Retail Banking Activities of Brac Bank Limited

Retail Banking Activities of Brac Bank Limited Focusing on “Home Loan�:

1.1: Introduction: Bank plays an important role in the business sector and industrialization of a country. Basically bank offers different services and products to the customers. Commercial Banks are the primary contributors to the economy of a country. So, it can be said that Commercial Banks are a profitmaking institutions that collect the deposits from the surplus unit of the society and then lend the deposits collected to the deficit unit of the society. So, the people of the society and the government are very much dependent on the commercial banks as the financial intermediary.

Internship is an essential part for every student, especially for the students of business administration. By an internship program in bank, students can obtain practical knowledge, which helps to know real life situations, helping them to launch a career with some practical experience. I have found the opportunity to perform the Internship with Brac Bank Limited in Mirpur Branch.

1.2: Objectives: The objectives of the report are as follows: The main objective of this report is to discuss the retail banking activities of Brac Bank Limited, Mirpur Branch with special concentration on its Home Loan. The specific objectives are 1. To describe the products and services of retail banking activities of Brac Bank Limited, Mirpur Branch 2. To describe home loan activities of the bank.

3. To find out the problems of the company regarding home loan.

4. To make a comparison with other banks in the retail banking sector.

5. To recommend ways and means through which the bank can overcome those problems.

1.3: Methodology: The study requires a systematic procedure from selection of the topic to preparation of the final report. To perform the study, the data source were to be identified and collected, to be classified,

analyzed, interpreted and presented in a systematic manner and key point were to find out. The overall process of methodology has been given as bellow:

1.3.1: Nature of Study: This is an exploratory type of research. Information collected to complete the report is both from primary and secondary sources.

1.3.2: Sources of Data: I.

II.

The Primary Sources: For primary data there are three types of respondents, such as •

BSSO’s

•

Management Level Personnel

•

Customers

The Secondary Sources: •

Annual Reports of BBL, 2008

•

Prior Research Report,

•

Official Website of BBL

•

Right Share Offer Document, 2008

1.3.3: Target Population: All employees and management level personnel and customers of BBL, Mirpur Branch

1.3.4: Sample Size: •

12 Employees

•

35 Customers

1.3.5: Sampling Method: Convenience sampling method has been used to select sample.

1.3.6: Data Collection Method: Primary data were collected through direct and face-to-face interview and observation.

1.4: Limitations of the study:

As an intern, it was a great opportunity for me to know the banking activities of Bangladesh especially of Brac Bank Limited, Mirpur Branch. But there are some restraints also, which disclosed in below: •

It was difficult to communicate with the customers and the employees as many of them were unable to give me much time for interview.

•

As I have taken a sample of 47 respondents, there may be sampling error.

•

I had to go under my day to day job responsibility that I was supposed to do so. So, I could get few more time to spend in collecting data for preparing my internship report.

•

The main constraints of the study are insufficiency of time.

•

I was carried out such a vast study for the first time, so inexperience is one of the main constraints of the study.

Organization Part 2.0: Introduction: Generally by the word “bank”, it can easily understand that the financial institution dealing with money. There are different types of banks like Central Banks, Commercial Banks, Savings Banks, Investment Banks, Industrial Banks, and Co-operative banks etc. But when we use the term “bank” without any prefix or restriction, it refers to the Commercial Banks. Commercial Banks are the primary contributors to the economy of a country. So it can be said that Commercial Banks are a profit-making institution that collects the deposits from the surplus unit of the society and then lend the deposits collected to the deficit unit of the society. So the people of the society and the government are very much dependent on the commercial banks as the financial intermediary. As banks are profit-earning concern they collect deposits at the lowest possible cost and provide loans and advances at higher.

Banking sector is expanding its hand in different financial events every day. At the same time the banking process faster, easier and the banking arena is becoming wider. As the demand for better service increases day by day, they are coming with different innovative ideas and products. In

order to survive in the competitive field of the banking sector, all the banking organizations are looking for better service opportunities to provide their fellow clients. As a result it has become essential for every person to have some idea on the bank and banking procedure.

2.1: Overview of BBL: BRAC Bank Limited is a scheduled commercial bank in Bangladesh. 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. 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 Chairman of the Bank is Mr. Muhammad A (Rumee) Ali. Now the Managing Director of the bank is Mr. A.E.A Muhaimen.

A fully operational commercial bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprise Business, which till now has remained largely untapped within the country. In the last several years of operation, the Bank has disbursed over BDT 3700 corers in loans to nearly 120000 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.

The Bank is mainly owned by the largest NGO in Bangladesh- BRAC .The Bank has positioned itself as a new generation Bank with a focus to meet diverse financial need a growing and developing economy.

BRAC Bank has a centralized banking structure through on-line banking system. It consisted of four major division’s namely small and medium enterprises division, retail (direct) banking, corporate banking and treasury division.

The Corporate Banking Division provides full range of commercial banking products and services. Other departments such as Foreign Trade, Treasury, Credit Administration etc. plays the support role for a comprehensive range of service to the Corporate Banking Division.

2.2: History of BBL: BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shore cap 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 pursuing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped within the country. In the last seven years of operation, the Bank has disbursed over BDT 3700 crore in loans to nearly120000 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 July 2001, the Bank's footprint has grown to 22 branches, 327 SME unit offices and 16 ATM sites across the country, and the customer base has expanded to 500,000, as well as deposit grown up 1400 crores last 30, December 2008. In the years ahead BRAC Bank expects to introduce many more services and products as well as add a wider network of SME unit offices, Retail Branches and ATMs across the country.

It is one of the largest Southern development organizations employing 97,192 people, with 61% women, and working with the twin objectives of poverty alleviation and empowerment of the poor.

Paid-up Capital of BRAC Bank Limited

IFC 19% Shore Cap Int’l Ltd 18%

Others 0% BRAC 63%

Fig-1.2 Shareholders of BRAC Bank Limited

2.3: Logo of BBL: BRAC BANK LOGO

BRAC BANK REVERSE LOGO

2.4: Corporate Vision of BBL: "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".

BRAC Bank will be a unique organization in Bangladesh. It will be a knowledge based organization where the BRAC Bank professionals will learn continuously from their customers and colleagues worldwide to add value. They will work as a team, stretch themselves, innovate and break barriers to serve customers and create customer loyalty through a value chain of responsiveness and professional service delivery. Continuous improvement problem solution, excellence in service, business prudence, efficiency and adding value will be the operative words of the organization. BRAC Bank will be a socially responsible institution that will not lend to business that has a detrimental impact on the environment and people.

2.5: Corporate Mission of BBL: 

Sustained growth in ‘Small & Medium Enterprise’ sector.



