Marketing Strategy of Credit Card, A study of BRAC Bank.
1.1. Introduction BRAC Bank Limited is one of the leading banks in Bangladesh. Since its inception in the year 04 July, 2001 the BRAC Bank Limited has earned tremendous popularity and credibility among the people for its service. Banks are providing various schemes for clients. Credit card is one of them. Credit card of BRAC Bank Limited is gaining more and more popularity which is functioning from the very inception of the bank. BRAC Bank Limited is one of the leading banks who are offering Consumers Credit Scheme (CCS) for the people. It is very helpful to people specially for middle class people and lower middle class people. Under this scheme people can take loan to buy household goods. By installment basis they can repay the loan. As total loan amount is repaid on installment basis it puts less pressure on consumer. Under Consumers Credit Scheme (CCS) people can take loan from banks and can buy their necessary goods. For limited income group Consumers Credit Scheme (CCS) is very helpful. BRAC Bank Limited wants sustainable growth and continues to meet social obligations. Day by day the number of consumers in BRAC Bank limited increases which indicate potentiality of the scheme. I have chosen BRAC Bank Limited, and other two private sector banks to make a comparison between “Credit Polices & Facilities”.
1.2. Objective of the Study To gain the relationship between theoretical and practical learning and the real life situation of BRAC Bank Ltd. in operating its Credit Card Schemes. The various concepts, which I have learnt from different courses during my BBA program, influencing an organization in various aspects, are considered chiefly here.
1.2.1. Primary Objective:
To gain practical experiences of credit card operation
1.2.1. Secondary Objectives: •
To give an overview on BRAC Bank Ltd. and its services.
•
To detail the Credit Card Policies & Facilities of BBL and its Credit Card Operation System.
•
To perform a comparative analysis on Credit Card Policies & Facilities of BBL with others two banks.
•
Finding out the shortcomings of the Bank in its Credit Card operations and providing some Recommendation.
1.3. Scope of the Study: My assigned work was limited by the report topic to observe and collect information on Credit Card Polices & Facilities of different private sector banks. For this I have collected data and information on Credit Card Schemes of two private sector banks, along with BRAC Bank Ltd. Those are as follows: 1. Eastern Bank 2. Standard Chartered Bank. I have selected these banks not on the basis of their size, but on the basis of the market acceptability of their Credit Card Scheme.
1.4. Methodology of the Study Primary information regarding the BRAC Bank Limited has been obtained through personal interviews of some of the officials of the bank. Secondary data are taken from different annual reports and journals of different banks and BRAC Bank. Different books and journals as well as Internet are used as a means of this study.
1.5 Population and Sample As a case study, the study covers only the BBL ATM Card users. The population size is forty. In this study convenience sampling technique has been used. The sample size of this study is 35.
1.6 Data Analysis The classified and tabulated data had been analyzed elaborately in a number of tables in an analysis part. Necessary percentages and averages calculated and the analyzed results describe step by step. Both primary and secondary data were used for the purpose of the study. One set of structured questionnaire was used to collect primary data for the study. Secondary sources are operational manual, official website, banking journal, BBL newsletter and research paper.
1.7 Limitations Observing and analyzing the broad performance of a bank is not an easy, particularly in such a short duration. Shortage of recent data as well as information of different activities of BRAC Bank was a great problem for me is to depict the actual and up-to-date business position of the bank. Moreover, all the employees were always busy with heavy workload. Therefore, they were not able to extend their co-operation properly. ATM Card production unit is entry restricted area. The officers and staff are not cooperative. They told that it is a sensitive issue. They do not want to express their information and ideas. 2.1 Organization Name BRAC Bank Limited (BBL)
2.2 Location Head office 1 Gulshan Avenue Gulshan-1, Dhaka-1212, Bangladesh. Phone: 88-02-9884292, Fax: 88-02-9860395 Swift: BRAKBDDH Web: www.bracbank.com
2.3 Historical Background BRAC Bank Limited is a scheduled commercial bank in Bangladesh emerged from the mother organization BRAC. It established in Bangladesh under the Banking Companies Act, 1991 and incorporated as private limited company on 20 May 1999 under the Companies Act, 1994. BRAC Bank will be a unique organization in Bangladesh. The primary objective of the Bank is to provide all kinds of banking business. At the very beginning the Bank faced some legal obligation because the High Court of Bangladesh suspended activity of the Bank and it could fail to start its operations till 03 June 2001. Eventually, the judgment of the High Court was set aside and dismissed by the Appellate Division of the Supreme Court on 04 June 2001 and the Bank has started its operations from July 04, 2001. The importance of financial intermediaries in the development of the overall economy of country cannot be described in short. From the inception of the civilization the banking sector dominate the economic development of a country by mobilizing the saving from the general people and channeling those saving for investment and thus economic development and growth. The importance of commercial banks after the ravage of the liberation war to develop a better economy was severally needed and it is needed now and will be required in future also. In time-totime Government of Bangladesh agreed to permit the private commercial banking in the country. BRAC bank will be knowledge-based organization where the BRAC Bank professionals will learn continuously from their customers and colleagues world wide to add value. It will work as a team, they innovate and break barriers to serve customers and create customers loyalty through a value chain of responsive and professional delivery. The bank promotes broad-based participation in the economy of Bangladesh through the provision of high quality banking services. BRAC Bank will do this by increasing access to economic opportunities for all individuals and business in Bangladesh with a special focus on currently under-served enterprises and households across the rural – urban spectrum. BRAC Bank believes that the pursuit of profit and developmental goals is mutually reinforcing. Increasing the ability of under – served individuals and enterprises to build their asset
base and access market opportunities will increase the economic well being for all Bangladeshis at the same time, this will contribute significantly to the profitability of the Bank. BRAC Bank intends to set standards as the Market leader in Bangladesh. It will produce earnings and pay out dividends that can support the activities of BRAC, the Bank’s major shareholder. Development and poverty alleviation on a countrywide basis needs mass production, mass consumption and mass financing. BRAC Bank goal is to provide mass financing to enable mass production and mass consumption, and thereby contribute to the development of Bangladesh. BRAC Bank intends to set standard as the market leader in Bangladesh by providing efficient, friendly and modern fully automated online service on a profitable basis Aiming at offering commercial banking service to the customers’ door around the country, BRAC Bank limited established 56 branches up-to this year. This organization achieved customers’ confidence immediately after its establishment. Within this short time the bank has been successful in positioning itself as progressive and dynamic financial institution in the country. The is now widely acclaimed by the business community, from small entrepreneur to big merchant and conglomerates, including top rated corporate and foreign investors, for modern and innovative ideas and financial solution. Thus within this short time it has been able to create an unique image for itself and earned significant solution in the banking sector of the country as a bank with a difference. The emergence of BRAC Bank Limited is an important event in the country’s financial sector at the inception of financial sector reform. The authorized capital of BBL is Tk. 1000 million and paid up capital of the same bank is Tk. 500 million. The Chairman of the Bank is Mr. Fazle Hasan Abed. Now the Managing Director of the bank is Mr. Imran Rahman.The bank has made a reasonable progress due to its visionary management people and its appropriate policy and implementation
