solutions like NCS (Nationwide Collection Solution), PTS (Payment Transfer Solution), Mobile Banking Services, Cash Pick Up Services and bill collection solutions through its own and correspondent branch network and through different alternative delivery channels as per clients requirement and specification. Within a very short span of time, its cash management unit has established themselves in the market by providing cash solution to large FMCGs, Telecommunications companies, NGOs and different Governmental Organizations. In addition to Cash Management solutions, its liability has also introduced different long and short run investment products for large and medium business enterprises.
3.4 Probashi Banking Division
2007 has been an eventful year for SRS. Remittance Services in 2007 has turned out to be one of the core business area of the bank. The year remained as a rewarding and successful one in terms of new tie-ups and partnerships with a focus on pursuing unexplored and niche markets around the globe. 4 new partnerships have been added to the list of SRS affiliated Exchange Companies in this year. Association with international renowned banks like ICICI bank and Bank of Ceylon are also major accomplishment of the year 2007.
With a goal to provide fast and expeditious services to deliver remittances even in the most remote corner of Bangladesh, the network of electronically connected field officers have been expanded more than 1200 BDP outlets across the country for remittance payment.
An array of products and services have been introduced targeting the non-resident Bangladeshis living in different parts of the world, a milestone for BRAC Bank as to becoming the pioneer in such operation. The official launching of Probashi Shubidah Account took place on 16 January, 2007 with a perspective to catering the beneficiaries of NRB customers with their different banking needs. SRS had also launched TT arrangements through Sonali Bank in Bangladesh, which has added to our options in making the fastest remittance in Bangladesh.
In March 2007, an open-air concert was organized jointly by BRAC Bank and Western Union Money Transfer to endorse the remittance facility in Singapore. A road show was organized along with Western Union all over the country from the month of May 2007 to September 2007 as a promotional campaign to promote the newly added BRAC BDP locations as part of the wide coverage of BRAC Bank for processing Western Union transactions. This year, BRAC Bank has been also chosen as a western Union distribution network in Bangladesh. Secure remittance service of BRAC Bank, made strategic alliances with two other private banks – Dhaka bank on 13 may, 2007 and First Security bank on 17 September, 2007 as its subagents of processing Western Union transactions.
SRS counter branding at the departure lounge of ZIA International Airport had been done this year. This unique branding had yield huge visibility at this key national installation and lifted the corporate image immensely. This branding at ZIA has been the biggest branding effort of BRAC Bank so far as it is estimated that annually 3 million (approx.) travelers are using ZIA International Airport for traveling.
Overseas deployment of two employees from SRS team of BRAC Bank had been initiated in this year. One of them was deployed to Singapore on March, 2007 and other was to Italy on August, 2007 to promote BRAC Bank – Western Union remittance tie-up in the respective countries.
Brac Bank had been considered as the market leader in terms of Western Union payouts with approximately 50,000 transactions in the month of December, 2007 among 13 agents and subagents in Bangladesh. This has honored BRAC Bank as one of the three largest WU agents in South Asia. In the end of the year2007, SRS participated in first ever NRB conference held in Bangladesh and was the main sponsor of the Painting Exhibition during the event.
3.5 Card Division
February 6th, 2007 marks the beginning of BRAC Bank’s Credit cards Business. Being the latest entrant into the cards market, the card division’s greatest challenge was to publish itself in an already demanding marketplace and create its own niche. In a space of a year, BRAC Bank today has become the fastest growing issuers of credit cards in Bangladesh.
Staying true to our motto of being the bank of the masses it has successfully managed to penetrate and enlist a large segment of the middle class society who has adopted the plastic card as part of their everyday life.
With an aim to becoming the credit card of choice, regular product innovations and value added services round the year ensured acquisition of new users and also aided in retention of existing clients. Aggressive promotional and brand building campaigns have created a niche that serves to distinguish Brac bank Credit Card from the competition,
Dedicated and well defined organizational verticals allow efficient and quick turnaround of all internal and external challenges. Acquiring, Sales, portfolio, Product development, Customer Services and Collection wings forms an effective cards team to create a positive and lasting impact in the Credit Card market of Bangladesh.
3.6 Treasury & Financial Division
Treasury department is vested with the responsibility to measure and minimize the risk associated with bank’s liquidity, foreign exchange exposure and asset liability management. Treasury continuously monitors price movements of foreign exchange and uses various hedging techniques to manage its open position in such a way that minimizes risk and maximizes return.
The Asset Liability Management (ALM) desk provides country economic analysis, balance sheet gaps, ALM ratios and many other findings before the ALCO.
The Financial Institutions (FI) wings works as the trigger point of establishing new relationship with correspondent banks as well as to maintain the existing relationship to provide a smooth funding channel for all business units.