Continuous low cost deposit growth with controlled growth in Retained Assets.



Corporate Assets to be funded through self-liability mobilization. Growth in Assets through Syndications and Investment in faster growing sectors.



Continuous endeavor to increase fee based income.



Keep our Debt Charged at 2% to maintain a steady profitable growth.



Achieve efficient synergies between the bank’s Branches, SME Unit offices and BRAC field offices for delivery of Remittance and Bank’s other products and services.



Manage various lines of business in a 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.

2.6: Goals of BBL: BRAC Bank will be the absolute market leader in the number of loans given to small and medium sized enterprises 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 in this part of the world.

2.7: Objectives of BBL: The objective of BRAC Bank Limited is specific and targeted to its vision and to position itself in the mindset of the people as a bank with difference. The objective of BRAC Bank Limited is as follows: •

Building a strong customer focus and relationship based on integrity, superior service.

•

To creating an honest, open and enabling environment

•

To value and respect people and make decisions based on merit

•

To strive for profit & sound growth

•

To value the fact that they are the members of the BRAC family – committed to the creation of employment opportunities across Bangladesh.

•

To work as a team to serve the best interest of our owners

•

To relentless in pursuit of business innovation and improvement

•

To base recognition and reward on performance

•

To responsible, trustworthy and law-abiding in all that we do

•

To mobilize the savings and channeling it out as loan or advance as the company approve.

•

To establish, maintain, carry on, transact and undertake all kinds of investment and financial business including underwriting, managing and distributing the issue of stocks, debentures, and other securities.

•

To finance the international trade both in import and export.

2.8: Management of BBL: Boards of directors are the sole authority to take decision about the affairs of the business. All the directors have good academic background and have huge experience in business. The board of directors holds meetings on a regular basis. The current management teams and board of directors’ name are given in the following table:

Management Team A.E.A

Muhaimen

Managing Director & CEO Mr. Mohammad Mamdudur Rashid Deputy Managing Director

Mr. Syed Mahbubur Rahman Deputy Managing Director Shafiqul I Chowdhury Chief Operations Officer Rais

Uddin

Ahmad Firoz

Ahmed

Khan

Head of Risk Management & Company Secretary Head of Retail Banking Mohd.

Rafat

Head of Credit Tahniyat

Ullah

Khan Naushad Hussain Head of Probashi Banking Karim Faruk Ahammad

Ahmed

Head of Human Resources

Head of Financial Administration

Mr. Syed Faridul Islam

Md.

Head of Small & Medium Enterprise (SME)

Head of Treasury

Khwaja

Shahriar Shah

Head of Corporate Banking Mizanur Rahman Chowdhury

Rahmat Alam

Bhuiyan

Head of Enterprise Risk Management

Head of Information Technology (IT) Board of Directors Mr. Muhammad A (Rumee) Ali Chairman Mr. Shib Narayan kairy Director Mr. Mark A. Coffey (Nominated By Shore Cap International Limited), Director

Pasha

Ms. Nihad Kabir Director Ms. Tamara Hasan Abed (Nominated by BRAC), Director

Mr. Quazi Md. Shariful Ala

Mr. A.E.A Muhaimen

(Nominated by BRAC), Director

Managing Director and CEO

2.9: The Management Hierarchy of BRAC Bank Limited is given below: Chairman Board of Director Managing Director Deputy Managing Director Executive Vice President Senior Vice President Vice President Senior Ass. V. President First Ass. V. President Assistant V. President Senior Principal Officer Principal Officer Senior officer Officer Grade II Officer Grade I Executive

2.10: Mirpur Branch: Mirpur Branch of Brac Bank Limited was established in 15 th October, 2004. It’s the only branch in Mirpur. It has two sections: Retail banking section & cash section.

2.11: Organogram of Mirpur Branch:

2.12: Departments of BBL: If the jobs are not organized considering their interrelationship and are not allocated in a particular department it would be very difficult to control the system effectively. If the departmentalization is not fitted for the particular works there would be haphazard situation and the performance of a particular department would not be measured. BRAC Bank Limited has does this work very well. Departments are as follows: •

Human Resources Department

•

Financial Administration Department

•

Asset Operations Department

•

Credit Division

•

SME Division

•

Internal Control & Compliance Department

•

Marketing & Product Development

•

Impaired Asset Management

•

Probashi Banking Operations

•

Treasury Front

•

Treasury Back

•

General Infrastructure Service

•

Information Technology Department

•

Customer Service Delivery

•

Cards Division

•

Phone Banking

•

Cash Management

•

Payment Service

•

Loan Administration Department

2.13: Business Units of BBL: There are five different business units generating business of BRAC Bank Limited: •

Small & Medium Enterprise (SME)

•

Corporate Banking

•

Retail Banking

•

Treasury & FI

•

Probashi Banking

All the units are being operated in a centralized manner to minimize costs and risks.

2.14: Shareholding Structure of BBL: A fully operational commercial Bank, BRAC Bank focuses on perusing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped within the country. The Bank has provided support to more than 100000 Small and Medium Enterprise. Since inception in July 2001 the Banks footprint has grown to 36 branches, 427 unit offices and more than 75 ATMs across the country.

The Banks operate under a double bottom line agenda where profit and social responsibility to hand in hand as it strives towards a poverty free, enlightened Bangladesh.

BRAC Bank Limited with institutional shareholding by BRAC, International Finance Corporation and Shore cap International has been the fastest growing bank for last several years.

Shareholding Structure Name of Shareholder BRAC International Finance Corporation Shore Cap International Limited Non Resident Bangladeshi Mutual Funds Institutions and General Public Others

Percentage of Shareholder 31.74% 9.50% 8.75% 0.47% 2.42% 47.11% 0.06%

2.15: Long Term Strategy of BBL: Summed up in a single sentence, the long term strategy is to go where the market is trying to go in the near future. The SME market in Bangladesh is large from the recent point of view, which was explored by the BRAC Bank Limited at first in the society. As a result of the achievements of the micro credit providers, Bangladesh now has an hour glass shaped banking market in which credit and other limited financial services are valuable to both very large and very small business and very wealthy and very poor individuals. While there is well-known informal system that provides credit to business, virtually nothing is available from either banks or micro finance

providers to the million the middle –business and individual- who are severely constrained in their ability to produce and save for lack of access to financial resources and services . Until modern competitive financial services are readily available –including credit in amounts terms and conditions that small can access. Bangladesh will not be able to create the large middle class that is a prerequisite to social stability.