2.4. Achievements i.
Fastest growing bank in the country for the last two years
ii.
Leader in SME financing through more then 400 offices
iii.
Biggest suit of personal banking & SME products
iv.
Large ATMs (Automated Teller Machine) & POS (Point of Sales) network
v.
Brac bank has been recognized for ‘ICMAB best corporate award 2007’
2.5 Management of BRAC Bank Limited
Boards of directors are the sole authority to take decision about the affairs of the business. Now there are 5 directors in the management of the bank. All the directors have good academic background and have huge experience in business. Mr. Fazle Hasan Abed is the chairperson of the bank. The board of directors holds meetings on a regular basis. The current management teams and board of director’s name are given in the following table: Management Team Mr. A. E. A. Muhaimen Managing Director & CEO Kaiser Tamiz Amin Chief Operations Officer Rais Uddin Ahmad
Siddik Bin Zia
Head of Risk Management & Company
Head of Retail Banking Operation
Secretary Mohd. Rafat Ullah Khan
Naushad Hussain
Head of Credit
Head of Secured Remittance Service
Tahniyat Ahmed Karim
Faruk Ahammad
Head of Human Resources
Farzana Chowdhury
Head of Financial Administration Md. Rahmat Pasha
Head of Small & Medium Enterprise (SME) Khwaja Shahriar
Head of Treasury Shah Alam Bhuiyan
Head of Corporate Banking Head of Asset Operations Mizanur Rahman Chowdhury Head of Information Technology (IT) Board of Directors: Mr. Fazle Hasan Abed, Chairman Mr. Syed Humayun Kabir, Director
Mr. Md. Aminul Alam, Director
Mr. Paul D. Christensen
Mr.
Muhammad
A.
(RUMEE)
(Nominated By Shorecap International (Nominated by BRAC), Director Limited), Director Mr. Quazi Md. Shariful Ala
Mr. Imran Rahman,
(Nominated by BRAC), Director
Managing Director and CEO
2.6. Characteristics of the Founders
ALI
•
The company shall go for Initial Public Offer (IPO) for 5,000,000 ordinary shares of Taka 170.00(one hundred seventy) per share worth Taka 850,000,000.00 (Eighty five crore) following the Securities and Exchange Commission (Public Issue) Rules, 2006, the Depository Act, 1999 and regulations issued hereunder.
•
The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer in four national daily newspapers (in two Bengali and two English), within three working days of issuance of this letter. The issuer shall post the full prospectus vetted by the Securities and Exchange Commission in the issuer’s website and shall also put on the web sites of the Commission, stock exchanges, and the issue manager within working days from the date of issuance of this letter which shall remain posted till the closure of the subscription list. The issuer shall submit to SEC, the stock exchanges and the issue manager a diskette containing the text of the vetted Prospectus in ms-word format.
•
Sufficient copies of prospectus shall be made available by the issuer so that any person requesting a copy may receive one. A notice shall be placed on the front of the application form distributed in connection with the offering, informing that interested persons are entitled to a prospectus, if they so desire, and that copies of prospectus may be obtained from the issuer and the issue manager.
•
The subscription application shall indicate in bold type that no sale of securities shall
•
be made, nor shall any money be taken from any person, in connection with such Sale until twenty five days after the prospectus has been published.
•
The company shall submit forty copies of the printed prospectus to the Securities and Exchange Commission for official record within five working days from the date of publication of the abridged version of the prospectus in the newspaper.
•
The issuer company and the issue manager shall ensure transmission of the prospectus, abridged version of the prospectus and relevant application forms for non-resident
Bangladeshis through e-mail, simultaneously with publication of the abridged version of the prospectus, to the Bangladesh Embassies and Missions abroad and shall also ensure sending of the printed copies of abridged version of the prospectus and application forms to the said Embassies and Missions within five working days of the publication date by express mail service of the postal department. A compliance report shall be submitted in this respect to the SEC jointly by the issuer and the issue manger within two working days from the date of said dispatch of the prospectus & the forms. •
The paper clipping of the published abridged version of the prospectus, as mentioned at condition two above, shall be submitted to the Commission within 24 hours of the publication thereof.