3.6.1 Summary of performance of Business Division – Treasury & FI
Brac Bank’s treasury is well equipped with modern telecommunication infrastructure facilities like SWIFT, Reuters, Bloomberg, Internet, Voice Recorder etc. recently it successfully implemented Kastle, a treasury software which is one of the top ranked software for treasury functions from 3i InfoTech. Bank’s independent Dealing Room is committed to provide best rate / price to its customers. A centralized operation with on-line connectivity facilities its customer to avail fast and efficient service. BRAC Bank is a very active player in inter-bank call money and fx. market. It is one of the major suppliers of foreign currency in the inter-bank fx. market. Money market maintains the portfolio of Call & Term, Govt. & Private Securities, equity Investment, Repo & reverse Repo bank’s account while maintaining CRR & SLR. Fx. dealers quote very competitive cross currency spot, forward and swap rates to its customers while complying with Bangladesh Bank’s Foreign Exchange Risk Management Guidelines. BRAC Bank Has clearly demarcated Front Office, mid office and Back office having separate reporting lines, as per international best practice of treasury management and core risk management guidelines of Bangladesh Bank. The Front office involves in dealing activities, Mid office monitor rate appropriateness and any breach of limit while the Back office is responsible for all related process, support and settlement functions.
BRAC Bank has a dedicated team for Asset Liability Management. Recently they implemented Kastle, ALM software from 3i InfoTech for their rigorous analysis and forecasting the market behavior and to provide useful information before the ALCO. The ALM team monitor and present before ALCO the country’s overall economic position, Bank’s Liquidity position, ALM ratios, Interest Rate Risk, Capital Adequacy, deposit Advance growth, Cost of deposit & Yield on Assets e.g. Gap, Market Interest Rate and deposit and lending pricing strategy. The ALM team is also responsible for complying all regulatory requirements related with asset liability management. BRAC Bank has a strong worldwide correspondent network with the world’s leading 20 banks to facilitate trade, remittance & other services to its client efficiently and profitably. BRAC Bank also maintains about 477 accounts with 13 local banks to support its Small & Medium Enterprise (SME), Probashi Banking Services (PBS) & Cash Management business throughout the country.
3.7 Central Operations Division
Central Operations is the warden of all kinds of loan securities of the valued customers of BRAC bank. It is a single point of contact of all loan documents and securities. Central Operations supports business and other operational units through its following arms:
· Loan Archive
· Reconciliation
· Data Control
· Regional Operating centre
There are some major endeavors of Central Operations. They are as followed :
· Reconciliation of Financial Transactions
· Post Disbursement Monitoring
· Safe Keeping of loan files after due checking
· Performing of clearing activities
· Data validation and monitoring
· Release of securities on demand
3.8 Financial Administration Division
Financial Administration Department Has the responsibility of doing financial planning and management, chart of A/C and control, budgeting, planning, cost management and ensures financial control across the bank. It also generates and disseminates all forms of internal and external financial reporting, regulatory reporting and all business MIS.
3.9 General Infrastructure Division
General Infrastructure services (GIS) plays the pivotal role to ensure all kind of infrastructure support services for the bank. This department consists of six functional units namely Infrastructure Development, Infrastructure Management, Operations, procurement, Logistics and Small & Medium Enterprise administration Unit. With the combined roles and responsibilities of all these units, GIS is actually the execution point for all administrative related activities including the development of infrastructure setups for new Head Office Premises, Branch, ATM Booths, and Sales Center for BRAC Bank Limited all over the country.
3.10 Credit Division
In order to minimize credit risk, BBL has formulated a comprehensive credit policy according to Bangladesh Bank Core Risk Management guidelines. Credit policy of the bank provided for the separation of the credit approval function from business / marketing and loan administration function. Credit policy of BBL recommended thorough credit assessment and risk grading of all clients at the time of approval and portfolio review. Credit policy also provides thee guidelines of required information for credit assessments, marketing strategy, approval process, loan monitoring, early alert process, credit recovery, NPL account monitoring, NPL provisioning and write off policy etc. The board of directors reviews the credit policy of the bank annually.
3.10.1 Approval Process
Previously in the approval process, the bank had a Credit Committee consisting of four members, Managing Director & CEO, Deputy Managing Director & COO, Head of Corporate Banking & Head of Credit for approval of credit proposals. Later on, as per Bangladesh Bank credit Risk management (CRM) observations it has dissolved the Credit Committee and set the delegation of authority at individual level, duly approved by the board. Under BBL approval process, the activity of credit has been segregated as follows:
- Relationship Manager (RM) / Direct Sales Executives / Customer relationship Officer prepares the loan proposals and submits for recommendation from Head of Business Units / Respective managers.
- Head of Business Units / Managers place it to credit division for their approval / recommendation.
- After proper assessment of loan proposal by credit division, Managing Director Approves / recommends as per delegated authority by the board.
- Managing Director presents the proposal before board.
- Board advises the decision.
The following diagram illustrates the existing approval pro