BRAC Bank limited consists of four major business divisions namely corporate banking division Retail division, Small and Medium Enterprises (SME) and foreign and Treasury. Corporate division provides full range of commercial banking products and services to any potential company clients including multinationals large or medium local corporate, institutional bodies.

Retail division offers a wide array of lucrative and competitive products and services to the individual customers of the bank. Currently there are several lending products and a number of other attractive new products will be launches shortly. It also offers different types of term deposit scheme and attractive STD and saving deposit schemes giving interest on daily balance.

As a part of the total banking solution it has introduced an innovative and one of its kind remittance service under the style and name Secured and Easy Remittance Service. The aim of the program of the service is to introduce easy and secured service whereby people will be comfortable and secured in remitting funds without hustle and delay.

2.16: Products and Services of BBL: BBL offers a wide range of products all over the Bangladesh. These are personal, corporate, investment; trade services; cash management; treasury and capital market services; insurance; consumer and business finance; pension and investment fund management; savings & deposit services, cash management; loan products, corporate and institutional services, day & night banking.

2.16.1: Personal Banking Services: The BRAC BANK Limited offers a full range of personal banking products and services designed to take care of its customers’ growing needs and requirements. BBL in Bangladesh has launched a number of loan products and many other products during their seven years of operation.

2.16.2: Corporate Banking: As one of the largest banking and financial organizations with an extensive local capability, the BBL is one of the major players in the Corporate banking market. BBL has a full range of products and services for corporate clients, which include: Lease Capital Financing, Term Loan, Trade Facilities, Guarantees, Work Order financing, Floor Financing and Structured Financing & Syndications etc.

Brac Bank Limited Corporate Service follows centralized process through online banking system as well as credit facility is processed at the Head office. After processing the facility the limit is put online and customer can enjoy the facility from any of the BRAC Bank Branches. BBL offers a wide range of cash financing, working capital, short and medium-term loans and guarantee facilities from its Head Office and Chittagong divisional branch.

2.16.3: Personal Financial Services: The Bank has a range of products and services designed to cater individual requirements. The range of products & services for individual customers comprises of the following: •

Online Banking

•

ATMs

•

Phone banking

•

Customer Service Department

•

Savings/Current/Deposit Accounts

•

My Future - Personal Savings Plans/My Loan - Personal Lending Products

•

Foreign currency banking services for Resident and Non-resident Bangladeshis

Along with these products, BBL is committed to providing a superior level of personalized customer service, which is being constantly monitored through service quality department as well.

2.16.4: Investment Banking: Investment Banking and Markets brings together the advisory, financing, equity securities, asset management, private banking and trustee, private equity and treasury and debt capital markets activities of the BBL Group. It offers a full spectrum of services for the Group's corporate, institutional and retail clients.

By drawing on local commercial market knowledge and international product expertise, the Investment Banking and Markets business is able to provide an excellent combination of local market penetration. Private Banking is part of the Investment Banking division of the BBL Group and services offered will vary from division to division.

2.16.5: Cash Management Services: BBL Cash Management services provide domestic transaction solutions to companies throughout the country. Services include a comprehensive range of traditional account and transaction services, augmented by liquidity and financial management solutions and delivered via BBL Internet banking platform, BBL net.

BBL operates on a local level to ensure the cross-border differences are identified and any related benefits exploited. BBL teams of specialists ensure that whether you need solutions across the country, regionally or locally, they have the skills, expertise and resources to deliver them. They automate as many functions as possible, whilst ensuring you retain control. BBL cash management service provides the effective cash management service with other supplementary services to the corporate clients with proper customer segmentation. Payment services reduce the lead time as well as magnify business opportunity and providing both banking services and a financial partnership with commercial and non commercial organizations.

2.16.6: Trade Services: Trade finance originally facilitates “International Business� They handle Letter of Credit and do necessary activities related to international trade. As the provider of trade finance and related services to importers and exporters in Bangladesh, HSBC in Bangladesh operates a highly automated trade-processing network. The Bank uses SWIFT, an efficient and secure mechanism for bank-to-bank global communications used for all trade related activities including fund transfers and issuance of DC’s (Documentary Credit).

The trade services provided by BBL can be classified into two broad categories in accordance to the nature of business.

Import

With over very little experience supporting importers globally, BBL is well positioned to fulfill the client’s requirements of foreign trade. A full range of import services handled by experienced staff is available, ensuring that the client’s import documents are processed without delay.

The Import Services include: •

Documentary Credits

•

Import Collections

•

Import Finance

•

Shipping Guarantee

Export BBL Bangladesh has a dedicated team of experienced trade professionals to facilitate the client’s export requirements in a tailor made fashion, it aims to provide the client with faster turnaround time and innovative export solutions.

The Export Service includes: •

Pre-shipment Finance

•

Post- shipment Finance

•

Electronic Documentary Credit Advising

2.16.7: Service Quality: The Service Quality department deals with all aspects related to BBL Unique Banking as well as hassle free banking provided to the customers. It is the more unique department through out the entire Bank operating in Bangladesh. This department checks out the service provided by all the employees of the BBL to their customers. They offer the customers more convenient and efficient banking than ever before. It is an innovative non desktop banking system developed by the BBL group to facilitate the customers.

2.16.8: Commercial Banking: This is another wing of corporate banking division dealing with all the corporate products including non funded facilities to medium size enterprises where the requirement range varies from BDT 3.00 million to BDT 20.00 million. They are catering financial services to manufacturing, trading as well as to the service industry, limited company from Dhaka and Chittagong cities right at the moment with a view to serve other metropolitan cities of

Bangladesh. They deal right at the moment more then one hundred customers with total outstanding of BDT700.00 million including BDT200.00 million as non funded facilities. The customers are in this department more formal than the small enterprise customers as well as less structured than corporate customer.

2.16.9: Premium Banking: With a global outlook and commitment to provide innovative products and unparalleled service propositions to valued customers through out the country, BBL in Bangladesh launch Premium Banking service initiatives. Premium banking, as defined by the Group, is “the premium personal banking service proposition available through out the country to BBL upscale customer package of products and services designed to retain existing customers and allow us to deepen our relationship with them. It is also a vehicle to attract new customers from this valuable target Market.” At the heart of the BBL Premium, position is the objective to build strong relationship with these key customers, to provide through out the country recognition and superior reward by delivering benefits which add value to their life style. BBL also provide associate relationship manger with the entire premium customer.

Learning Part At the time of my internship at Mirpur Branch, there are two sections: Customer Service Section and Cash Section. I worked at Customer Service Section which mainly deals with one of the main business unit called “Retail Banking”. So in my internship report, I want to give an overview about Retail Banking and its several products and services. After this, I want to focus on the main part of the repot which is on “home loan”.