•
The company shall maintain separate bank account(s) for collecting proceeds of the Initial Public Offering and shall also open FC account(s) to deposit the
Application money of the Non- Resident Bangladeshis for IPO purpose, and shall incorporate full particulars of said FC account(s) in the prospectus. The company shall open the abovementioned accounts for IPO purpose; and close these accounts after refund of over-subscription. 2.7. Vision BRAC Bank vision is to build a profitable and socially responsible financial institution focused on Markets and Businesses with growth potential, thereby assisting its stakeholders build a just, enlightened, healthy, democratic and poverty free Bangladesh. 2.8. Mission BRAC Bank will adhere to professional and ethical business principles and internationally acceptable banking and accounting standards. Every BRAC Bank employee will need a commitment to excellence in all that he/she does, a keen desire for success, a determination to excel and a drive to be the best. They will individually and jointly learn continuously from customers and colleagues around the globe to improve the way they do business, so that they can be the best. They will walk that extra mile with enthusiasm and
empathy to serve their customers and to solve problems together so that their customers succeed in their business and remain loyal to our Bank. They will set up goals and then exceed the goals that they set up. They will not accept failure. 2.9. Goals & Objective BRAC Bank will be the absolute market leader in SME business through out Bangladesh. It will be a world – class organization in terms of service quality and establishing relationships that help its customers to develop and grow successfully. It will be the Bank of choice both for its employees and its customers, the model bank across the globe. 2.10. Management The credit approval team is independent from the sales and branch team who will evaluate and approve the loan. The credit card division checks and ensures the documentation of credit card application. Through this credit division take decision that this application holder can get the BBL credit card or not. If they find that this application holder fulfills the requirement of BBL then they approve the application. This ensures the better control on the credit card holder. 3.1. Introduction During my three months of work experience with BRAC Bank Ltd. on my internship program, I was placed in the Regulatory & Internal Control Department , usha tower, Gulshan-1. I joined the program in 5th January 2009. This is a division of the head office of BBL as a result I have gathered an important experience of assessment of credit card. 3.2. Description of My Task Areas In BBL Credit Division my main task was to handle assessment of credit card application, which helped me to gain practical experience on calculating the bank statement of the credit card applicant, customer personal verification, application processing, evaluating the credit limit and maintain a status of free for life (FFL) applications. This has definitely enriched my practical experience. 3.3. Observation It is my personal observation that everyday approximately 500 credit card application come to the bank. From this 500 application approximately 40-50 we send back for not fulfilling the total requirement of BBL and reject approximately 10-20 applications because of observing their
document which does not support the BBL requirement. I had many things to learn in the last three months. 3.4. Other Task Areas The bank had to maintain a status of FFL application. At first I had to receive the application from MIS and maintain a status of receiving file or application and after assessing I had to send the credit approve files to the operation and maintain a sending approve status to operation. 3.5. Learning Experience I have learned that when the internal communication is effective among the employees within the organization, it tends to encourage employees to perform better and it automatically motivates the employees. I learned the importance of detailed data to be gathered from customer while opening a credit card. The validity and the accuracy of the details given offer help the bank in providing fast service. I learned to work in a group and how to contribute positively to the objective of the group. BBL has a practice of teamwork in almost each of its specific task. Working in different groups in different time helped me improve my communication skill. Interacting with customers and the techniques applied to deal customers over phone also helped me improve my communication skill. I learned that the perception and knowledge I gained from my Business School is of extreme importance. It made me confident, knowledgeable and open minded to new ideas and situation. This may be the reason that I found no problem to work in an absorbing work environment of BBL. 4.1. History of Credit Card of BRAC Bank Limited At the beginning BRAC Bank Ltd. Provide credit card just for their employees. But later on to fulfill the customer demand, to give the better service to the customer as well as to increase the market shares they launce their credit card to the market. BBL started to launce their credit card officially at the 6th February 2007. After stared their journey they give attractive offer to the customer so that the number of customers has grown rapidly due to this merger and continuous marketing effort. Above all the bank’s success in acquiring a broader credit card customer base has created a serious problem in providing the usual fast service that this bank was repute for.
4.2. Objectives of the Scheme
•
To sell BBL services to a wide range of customers and increase their Credit Card portfolio
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To provide financial assistance to the customer at their necessity for buying household durable and utility products
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To help the professionals in raising their standard of living
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To participate in the socio-economic development of the country
4.3. Credit Card Consumer or personal credit card is comprised of advances made to individuals to enable them to meet expenses or to purchase, on a deferred- payment basis, goods or services for personal consumption. Such credit card may be used not only to obtain consumer goods or services but to refinance debts which originated when such purchases were made. In this case they can withdraw a percent of cash of their limit if they want. The special features of the card are 10 per cent cash back facility,
days interest free period, free three months insurance coverage, access to all Visa ATMs and outlets and 24-hour customer service through phone banking. The interest rate will be 2.5 per
cent
per
month
and
30
per
cent
per
4.4. Eligible Items
There are two types of credit card: • Silver Credit Card •
Golden Credit Card
5.1. Credit Card Policies of BBL 5.1.1. Eligibility of Consumers 5.1.1.2. Following person can get Credit Card: •
Government employee ;
•
Non-Government organizations/ Institute’s employee ;
•
Semi-Government employee ;
Self-employed ;
•
Professionals and
•
Land Lord/Lady who has rental agreement copy, last three months rent receipts copy.
5.1.3. Age Limit for being a consumer of Credit Card Minimum Age: 21 years
Maximum Age: 60 years
year
5.1.4. Mandatory Document Salaried A/C Paid Salaried Cash Paid Self-employed Land Lord/Lady Professionals
Latest LOI / Pay Slip / Salary Certificate (any one of them), Mini Bank Statement, Visiting Card, Land Phone Latest LOI ( issued by authorized person) Mini Bank statement, Visiting Card, Land Phone Trade License, Partnership Deed, MOA, Certificate of Incorporation, Work order, Mini Bank Statement, Visiting Card, Land Phone Rental Agreement copy, Last three months rent receipts copy, Mini Bank Statement, Land Phone. Professional Certificate, Mini Bank Statement, Land Phone.
Bank Statement Salaried A/C Paid Salaried Cash Paid Self-employed
Six month Salary A/C with other bank or one month Salary A/C with BBL Last Six months personal Bank Statement Last 12 month Personal / Company stmt.
Work experiences/ Business existence Salaried A/C Paid Three months work experiences in same org. Salaried Cash Paid Six months work experiences in same org. Self-employed One year in same business. Classification of Cards based on Income. Salaried A/C Paid Classic- Tk.10,000 Salaried Cash Paid
Gold-Tk.35,000 Classic- Tk.14,000
Self-employed
Gold-Tk.45,000 Classic- Tk.14,000 Gold-Tk.45,000
5.1.5. Declining Details To be a BBL credit card holder the applicant has to fulfill the above requirements. After giving the all document some time the application may decline for the following reasons. Those are following: •
21years<AGE>60years
•
Bank Statement<6months
•
Bank Statement<6months
•
Bank Statement<3months
•
B/S without continued balance
•
DBR>50%
•
Designation doesn’t support
•
Discouraging sector
•
Existence of company<2years
•
Fraudulent document
•
Frequent cheque return
•
No proof of income
•
Poor bank statement
•
Poor loan repayment history
•
Name mismatches among the document
•
Poor credit card repayment history
•
Improper salary certificate
•
Incomplete application
•
LOI is issued by unauthorized person
•
Negative listed company
•
Poor company profile
•
CPV negative
•
Left job
•
Not available phone
•
Previously rejected
5.2. Credit Card Facilities of BBL 5.2.1. Credit Limit. Credit limit is different for different customer. The limit of BBL credit card is Tk.10000-Tk.500000. It may be Tk.10000 or Tk.500000. It depends on the average credit transaction (A.C.T) and average monthly balance (A.M.B) of the customer bank statement. Amount of credit will be allowed keeping in view the repayment capability of the customer. The amount of credit shall be determined in such a manner that the minimum installment or payment does not exceed 50% of the disposable income (take home salary/ income) of the customer. The minimum installment size will not exceed one third of the take home salary for officers only so as to enable the customer to repay the loan easily. Minimum payment size also depends on the limit of the credit card. On the other hand the limit of Free For Life (FFL) credit card is 1.5times of existing card limit. It is maximum Tk.5000000. This product is offered to only those who transfer their outstanding credit card balance from their current credit card to BBL credit card.
5.2.2. Free For Life (FFL): BBL introduces a credit card that is free for life. This is for those customers who has credit card of another bank. For this type of customer BBL gives an attractive offer, like if they want to be a member of BBL credit card family then they can enjoy the credit card without any paying annual fee for ever. Not only that but also BBL will give1.5 times of the existing credit card limit in their BBL credit card. 5.2.3. Balance Transfer: If any one has other bank credit card, then he/she has the option to transfer his/her current outstanding balance without any fee to his/her BBL credit card. This saves his/her money, time and gives the convenience to manage all his/her expenses from one point. They want to be customer life time partner. That’s why they care about customer outstanding amount. 5.2.4. Card Cheque: It’s very good news to the BBL credit card customer that very soon BBL will provide cheque of credit card to the customer. It will give some extra facilities to the customer. Customer can make payment to any person or organization of their choice. This cheque book is useful in situations where they can’t use their credit card. 5.2.5. Worldwide acceptance: BBL credit card is accepted at over 5000 VISA merchant outlets around the country and over 24 million VISA outlets worldwide. Customer can use this card for a wide range of products and services such as hotels, restaurant, airlines & travel agents, shopping malls & departmental stores, hospitals & diagnostic centers, mobile phone & internet service providers, fuel station and what not! The number is progressively on the rise. No matter whenever you are with BBL credit card, you will always have the purchase power. 5.2.6. Immediate Cash Advance Facility: With a BBL credit card in your wallet, you will not be strapped for cash ever again. You can withdraw cash up to 50% of your total credit limit 24-hours a day from any BBL ATM; or from any VISA participating member bank ATMs across the country; or from any VISA ATMs worldwide. You don’t need to worry about carrying cash anywhere –not even on a foreign trip when there is no one to give you hard cash at times of need. 5.2.7. Supplementary Card:
BBL credit card gives you the opportunity to share the benefits of your card with your family members by providing you supplementary cards. It’s a great offer of BBL credit card that they offer at best 10 supplementary cards. Being a primary cardholder, cardholder has the option to set a spending limit for each of cardholder supplementary cards. This is perfect for you if you are thinking of giving cardholder’s wife, children or other family member their pocket money with present spending limit. You can easily setup their spending limit and also have an eye on their spending behaviors. All transactions on your supplementary card will separately be shown on your monthly statement. Cardholder has no need to pay any fee for the first four supplementary cards. 5.2.8. Risk Assurance Program: Risk assurance program is a double benefit insurance plan for the BBL credit cardholders. The entire dues on the credit card, in the event of death or permanent total disability of BBL credit cardholder, will be waived and the cardholder or his/her family will receive equal amount to meet immediate expenses – under risk assurance program. Very normal change will be applicable for this coverage. Cardholder can decide to cancel this program by sending a letter to BBL at any time. 5.2.9. Easy Installment Program (incoming) Easy installment program of BBL credit card allows the cardholder to convert any retail transaction into an easy installment plan. You can purchase any high value product or service and make payments in equal monthly installments. The program will be notifying you as soon as their network partners increase. 5.2.10. Auto Debit Facility: If you have an account with any BBL branch you have the option of making the payment of your monthly credit statement directly through your bank account. 5.2.11. e-statement: BBL cardholders can receive monthly statement via e-mail, completely free of cost. This is a fast, reliable and efficient service, which will minimize your paperwork and maximize your convenience. Your statement mails or SMails can be delivered to more than one e-mail address. All you need to do is just filling up the form and we will do the rest 5.2.12. Global Emergency Assistance Service: When you travel abroad, you have to remember that you have the option of using the global emergency assistance service provided by VISA for our cardholder. This can be availed for: •
Reporting lost/stolen credit card
•
Requesting for an emergency card replacement
•
Emergency cash advance and
•
Miscellaneous enquires
The toll free telephone numbers for accessing these emergency assistance help lines are available in local telephone directories/yellow pages and other local listings in each country. 5.2.13. SMS service + transaction Alert: Recently BBL makes an agreement with the Bangladesh largest telecommunication company Grameen Phone to give the mobile alert service to the customer. Mobile alert is a very simple, powerful and convenient way to know your credit card statement details instantly without any postal delays. As soon as you become a BBL credit cardholder, you automatically join in the BBL mobile alert service and get faster, reliable access to your monthly statement. Mobile alerts from BBL provide you with information on your BBL credit card even when you are on the move. Now you would no longer miss a payment or exhaust your credit limit without any warning. Once your statement is generated, they will notify you about the balance status with payment information. 5.2.14. Earn While You Spend BBL Rewards Program: A special bonus plan that allows you to earn points every time you use your card, every Tk.50 that you spend earns you 1 point. The redemption of reward points can be done against the product and services in the reward catalogue. The enrollment is free. They are preparing the rewards listing and shall mail you the catalogues with program details as soon as it is launched. 5.2.16. Self Set Limit: BBL credit card is the only card that allows you to pre-define your own credit limits. You can request for a limit lower than that you are eligible for. You can even pre-set the monthly spending limits on the supplementary cards. Any transactions over the specified ‘spend limit’ will be declined. This monthly spending limit can be reset every billing cycle by just calling the BBL 24-hour cards center and place your request with the customer service executive. Your spending limit will be changed online and come into force from the next billing cycle. 5.2.18. BBL 24-Hour calls Center: The BBL bank 24-hour card center is equipped with a state of the art system that ensures your queries are being handled efficiently and promptly.