3.1: Retail banking: Retail division offers a wide array of lucrative and competitive products and services to the individual customers of the bank. Currently there are several lending products and a number of other attractive new products will be launches shortly. It also offers different types of term deposit scheme and attractive STD and saving deposit schemes giving interest on daily balance.

As a part of the total banking solution it has introduced an innovative and one of its kind remittance service under the style and name Secured and Easy Remittance Service. The aim of the program of the service is to introduce easy and secured service whereby people will be comfortable and secured in remitting funds without hustle and delay. Using the countrywide

network of BRAC comprising more than 1100 field off SRS will ensure secured and only 24 hour lead time delivery of remittance anywhere in Bangladesh. Now a days BBL focus more on their retail division to serve their existing and new customers by their full satisfaction as well as they increase their branch

3.2: Retail Banking Products And Services: 3.3: Deposit products: •

CASA (Current & Savings Accounts), also known as Transactional Accounts.

•

HNW (High Net Worth), also known as Term Deposit (TD).

3.3.1: The main CASA products are listed below: 1. Savings Classic Savings Classic Account is a local currency interest-bearing account with cheque book facility.

The minimum account opening balance is BDT 15,000. The interest rate in this account is 5.5% p.a., credited to the account Half Yearly. Any balance greater than zero will be eligible for interest. Interest forfeiture rules are applicable for this account. Annual Account Maintenance Fee of BDT 800 + VAT and Annual Debit Card Fees of BDT 520 + VAT will be charged upfront at the time of account opening and on anniversary of every following year. The account comes up with a 12 page cheque book free. The customers can avail a second cheque book of 12 pages for free, if the account’s balance is BDT 15,000 and above. If the balance is below BDT 15,000, Tk 100 + VAT will be charged. Special cheque book of 25/50/100 pages can be issued at a cost of BDT 4 + VAT per pages. Customers receive half-yearly bank statement. Interest will be forfeited in the following cases.

2. Triple Benefits Savings Account Triple Benefits Savings Account is a local currency interest-bearing savings account with cheque book facility. The minimum account opening balance is BDT 50,000. The interest rate in this account is ranging from 4% to 8% p.a., credited to the account every month. Interest slabs are as follows:

Monthly average balance Rate Below Tk. 50,000 0% From Tk. 50,000 to less than Tk. 5 lac 4% From Tk. 5 lac to less than Tk. 25 lac Tk. 25 lac & above

6% 8%

Any balance of BDT 50,000 & above will be eligible for interest. Interest forfeiture rules are not applicable for this account. There is no Annual Account Maintenance Fee or Annual Debit Card Fees or any other upfront fees. If customers do not maintain a Half-Yearly Average balance of BDT 50,000, the account will be charged with BDT 750 + VAT every half year, on 1 st January and 1st July of each year. The account comes up with a 12 page first cheque book free. The customers can avail a second cheque book of 12 pages for free, if the account’s balance is BDT 50,000 and above. If the balance is below BDT 50,000, BDT 100 + VAT will be charged. No Special cheque book is available for this account. Loan amount cannot be disbursed in this account.

3. Femina Account Femina Account is a local currency interest-bearing savings account without cheque book facility. The minimum account opening balance is BDT 5,000. The interest rate in this account is 6.5% p.a., credited to the account monthly. Interest is calculated on day-end balance. Any balance greater than zero will be eligible for interest. There is no Annual Account Maintenance Fee. Annual ATM Card Fee of BDT 400 + VAT will be charged upfront at the time of account opening and on anniversary of every following year. This is a non-cheque-book account.

However, a customer can avail a special cheque of 12 pages at a premium price.

4. Current Classic

Current Classic Account is a local currency non interest-bearing account with cheque book facility. The minimum account opening balance is BDT 15,000. There is no interest in this account. Annual Account Maintenance Fee of BDT 800 + VAT and Annual Debit Card Fees of BDT 520 + VAT will be charged upfront at the time of account opening and on anniversary of every following year. The account comes up with a 12 page cheque book free. The customers can avail a second cheque book of 25 pages for free, if the account’s balance is BDT 15,000 and above. If the balance is below BDT 15,000, Tk 100 + VAT will be charged. Special cheque book of 50/100 pages shall be issued for the charge of BDT 4 + VAT per pages. For more than 5 (five) transactions in a day, charges will apply for every additional transaction as per the Schedule of Charges.

5. Ezee Account Ezee Account is a local currency interest-bearing current account without cheque book facility.

The minimum account opening balance is BDT 10,000. The interest rate in this account is 4% p.a., credited to the account Half Yearly. Any balance greater than zero will be eligible for interest. There is no Annual Account Maintenance Fee. Annual VISA Debit Card Fee of BDT 520 + VAT will be charged upfront at the time of account opening and on anniversary of every following year. This is a non-cheque-book account. However, a customer can avail a special cheque book of 12 pages at a premium price.

6. Salary Account Salary Account is a non-cheque book individual account with overdraft facility for employees of different Corporate Houses to disburse their monthly salaries. Employees of MNC/LLC/MID CORP/NGO/Large proprietorship/Partnership firm, other than foreign nationals are eligible to open this account. Interest rate for Salary Account is 4% p.a. Any balance greater than zero will be eligible for interest. Interest calculation will be based on Daily Balance and Interest payment will be made Quarterly. There is no Annual Account Maintenance Fee in Salary Account.

Annual ATM Card Fees of BDT 300 + VAT will be charged upfront at the time of account opening and on anniversary of every following year. Salary Account is a non-cheque book account. However, a customer can avail a special cheque of 12 pages at a premium price of BDT 300 + VAT. 7. Prapti Current account:

It’s a Bizness Account; it is an interest bearing account only for business Enterprise for SME and Retail banking. These customers need not to maintain any minimum balance to operate the account as well as they get 4% interest on daily balance.

8. Campus Account Campus Account is non cheque individual account for students of different educational Institutes. The parameter of the product has been set in a way to encourage the students to enter into the wide range of modern banking facilities of BBL. They also get 4% interest on daily balance as well as discount at different stores.

9. Current plus: It needs take 25,000 as opening balance. It has the visa debit card facility. It has no debit Card fee and upfront fee. It also has no intercity transaction fee. This account has no account related yearly and half yearly fees.

3.3.2: The main High Net Worth products is listed below: 1. Interest First Fixed Deposit In this account customers no need to wait till maturity to receive interest on their fixed deposit.

BBL IFFD lets customers draw the interest instantly at the time of their deposit. This is a unique product for BBL where clients receive interest in advance.

2. Abiram BBL Abiram Account is special type of Fixed Deposit Scheme. It offers the flexibility & comfort of having a guaranteed monthly return on investment. This account ensures a safe and steady return on customer investment. This deposit provides 95% loan against the deposit.

3. Freedom Fixed Deposit Freedom Fixed Deposit is fixed deposit product specially designed for individuals. It works like normal Fixed Deposit with the unique benefit receiving quarterly interest. The interest rate will be higher than the prevailing Fixed Deposit rate and there will be a minimum tenor for the deposit. Clients get 90% loan on face value as well as interest shall be paid on quarterly basis after deducting the income tax on the interest amount.

05. Short Term Deposit Short Term Deposit scheme give returns to the customers. The minimum balance required to open this account is Taka 100000 and interest paid twice a year but calculated on a monthly basis if balance is Taka one lac or above at the account.

6. Fixed Deposit Premium It is a monthly savings scheme for periods of 1 to 15 years. Customers can save in small amount installments and get a handsome return at maturity. This accout can easily maintain through customers link account that means monthly installment will be automatically realized from customers account.

3.4: Loan Products: BBL provides Loans which are grouped under term finance depending on the term loan. It is generally categorized under short term and long term. Term finance is both fund based and non fund based.

There are several loan products of BBL. They are listed below: 1. Home Loan: we’ll discuss it broadly in below.

2. Auto Loan: 3. Salary Loan 4. Quick Loan & 5. SL & SOD An overview of all loans at a glance: SL-11.50%

Credit

Salary Loan

Home Loan

Quick Loan

Auto Loan

&

Criteria

19%

13.5% & 14%

19.50%

17.5% & 18.50%

10.50%

Business/Doctor

Salaried

Target Group

Type-A

Age

23-60

Income

20K

Type-B

Salaried

Businessman

24-68 at the time of app 15K

25k

30k

23-65 at time of maturity 40k

Businessman

23-60 at the time of app 25k

35k

SOD-

Loan Amount IFFD-70%

3 Years in current

Service Length

1Y for A

2 Y in current organigation

organization (Own 3years

3years

house.

4 Years (Rental house)

Org.

5Y

Existence

operation

Residence No of Staff Min Loan

in

5

Y

in

operation

Residence within the Br. Network 20 Staff 20 Staff 1 Lac A-15k to 30k-10times &

-

-

Residence

Residence

within

within city

city

copr. area

copr. area l

5 Lac

5 Lac

2Y

A:1year

proof

2years Y

in

operation 6 Months in

current address 1.5Lac

B -20k to 50k-8times &

Loan Size

50k+ 12times Gross/10

2Years

--

-

20 Staff 2 Lac

Nil 2 Lac

Bk.St -Latest Documents Required

salary Slip/ LOI -Proof of ID Business Card National Id

75 Lac

10 Lac

20 Lac

of

the

Limit

20 Lac

BDT 1000 Maximum BDT 10000

-Last

6

Bank

statement.

statement.

Trade License

Trade License Tin

months

Tin

National Id

-TIN

National Id

Spouse

-Trade

Spouse

guarantee

guarantee

Business Card

Business

Car Quotation &

guarantee

Card

Others

Business

One

necessary Docs.

Card

Businessman

National Id

Guarantee &

bank

St

license Spouse

Depend profession

on

Others necessary Docs.

Telephone

1%

Minimum

Last 1 Years Last 1 Years Bank

6month

Processing Fee

Lac

-Last

FDR-90% Loan

30k+ 15 times/10 Lac

Max

85%

Business

B:

5

-

Abiram/FFD-

Type-

--

-

--

Depend

on

40%

Income

(35%-

TIN

If any

55%) TIN req.

12-180(Sal)&12-

house TIN req.

Tenor

12-60 Months

240(Bus,

12-60 Months

DBR

Land

35%

Own

house,30% rental

Depend

on

Income(35%-45%) TIN req. (Businessman) 12-60 Months

Lord) Months

3.5: Cards Products: 3.5.1: Product Types: 1. VISA Card Gold – Local 2. VISA Card Classic – Local 3. VISA Card Gold – Dual(international credit card) 4. VISA Card Classic – Dual(international credit card) 3.5.2: BIN List of BRAC Bank: 432146

Visa Classic (Silver) Local

432145

Visa Classic (Silver) Dual

432148

Visa Gold Local

432147

Visa Gold Dua

3.5.3: Product Description: 1. Visa Local Classic: This is a local Visa Credit Card, which is valid only in Bangladesh. It can only be used in local currency (BDT) within the country. This type of credit card has a limit ranging from BDT 10,000 to BDT 74,999. This type of card has designed for medium earner category customers.

2. Visa Local Gold: This is also local Visa taka card of which acceptance jurisdiction only in Bangladesh and transaction currency is BDT. The differences between these two cards are higher credit limit than classic card. Credit limit of Visa Gold Card is ranging from BDT 75,000 to BDT 5, 00,000. This type of card has been designed for the higher earner category customers.

3. Visa Classic Dual: This is basically one plastic that has dual options to make transaction in two currencies. Its acceptance jurisdiction is in country and outside country in BDT and USD respectively. Classic dual is for the medium earner category customers. Its USD credit limit will be within approved BDT limit assigned for this category.

4. Visa Gold Dual: This is a high value dual card remaining other features same with classic dual. Gold dual is also for the higher earner category customers and its USD credit limit will be within approved BDT limit assigned for this category. A secured dual card’s limit will be maximum USD 30,000 against lien on RFCD or ERQ account.

3.5.4: Staff Card: This is only for the BBL permanent and contractual staffs with special facilities detailed in the product parameter. Staff card will be more secured than the customer card, as they will be maintaining an account with BBL. When a staff resigns from job then he/she can continue his/her BBL Credit Card as a normal customer.

Home Loan I am going to now focus on the main topic, which is on ‘ Home Loan’ and its process flow, terms and conditions, customer eligibility, property information and its important features. Along with this, I also prepared a comparative study among the several top banks of market including BBL. Then I was trying to find out the strength and also weakness of Home Loan product of BBL. During my internship, I was going through several CSO’s who helped me so much to know about the Home Loan, Mirpur Branch of BBL and they provide me important information about several loans especially about the home loan. Then I also talked with so many valuable customer of BBL who has already taken home loan and also with the customers who want to take loans from BBL. From the discussions I made with all of them, I got all the information about home loan which I present in below.