5.2.21. Mode of Repayment Repayment will start from the following month of the disbursement of loan. Repayment of loans including accrued interest will be made by equal monthly installments. Before disbursement of loan, the customer will deposit crossed cheque covering the total number of monthly installments in favor of the bank which will have to be presented for collection on the due dates. Installments will be paid within 7th day of each month. Default in payment of 3(Three) consecutive installments shall render the client liable to handover the articles to the bank. Pre-payment is allowed. The client may repay the entire outstanding amount in lump sum before expiry of validity period of the loan. 5.2.22. Bills Pay Machine A customer can pay his outstanding or minimum payment through the following booth and branch: •
Gulshan Branch Booth
•
Banani Branch Booth
•
Uttara Branch Booth
•
Green Road
•
Brac University
•
Delta Medical College Hospital (Mirpur)
•
Bijoy Nagar
•
Kazi Para Booth
•
Graphics Building Branch (Motijheel)
Next year BBL is going to increase more payment booth to give the better service to the customer.
5.3. Percentages & graphical representation of credit card uses: Users of ATM CARD Debit Card
80%
Credit Card
10%
Both
5%
80% 70% 60% 50%
Debit Card
40%
Credit Card
30%
Both
20% 10% 0%
Debit Card
Credit Card
Both
Analysis1. Debit Card Users of BRAC Bank is 80% 2. Credit Card Users of BRAC Bank is 10% 3. Both Card Users of BRAC Bank is
5%
Production Rate of Credit card Year 2007 2008
Total Production 18500 40000
40000 35000 30000 25000 Series1
20000
Series2
15000 10000 5000 0
Year
Total Production
The Production Rate of Debit and Credit card is increasingly day by day.If the production rate increases the users of ATM card also increase. ATM card production unit of BRAC Bank is producing around 2000 cards in different segment each day. It is expected that within next two to three years, Bangladesh will experience a 100% growth in card industry especially in debit card. More banks are becoming on-line and started issuing debit card. It always remains blurred to most of the local banks how to ensure substantial profit from card business.
At present, up to 25 banks are in card businesses in Bangladesh. Number of ATM cards is approximately 10, 00,000. With 6, 00,000 debit cards. There are around 4, 70,000 Credit cards currently in use in the country. New banks are coming in card business but growth rate is still medium, standing at approximately 30-40% now. 6.1. Introduction: The first of EBL credit card kind is a complete credit card with every benefit possible in a card and still offering you something extra. At work or leisure, experience the convenience of a card that does everything with style and honesty. When you become a member of EBL card services family, you become a part of an exclusive clubentitled to first class financial advice, priority treatment and a growing range of courtesy services. They understand the value of your money. That is why their vision to give the highest benefits to the customer at a minimum cost. 6.2. Credit Card Policies & Facilities of EBL: 6.2.1 One Time Fee & Life Time Fee: Owning a credit card is a basic right of a qualified financial services consumer- and there is no strong reason to pa fee every year for that right. At EBL they have shown respect to this concept. To avail EBL credit card services, you need to pay the subscription/annual fee only once. After that there is no annual fee for you as long as you transact at least 18 times in a whole year. It is a lifetime card. 6.2.2. Balance Transfer: They are happy to introduce balance transfer for the first time in Bangladesh. If any one has other bank credit card, then he/she has the option to transfer his/her current outstanding balance at a much cheaper rate to his/her EBL credit card. This saves his/her money, time and gives the convenience to manage all his/her expenses from one point. They want to be customer life time partner. Thatâ&#x20AC;&#x2122;s why they care about Customer outstanding amount.
6.2.3. Card Cheque: Through credit card customer can enjoy a full-fledged cheque book facility. Customer can make payment to any person or organization of their choice. This cheque book is useful in situations where they canâ&#x20AC;&#x2122;t use their credit card. The customer will get their first cheque book absolutely free. 6.2.4. Worldwide acceptance:
EBL credit card is accepted at over 5000 VISA merchant outlets around the country and over 24 million VISA outlets worldwide. Customer can use this card for a wide range of products and services such as hotels, restaurant, airlines & travel agents, shopping malls & departmental stores, hospitals & diagnostic centers, mobile phone & internet service providers, fuel station and what not! The number is progressively on the rise. No matter whenever you are with EBL credit card, you will always have the purchase power. 6.2.5. Immediate Cash Advance Facility: With an EBL credit card in your wallet, you will not be strapped for cash ever again. You can withdraw cash up to 50% of your total credit limit 24-hours a day from any EBL ATM; or from any VISA participating member bank ATMs across the country; or from any VISA ATMs worldwide. You don’t need to worry about carrying cash anywhere –not even on a foreign trip when there is no one to give you hard cash at times of need. 6.2.6. Supplementary Card: EBL credit card gives you the opportunity to share the benefits of your card with your dear ones by providing you supplementary cards. Being a primary cardholder, you have the option to set a spending limit for each of your supplementary cards. This is perfect for you if you are thinking of giving your children their pocket money with present spending limit. You can easily setup their spending limit and also have an eye on their spending behaviors. All transactions on your
supplementary card will separately be shown on your monthly statement. 6.2.7. Risk Assurance Program: Risk assurance program is a double benefit insurance plan for the EBL credit cardholders. The entire dues on the credit card, in the event of death or permanent total disability of EBL credit cardholder, will be waived and the cardholder or his/her family will receive equal amount to meet immediate expenses – under risk assurance program. Very normal change will be applicable for this coverage. Cardholder can decide to cancel this program by sending a letter to EBL at any time. 6.2.8. Great Discounts: EBL has partnered with hounded of venders for giving the EBL credit card users s hefty discount on their products and services. The great discount in turn allows you either to save money or shop more with the same amount you are spending now. Less or more – choice is yours. Spending has never been so great.
6.2.9. Shopper’s Guide: EBL credit card provides you a list of shops and outlets where your use of card will entitle you to receive certain discounts. They have chosen a large number of shops and retail outlets for this purpose. The printed guide comes with every detail. They will mail the customers every time it is published. Thus making customer’s life easier. 6.2.10. Easy installment Program: Easy installment program of EBL credit card allows the cardholder to convert any retail transaction into an easy installment plan. You can purchase any high value product or service and make payments in equal monthly installments. The program will be notifying you as soon as their network partners increase. 6.2.11. Auto Debit Facility: If you have n account with any EBL branch you have the option of making the payment of your monthly credit statement directly through your bank account. 6.2.12. SMail Service: EBL cardholders can receive monthly statement via e-mail, completely free of cost. This is a fast, reliable and efficient service, which will minimize your paperwork and maximize your convenience. Your statement mails or SMails can be delivered to more than one e-mail address. All you need to do is just filling up the form and we will do the rest 6.2.13. Global Emergency Assistance Service: When you travel abroad, you have to remember that you have the option of using the global emergency assistance service provided by VISA for our cardholder. This can be availed for: •
Reporting lost/stolen credit card
•
Requesting for an emergency card replacement
•
Emergency cash advance and
•
Miscellaneous enquires
The toll free telephone numbers for accessing these emergency assistance help lines are available in local telephone directories/yellow pages and other local listings in each country. 6.2.14. EBL Mobile Alert:
EBL mobile alert is a very simple, powerful and convenient way to know your credit card statement details instantly without any postal delays. As soon as you become an EBL credit cardholder, you automatically join in the EBL mobile alert service and get faster, reliable access to your monthly statement. Mobile alerts from EBL provide you with information on your EBL credit card even when you are on the move. Now you would no longer miss a payment or exhaust your credit limit without any warning. Once your statement is generated, they will notify you about the balance status with payment information. 6.2.15. Earn While You Spend EBL Rewards Program: A special bonus plan that allows you to earn points every time you use your card, every Tk.50 that you spend earns you 1 point. The redemption of reward points can be done against the product and services in the reward catalogue. The enrollment is free. They are preparing the rewards listing and shall mail you the catalogues with program details as soon as it is launched. 6.2.16. Photo-Card: Your EBL credit card has your photograph and signature digitally imprinted on the card. This provides you extra security at any of the merchant establishments. In fact, it can be used as proof of identification, in the interest of your own security. 6.2.17. Self Set Limit: EBL credit card is the only card that allows you to pre-define your own credit limits. You can request for a limit lower than that you are eligible for. You can even pre-set the monthly spending limits on the supplementary cards. Any transactions over the specified â&#x20AC;&#x2DC;spend limitâ&#x20AC;&#x2122; will be declined. This monthly spending limit can be reset every billing cycle by just calling the EBL 24-hour cards center and place your request with the customer service executive. Your spending limit will be changed online and come into force from the next billing cycle. 6.2.18. Limited Lost Card Liability: In this case the card is lost or stolen, call the EBL 24-hours card service center and report the loss of your card. A new card will be sent to you within 72 hours of reporting this loss. You are protected from any financial liability arising out of transactions done on your missing card, from the time you report the loss to EBL. 6.2.19. The Schedule of Charges for Credit Card
Payment Due Date Local Dual
Classic 15 days 15 days
Gold 15 days 15 days
Maximum Amount Due Local
Classic Gold 5% or BDT 500,whichever 5% or BDT 500,whichever
Dual
higher higher 5% or BDT 500,whichever 5% or BDT 500,whichever higher
higher
Cash Advance Limit Local Dual
Classic 50% 50%
Gold 50% 50%
Maximum Interest Free Days
Classic
Gold
Available Local Dual
45 days 45 days
45 days 45 days
First Year Annual Fee Local Dual
Classic Tk.1300 Tk.1500
Gold Tk.2500 Tk.3500
First Year Annual Fee of
Classic
Gold
Supplementary Card Local Dual Card Replacement Fee Local Dual PIN Replacement Fee Local Dual
Tk.1300 Tk.1500 Classic Tk.150 Tk.300 Classic Tk.150 Tk.300
Tk.2500 Tk.2500 Gold Tk.200 Tk.400 Gold Tk.200 Tk.400
Classic
Gold
Transaction-Annual Rate Local Dual
30% 30%
30% 30%
Balance Transfer Interest Local Dual
Classic 22% 22%
Gold 22% 22%
Financial
Charge
on
all
Interest on Excess of Limit
Classic
Gold
Amount Local Dual
35% 35%
35% 35%
Late Payment Fee Local Dual
Classic Tk.300 Tk.500
Gold Tk.300 Tk.500
Cash Advance Fee Local
Classic 3% or BDT 100 whichever
Gold 3% or BDT 100 whichever
Dual
higher 3% or BDT 100 whichever
higher 3% or BDT 100 whichever
higher
higher
Duplicate Statement Fee Local Dual
Classic Tk.50 Tk.50
Gold Tk.50 Tk.50
Returned Cheque Fee Local Dual
Classic Tk.200 Tk.200
Gold Tk.200 Tk.200
Outstanding
Cheque Classic
Collection Fee Local Dual
Tk.250 Tk.250
Gold Tk.250 Tk.250
7.1. Introduction: Standard Chartered is the first bank who introduce credit card in Bangladesh. They have much more credit cardholders than other bank. At SCB they believe in respecting the customer value. Recently they launch a credit card called SCB Saadiq Credit Card which is Bangladesh first Sariah-compliant, which combine the international acceptability with worldwide reliability and excellent service. 7.2. Credit Card Policies & Facilities of SCB: 7.2.1 Balance Transfer: If any one has other bank credit card, then he/she has the option to transfer his/her current outstanding balance at a much cheaper rate to his/her SCB credit card. This saves his/her money,