4.1: Home Loan: Purchase of under-construction / semi-completed / completed / secondhand Apartment or house

4.2: Process Flow of Home Loan: Process Flow of Home Loan 1) Lead generation 2) Application Form Fill up 3) Collection of pre-sanction documents 4) Sending CIB for both applicant & joint

Submission to credit for address verification & Income Assessment

Upon satisfactory verification report & income assessment, Credit issues Conditional Approval

Source opens Joint Account

Source takes signature on Conditional Approval, collect valuation documents and sends valuation request to Credit along with PO of Valuation charge Credit checks valuation report & CIB and upon satisfaction, issues Final Approval

Source collects property relevant documents & sends to RBO for legal vetting through VC

Upon receipt of final approval, source collects TPA / Mortgage Deeds & executes and also collects other security documents as per criteria. Then provides to RBO RBO checks all security and other required documents and upon satisfaction, they disburse the loan Note: In case of Home loan, valuation & vetting is sent simultaneously, but in case of Home Credit or Takeover, vetting is sent if the valuation report becomes satisfactory

4.3: Customer Segment & Eligibility: Salaried * Minimum age 24 years * Maximum age 68 years at the end of loan tenure * Total Job Experience is minimum 3 years (must be permanent in current job) * Service length with Present Employer a) 3 months for executives of Type-A companies. b) 2 years for salaried persons of other companies.

* Contractual employees of organization like: FAO, WHO, Care, save the children etc. can be eligible provided the following conditions are meta) Minimum length of service 05 years b) Minimum 02 renewals are provided * Minimum income is BDT 20,000 for type-A company employees * Minimum income is BDT 25,000 if employee of any company except type-A. a) If income of both applicants' is considered then one's income must be minimum BDT 20,000 and the other's must be minimum 5,000). * Salary must be credited to bank by the employer.

Businessmen * Owner / Director of Proprietorship / Partnership / Private Limited Company * Minimum age 24 years * Maximum age 68 years at the end of loan tenure * Total Experience is minimum 3 years of experience with the same business. When business acquired from family then total length of inherited business should be 03 years (current + previous) with appropriate supporting documents. * Minimum income is BDT 30,000 (If income of both applicants' is considered then one's income must be minimum BDT 25,000 and the others must be minimum 5,000).

Self-employed person * Minimum age 24 years * Maximum age 68 years at the end of loan tenure * Minimum income is BDT 30,000 (If income of both applicants' is considered then one's income must be minimum BDT 25,000 and the others must be minimum 5,000).

Landlord * Minimum age 24 years * Maximum age 68 years at the end of loan tenure * Minimum income is BDT 25,000 (If income of both applicants' is considered then one's income must be minimum BDT 20,000 and the others must be minimum 5,000).

4.4: Property information & Eligibility:

Home Loan: Essentials to know: * Property must be purchased from Developer / Individual Seller * Developer can be categorized / non-categorized * Property can be a Joint Venture / self-built project * Developer name & property address * Construction stage (Superstructure completed / Brickwork completed / Inside Plasterwork completed / Floor Tiles work completed) * Apartment No., Floor / Level (where the mortgaged property is situated), size (sft) & facing * No. of Car parking * Possession Handover date as per Allotment Agreement * Property price including car parking price & utility cost. * How much amount already paid and what is the balance amount? * Age of the property (if secondhand Apartment) Home Credit: Renovation / Extension / construction Essentials to know: * No. of Apartment(s) / Floors * Floor area * Estimated value of the property * Property age (if renovation or extension) * Area of land * Construction status (in case of construction) Takeover: Transfer of current balance of existing Housing loan of the customer to BBL from any other Bank / NBFI Essentials to know: * Particulars of the mortgaged property * Status of security (Mortgaged / TPA) * Financial Institution / Bank name * Outstanding amount * Repayment history

4.5: Some important features: * Owner of the property must be the main borrower * Joint applicant is mandatory for all proposals except for the cases where the main applicant happens to be both (the property owner as well as the financially eligible person) and agrees to assign his/her Life Insurance Policy (LIP) covering the loan amount in favor of the bank to mitigate the death risk. In absence of LIP, Joint-applicant is a must.

Joint Applicant eligibility: Spouse, father, mother, son and brother only.

•

Maximum 2 Joint Applicants are allowed.

•

For proposals, where joint-applicant is someone other than spouse while the incumbent is married, a No-Objection-Declaration from spouse to be attained.

•

Main Applicant / Joint applicant must reside within the cities where BBL Branch representation is available. But this is applicable only for salaried persons of Type-A companies. For other segments in addition to Dhaka, Chittagong & Sylhet metropolitan city, greater Dhaka (Tongi, Gajipur, Savar etc.) allowed.

•

Mortgaged property must be located within the metropolitan area of Dhaka, Chittagong & Sylhet.

•

Bangladeshi by citizenship or by birth and permanent resident of Bangladesh.

•

Minimum loan amount is BDT 5, 00,000

•

Maximum Loan amount is BDT 75, 00,000 or maximum LTV whichever is lower

•

Maximum age of the property is 20 years at the time of underwriting and 35 years at the end of loan tenor (maximum tenor considered 20 years)

•

Mixed use properties with commercial usage allowed but financing will be done only against residential portion.

Processing fees & charges: Processing fee against loan upto BDT 15 Lac is @ 2% on loan amount + VAT. @ 1.5% + VAT on loan amount if the loan amount is above 15 lac. In case of Takeover, 0.50% of loan amount +VAT is applicable. For Home credit loan, fee may be deducted from loan amount before disbursement. Valuation charge @ 3500 + VAT will be paid by the customer after conditional approval. Legal vetting fee will be included in processing fee and to be borne by the financer. Stamp charges, registration and mortgage charges will be borne

by the customer. If valuation requires to be done more than 01 time for any reason, extra charge to be borne by the customer.

Early settlement (in full) * 5% of outstanding if settled within 1st year + VAT * 4% of outstanding if settled within 2nd year + VAT * 3% of outstanding if settled within 3rd year + VAT * 2% of outstanding if settled within 4th year + VAT * 1% of outstanding if settled within 5th year and onwards + VAT Partial pre-payment & fees * 5% of pre-payment amount (Minimum pre-payment amount is BDT 1,00,000). * Pre-payment is allowed any time but first pre-payment will be allowed only after completion of 12 successful installments from the full disbursement. * For only date rescheduling (where no partial pre-payment will be done), BDT 2000+VAT each time. * Penal Charges Applicable in case of delay of payment of installment @ 4% + VAT Interest Rate: For salaried: 13.00% (floating) For others: 14.00% (floating) DBR Calculation: Type A & Eco ~ 55%; For other segments ………

If income is BDT 25,000 – BDT 35,000 ~ 35% If income is BDT 35,001 – BDT 50,000 ~ 45% If income is BDT 50,001 – 75,000 ~ 50% If income is more than 75000 ~ 55%