time and gives the convenience to manage all his/her expenses from one point. They want to be customer life time partner. That’s why they care about customer outstanding amount. 7.2.2. Card Cheque: At the first time the provide cheque to the customer against credit card. Through credit card customer can enjoy a full-fledged cheque book facility. Customer can make payment to any person or organization of their choice. This cheque book is useful in situations where they can’t use their credit card. The customer will get their first cheque book absolutely free. 7.2.3. Worldwide Acceptance: SCB credit card is accepted at over 5000 VISA outlets across the country and over 24 million VISA outlets worldwide. Customer can use this card for every day purchases as well as high value transaction. You may use it to buy products and services such as hotels, restaurant, airlines & travel agents, shopping malls & departmental stores, hospitals & diagnostic centers, mobile phone & internet service providers, fuel station and what not! The number is progressively on the rise. 7.2.4. Immediate Cash Advance Facility: You can withdraw cash up to 50% of your credit limit from any one of SCB branches or ATM across the country and ATMs all over the world that has VISA logo. You don’t need to worry about carrying cash anywhere –not even on a foreign trip when there is no one to give you hard cash at times of need. 7.2.5. Supplementary Card: You can share the exclusive benefits of your SCB credit card by giving your loved ones a supplementary card. As a primary cardholder, you can also set a spending limit for each of your supplementary cards. This is perfect for you if you are thinking of giving your children their pocket money with present spending limit. You can easily setup their spending limit and also have an eye on their spending behaviors. All transactions on your supplementary card will separately be shown on your monthly statement. 7.2.6. Great Discount: SCB has partnered with hounded of venders for giving the SCB credit card users s hefty discount on their products and services. The great discount in turn allows you either to save money or shop more
with the same amount you are spending now. Less or more â&#x20AC;&#x201C; choice is yours. Spending has never been so great. 7.2.7. Auto Bill Pay: With your SCB credit card, you can pay your monthly bills of electricity (DESA, DESCO), mobile phone (AKTEL, Banglalink, CityCell, Grameenphone), ISP (AccessTEL, Agni, BOL, Zip) or Cable TV (Prisma Digital). 7.2.8. E-Statements: SCB cardholders can receive monthly statement via e-mail, completely free of cost. This is a fast, reliable and efficient service, which will minimize your paperwork and maximize your convenience. Your statement mails or e-statement can be delivered to more than one e-mail address. All you need to do is just filling up the form and they will do the rest 7.2.9. SMS Banking: SMS banking is the simplest way of finding out your credit card daily outstanding balance and available limit, statement balance, minimum due amount and payment due date. As soon as you become an SCB credit cardholder, you automatically join in the SCB SMS banking service and get faster, reliable access to your monthly statement. Now you would no longer miss a payment or exhaust your credit limit without any warning. 7.2.10. SCB Rewards Program: Itâ&#x20AC;&#x2122;s a loyalty program that rewards you every time use your SCB credit card. They are preparing the rewards listing and shall mail you the catalogues with program details as soon as it is launched. 7.2.11. Photo-Card: Your SCB credit card has your photograph and signature digitally imprinted on the card. This provides you extra security at any of the merchant establishments. In fact, it can be used as proof of identification, in the interest of your own security. 7.2.12. 24-Hour Call Centre: SCB offers customer services 24-hour a day, 7 day a week through our state-of-the-art call centre. For any enquiry on your SCB credit card simply call at 8961151, 01713041400-19 and 01819399999. 7.2.13. The Schedule of Charges for Credit Card
Payment Due Date Local International
Green 15 days 15 days
Gold 15 days 15 days
Minimum Amount Due Local
Green 5% or BDT 500, whichever
Gold 5% or BDT 500, whichever
International
higher 5% or BDT 500, whichever
higher 5% or BDT 500, whichever
higher
higher
Green 50% 50%
Gold 50% 50%
Cash Advance Limit Local International Maximum Interest Free Days
Green
Gold
Available Local International Monthly Maintenance Fee Local International
45 Days 45 Days Green Tk.500 Tk.550
45 Days 45 Days Gold Tk.600 Tk.650
Card Replacement Fee Local International
Green Tk.200 Tk.300
Gold Tk.300 Tk.400
Balance Transfer Fee Local International
Green 30% 30%
Gold 30% 30%
Late Payment Fee Local International
Green Tk.400 Tk.500
Gold Tk.450 Tk.650
8.1. Comparison Based on Local Classic/Green Function Payment
EBL Classic Due 15 days
SCB Green
BBL Classic
Advantage of
15 days
20 days
BBL +5day
Date Minimum
5% or BDT 500, 5% or BDT 500, 5% or BDT 500, Nil
Amount Due
whichever higher
whichever higher
whichever higher
Cash
Advance 50%
Limit Maximum Interest
50%
60%
+10%
45 days
45 days
50 days
+5 days
Tk.1300
Tk.(500*12=6000)
Tk.1500
+Tk.4500 than
Tk.150
SCB + Tk.50 than
Free
Days Available Annual Fee Card
Tk.150
Tk.200
Replacement
SCB
Fee Balance Transfer 22% Fee Late
Payment Tk.300
30%
15%
+15%
than
Tk.400
Tk.350
SCB + Tk.50
SCB Gold
BBL Gold
Advantage of
15 days
20 days
BBL +5day
Fee 8.2. Comparison Based on Local Gold Function
EBL Gold
Payment
Due 15 days
Date Minimum
5% or BDT 500, 5% or BDT 500, 5% or BDT 500, Nil
Amount Due
whichever
Cash
whichever higher
50%
60%
+10%
45 days
45 days
50 days
+5 days
Tk.2500
Tk600*12=7200
Tk.3000
+Tk.4200 than
Tk.200
SCB + Tk.100 than
higher Advance 50%
Limit Maximum Interest
whichever higher
Free
Days Available Annual Fee Card
Tk.200
Tk.300
Replacement
SCB
Fee Balance Transfer 22%
30%
15%
+15%
Fee Late
Tk.450
Tk.500
SCB - Tk.50 than
Payment Tk.300
Fee 8.3. Comparison Based on International Classic/Green
SCB
than
Function
EBL Classic
Payment
Due 15 days
SCB Green 15 days
BBL Classic
Advantage of
20 days
BBL +5day
Date Minimum
5% or BDT 500, 5% or BDT 500, 5% or BDT 500, Nil
Amount Due
whichever
whichever higher
whichever higher
50%
60%
+10%
45 days
45 days
50 days
+5 days
Days Available Annual Fee
Tk.1500
Tk550*12=6600
Tk.50*70=3500
+Tk.3100 than
Card
Tk.300
Tk.300
Tk.200
SCB + Tk.100
30%
15%
+15%
Tk.15*70=1050
SCB - Tk.550 than
Cash
higher Advance 50%
Limit Maximum Interest
Free
Replacement Fee Balance Transfer 22% Fee Late
Payment Tk.500
Tk.500
Fee
than
SCB
8.4. Comparison Based on International Gold Function