4.6: Maximum Loan Tenor: Salaried

Self-employed

Businessmen

Landlord

Home Loan Home Credit / TO

20 yrs 20 yrs

15 yrs 15 yrs

15 yrs 15 yrs

15 yrs 15 yrs

Businessmen 75% 75% 50%

Landlord 75% 75% 50%

4.7: Maximum LTV (Loan to Value Ratio): Salaried Home Loan 80% Home Credit / TO 80% Home Credit 50%

Self-employed 75% 75% 50%

(Renv) LTV calculation method * LTV is calculated on Completion Value of the property if developer is CAT-A & B * LTV is calculated on Forced Sale Value of Completion Value of the property if developer is CAT-C * LTV is calculated on Forced Sale Value of Present Value of the property if developer is Noncategorized / individual * LTV is calculated on Forced Sale Value of Present Value of the property if Home Credit

4.8: Possession Handover time (for Home Loan): * Property of Category A Developer Ready possession within the next 18 months from the date of loan disbursement. * Property of Category B Developer Possession within the next 15 months from the date of the loan disbursement * Property of Category C Possession within the next 06 months from the date of the loan disbursement Possession handover time is not applicable for non-categorized developer & individual seller

4.9: Minimum construction stage: Home Loan Superstructure completed for CAT – A developers Brickwork completed for CAT – B developers Tiles work completed for CAT – C developers Plaster work completed for Non-categorized developers and individual sellers Completed for secondhand apartment purchase from individual

Home Credit Renovation: Completed Construction work: At least 01 floor to be completed of the property to be mortgaged.

Extension work: Existing portion must be completed.

In case of Takeover and cash covered loan, consideration of construction stage ignorable.

4.10: Pre-sanction documents (documents required before submission): Common documents •Complete Application Booklet (with information and signatures) •Latest 01year personal bank statement (if any) •Latest Tax Clearance Certificate (where applicable) •Photocopy of Passport / Driving License / Voter ID •Sanction letter & Repayment statement of existing term loan (if any) •2 copy passport size photographs •Application Form (payment structure & schedule must be reflected) / Allotment Letter on company letterhead/ Allotment Agreement / Byna Deed [Home Loan] •Registered Ownership Deed [Home Credit] •Allotment Letter / Allotment Agreement / Registered Ownership Deed [Takeover] •Price Quotation for Home Credit (to be provided before Final Approval) •Letter of “Outstanding of Existing Housing Loan” [Takeover] •NOC from spouse if co-applicant is anybody (PPG allowed) other than spouse Additional documents Salaried •Letter of Introduction (LOI) as per BRAC bank format •Latest 06 months salary A/c statement Businessman (Proprietorship) •Trade License (Last 3 years) •Latest Offer letter for OD/CC/TR/Hypo etc •Latest 01year bank statement of the company •Latest Tax Certificate of company (if any) Businessman (Partnership) •Trade License (Last 3 years) •Latest Offer letter for OD/CC/TR/Hypo etc

•Latest 01year bank statement of company •Latest Tax Certificate of company •Registered Partnership Deed Businessman (Private Limited) •Trade License (Last 3 years) •Latest Offer letter for OD/CC/TR/Hypo etc •Latest 01year bank statement of company •Latest Tax Certificate of company •MOA + Certificate of Incorporation + Latest Schedule X duly attested by RJSC Self-employed •Certificate of professional degree •Certificate of membership of respective professional association •Declaration on self-pad along with seal Landlord •Registered Ownership Deed •Rental Deed •Copy of latest utility bill (any one) Above Documents list may vary subject to requirements

4.11: Property Valuation: Bank appointed valuation agency would value all properties as per standard templates. The Valuation report, amongst other things must contain certifications on the following: Completion date (if not completed) Status of construction Market rate Forced Sales value Date of site visit Market value of the property Photographs of the property inspected. % of work completion at the time of evaluation Cost breakdown in terms of value of land & the structure * For Home Loan, valuation will be done for mortgaged property * For Home credit (renovation), valuation will be done for mortgaged property

* For Home Credit (Extension / Construction), valuation will be done against existing structure No financing will be allowed if there is any “Structural Deviation” as per Valuation Report.

Documentation: Home Loan: Allotment Letter / Allotment Agreement / Byna Deed + RAJUK approved Plan Home Credit & TO: Registered Ownership Deed + RAJUK approved Plan

4.12: Legal Vetting of Title Ownership: Legal aspects of each case will be thoroughly scrutinized by paneled Law firms / legal advisors.

Documents to be furnished as per lawyer requirement based on which satisfactory legal & title report to be attained from Bank approved lawyers.

Documents required List-A (Joint Venture between the present owner & developer – Leasehold property) •Lease Deed •Bayna Deed up to last 25 years (if any) •Allotment Letter / Allotment Agreement / Deed of Agreement executed between the borrower & developer •Registered Power of Attorney (POA) executed between the present owner & developer •POA Acceptance Letter from the concerned Lease Authority •Joint Venture Agreement (JVA) executed between the developer & the Landowner •Mutation Letter from lease authority in favor of the present owner •Ground Rent Payment Receipt upto execution of JVA •City Corporation Holding Tax Receipt upto execution of JVA •Up-to-date Non-Encumbrance Certificate (NEC) •Plan Approval Letter List-B (Developer / Individual Seller / Borrower is the owner – Leasehold property) •Registered Ownership Deed •Bayna Deed up to last 25 years (if any) including Lease deed •Mutation Letter from lease authority in favor of the present owner •Up-to-date Ground Rent Payment Receipt •Up-to-date City Corporation Holding Tax Receipt •Up-to-date Non-Encumbrance Certificate (NEC) •Plan Approval Letter List-C (Joint Venture between the present owner & developer – Freehold property)

•Bayna Deed up to last 25 years (if any) •Allotment Letter / Allotment Agreement / Deed of Agreement executed between the borrower & developer •Registered Power of Attorney (POA) executed between the present owner & developer •Joint Venture Agreement (JVA) executed between the developer & the Landowner •Certified AC Land Mutation along with DCR as per R.S. Operation •Certified copy of CS, SA & RS Parcha •Attested copy of D.P. Khatian •Ground Rent Payment Receipt up to execution of JVA •City Corporation Holding Tax Receipt up to execution of JVA •Up-to-date Non-Encumbrance Certificate (NEC) List-D (Developer / Indivudual Seller / Borrower is the owner – Freehold property) •Registered Ownership Deed •Bayna Deed up to last 25 years (if any) •Certified AC Land Mutation along with DCR as per R.S. Operation •Certified copy of CS, SA & RS Parcha •Attested copy of D.P. Khatian •Up-to-date Ground Rent Payment Receipt •Up-to-date City Corporation Holding Tax Receipt •Up-to-date Non-Encumbrance Certificate (NEC) •Plan Approval Letter In case of Takeover, NEC is not require

4.13: Disbursement method: Disbursement for Categorized Developers: •

Pay Order in favor of the Developer

•

Customer account credit is not allowed

•

Partial disbursement is allowed as per customer’s discretion.