EBL Gold
Payment
Due 15 days
SCB Gold 15 days
BBL Gold
Advantage of
20 days
BBL +5day
Date Minimum
5% or BDT 500, 5% or BDT 500, 5% or BDT 500, Nil
Amount Due
whichever
Cash
whichever higher
50%
60%
+10%
45 days
45 days
50 days
+5 days
Tk.3500
Tk650*12=7800
Tk.80*70=5600
+Tk.2200
Tk.400
than SCB Nil
higher Advance 50%
Limit Maximum Interest
whichever higher
Free
Days Available
Annual Fee Card Replacement
Tk.400
Tk.400
Fee Balance
22%
Transfer Fee Late Payment Tk.500
30% Tk.650
15%
+15%
Tk.15*70=1050
SCB - Tk.400 than
Fee
than
SCB
9.1. Findings from Comparative Analysis: From my comparative analysis I have found two things one is advantage and another disadvantage. Advantages are following: 9.2. Payment Due Date: BBL gives more time than other bank to customer for making payment. At present EBL & SCB give maximum 15 days to make payment where as BBL gives maximum 20 days to make payment. 9.3. Balance Transfer Fee: The balance transfer fee of BBL is lower than others bank. It’s a great benefit of those customers who want to transfer their existing credit card balance to their BBL credit card. 9.4. Annual Fee: Annual fee of BBL is less than SCB though it little more than EBL. But it’s a great opportunity for the SCB credit card holder to use BBL credit card to reduce the annual fee. 9.5. Cash Advance Limit: It’s very good news for the credit card holder of EBL & SCB that BBL gives 60% cash advance of their credit card. 9.6. Maximum Interest Free Days Available: BBL gives maximum interest free 50 days which is 5 days more than EBL & SCB. 9.7. Disadvantage: I found two types of problems of BBL credit card. Those are following: •
Major Problems
•
Minor Problems
These two types of problems are discussed in brief as under: 9.7.1. Major Problems Associated With BBL Credit Card: 9.7.1.1. High Interest Rate: As a lot of private banks are operating in Bangladesh and some of them are providing Credit Card to customer, the power of supplier is moderate to high. Clients want a low interest rate on their credit card. BBL charges 30% of annual interest on credit card outstanding amount which is higher than other banks.
9.7.1.2. Limited Number of Bill Pay Machine: BBL has only 10 bill pay machine which is not sufficient for giving the better service to the customer. It is a fewer in number considering those of EBL & SCB. There are some very important places in Bangladesh where BBL doesnâ&#x20AC;&#x2122;t have their bill pay machine. 9.7.1.3. Insufficient Number of Employees: The number of employees at BBL credit card department is significantly low. At Niketon Credit Card head office of BBL only 7 employees are processing the credit card application. This is very difficult for the 7 employees to process more than 500 applications each and every working day. 9.7.2. Minor Problems Associated With Brac Bank Ltd.: 9.7.2.1. Absence of Effective Training Policy: BBL doesnâ&#x20AC;&#x2122;t have any effective training policy. Though it has a training institute but it is used for SME training. Credit Policy and rules are critical enough to understand. Only a few of officers of the bank are being properly trained in this sector. 9.7.2.2. Fewer Requirements of Documents: The customers of FFL credit card are not bound to submit their trade license, letter of income, original credit card statement etc. Only they have to submit the one or two credit card statement photo copy which is very much unsecured.
10. Recommendations: BRAC Bank Limited (BBL) should consider the following recommendations: 1)
BBL has to open some more bill machine in strategically important place to give better service to the customer.
2)
Credit card market is based on only Dhaka and Chittagonge. So in this case if they can create market in the division level then they can be benefited. They have to change the tradition and expand their market to division level. Though their SME market already entry level if they expand their market like that then they can reduce their administration cost.
3)
The Bank should charge less interest rate than other bank. Because in the above I said that credit card market is based on the Dhaka and Chittagonge based and other banks already capture the market. That means the competition is very
high. In this case if BBL want to make profit from credit card then BBL has to break the market of others bank. 4)
BBL should take some marketing expertise officer and executive in marketing division who has some experience regarding marketing of Credit card. BBL also should go for some promotional activities through its Public Relation Department and use advertising and increase the number of field level personal selling for its credit card.
5)
The higher authority of the Bank should promote eligible and expert employees at higher rank. This will reduce the employee turnover rate.
11. Conclusion Credit card is a type of loan provided by banks to its customers. Where Credit is an important input in the production process of a country as well as Credit Card improves the standard of living of individuals. The demand for Credit in a developing country like Bangladesh is much higher than its supply. The word ‘Credit’ comes from the Latin word “CREDO” meaning ‘I believe’. Credit card is lender’s (i.e. the Bank’s) trust in a person’s ability to repay the loan amount, which the client takes to purchase consumer goods / services, at some specified time in the future. Credit is power. For a Bank, Credit card is a significant source of profit and on the other hand, wrong use of Credit card would bring a disaster not only for the Bank but also for the economy as a whole. All the Private Banks those I’ve observed provide Credit Card to their clients within the policy guidelines of the respective Banks and the Bangladesh Bank. BRAC Bank Ltd. Launched credit card a few months ago but within this short time they become a large competitor of EBL and SCB. The Credit Card of the Bank aims to help the fixed income group in raising standard of living and has been widely appreciated. The rate of recovery under the Scheme is 94%. The main purpose of this report is to study the Credit Card of BBL and some other Private Sector Banks and to make a comparison between Credit Card Policies & Facilities of BBL with EBL & SCB. Considering all the Credit Card operations of the three banks, performance of BBL appears to be encouraging. Compared to other Banks, BBL will definitely show much better performance in the near future.