•

Full disbursement will have to be completed within possession handover

•

Customer equity portion to be paid before first disbursement

Disbursement for Non-categorized Developer / Individual seller:

•

Pay Order in favor of the Developer / individual

•

Customer account credit is not allowed

•

Full disbursement at a time

•

Customer equity portion to be paid before disbursement

Disbursement for Home Credit (Renovation): •

Up to BDT 20 Lac to be credited to customer’s A/c. Balance amount (if any) will be paid in favor of the Vendor / construction firm / Developer / contractor / Interior firm etc through Pay Order

•

If the loan amount is BDT 20 Lac or less than 20 Lac, in that case maximum 70% of the loan amount will be credited to customer account and the balance amount will be paid in favor of the Vendor / construction firm / Developer / contractor / Interior firm etc through Pay Order

•

Full disbursement at a time in case of renovation

Disbursement for Home Credit (Extension / construction): •

Up to BDT 20 Lac to be credited to customer’s A/c. Balance amount (if any) will be paid in favor of the Vendor / construction firm / Developer / contractor / Interior firm etc through Pay Order

•

If the loan amount is BDT 20 Lac or less than 20 Lac, in that case maximum 70% of the loan amount will be credited to customer account and the balance amount will be paid in favor of the Vendor / construction firm / Developer / contractor / Interior firm etc through Pay Order

•

One phase disbursement (100% of loan amount at a time) is allowed for loan amount up to 20 Lac

•

Two phase disbursement (50% of loan amount each) is allowed for loan amount above 20 Lac - up to 30 Lac

•

Three phase disbursement (33.33% apprx. of loan amount each) is allowed for loan amount above 30 Lac - up to 60 Lac

•

Four phase disbursement (25% of loan amount each) is allowed for loan amount above 60 Lac - up to 75 Lac

•

Customer will have to provide an Entire Phase Plan before disbursement

4.14: Security Documentation before disbursement:

Common documents •

DP Note

•

Letter of continuation

•

Irrevocable letter of Authority (for UDC)

•

Letter of Lien & Set Over Deposit Accounts / Margin Deposits

•

Extended General Condition of Banking Arrangement Letter

•

Banking Arrangement Letter

•

UDC & PDC from loan account (including PDC for Insurance premium)

•

Original Insurance Policy & Money Receipt. Fire, earthquake and flood damage risks will be covered. This will be mandatory. Cyclone coverage will be mandatory for cyclone prone zones. Policy should be assigned favoring the bank.

Above Documents list may vary subject to requirement

Market Analysis of Home Loan 5.1: Market Analysis: Now I am going to give a market analysis of home loan of 6 top most banks including Brac Bank Limited. In this market analysis I tried to find out BBL’s strength, weakness, opportunities and threats by comparing its home loan features with other banks.

Bank

BBL

SCB

HSBC

EBL

IDLC

DBH

7,500,000

7,500,000

7,500,000

7,500,000

2,000,000:

2,000,000:

(5,000,000:

(6,000,000:

Home

Scheme;

Renovation)

Renovation)

Scheme;

25,000,000:

25,000,000:

Normal Loan

3-20yrs

Normal Loan 20yrs (7yrs:

20yrs

Name Loan Ceiling

Repaymen

1-20 yrs.

3-20yrs

5-15yrs

t Tenor Interest

Salaried: 13.5%

Fixed:

Renovation) > 5 yrs: 14.5%

5 - 15 lac: 14%;

Commercial) Home Scheme

Commercial) Home Scheme

Rate

Others: 14%

3 - 10 yrs: 14.75%

5 - 15 yrs: 15.5%

15 - 20 lac: 14.25%

- 9%

9%

11- 15 yrs: 15.25%

25 - 40 lac: 14.5%

Normal Loan -

Normal

16 - 20 yrs: 15.5%

40 - 75 lac: 15%

14%

14.5%

1.25% (fresh), 0%

1%

1.50%

n.a

n.a

70-80%

90%

Variable:

12

<15lac:2%;

Fee

If >15lac, 1.5%;

(7yrs:

Loan

-

-

12.49%; 1.5%

Processing

(7yrs:

Home

1%

(takeover)

Takeover: 0.5% Early

For mixed 1% 5% within 1st yr;

settlement Fee

n.a

5% for 1st 2yrs;

1% of the advance/

4% within 2nd yr;

3% for 3rd yr; 2%

prepayment

3% within 3rd yr;

for 4th yr; 1% for

amount anytime

2% within 4th yr;

5th

1% within 5th yr

onwards

and onwards 80% (50%:

80%

Renovation)

Renovation)

Age Profession

24-60 Minimum 3 years

25-65yrs At least three years

al

(must

be

of

Experience

permanent

in

professional/

LTV

(50%:

yr

and

70%

(60%:

Renovation)

70-80%

(70%:

Renovation)

Eligibility

current job)

business

Minimum 5 years,

records

2years

in

23 - 60yrs 2 years experience

25-65yrs 3 years experience

service/

<60yrs 3

years

<60yrs 3 years experience

experience

track

the

current Income

profession.

Minimum

Minimum monthly

Minimum

Income:

income

Income:

25,000

(Salaried

person) 30000 person)

(Business

25,000

of

BDT

Minimum Income:

Minimum

Minimum Income:

25000

Income: 25000

25000

relax able for govt.

Home

Home Scheme:

person) or 50000

Employees)

Scheme:

Maximum monthly

(for

50000

Maximum

Income: 50000

monthly

or 50000 (for self-

Income: 50000

employed person)

(for

40000 salaried self-

employed person)

(salaried:

(for

or self-

employed person)

or 50000 (for self-employed person)

5.2: Major Findings of other Banks: 

SCB has the Lowest Interest Rate in the Market



IDLC and DBH have a high ceiling of 2.5 crore



HSBC and IDLC takes the lowest processing fee of 1%



DBH offered loan of upto 90% of property value



Only HSBC gives loan to applicant having 2 years’ experience, others require minimum 3 years’ experience but it also requires a higher monthly income for salaried person of BDT 40,000 compared to others (BDT 25,000)

5.3: Present Strategy: In formulating their present strategy, the Banks are focusing on some specific features that are listed below: SCB •

Lowest interest rate in the market

•

Option to pay only interest during construction period

•

Step-by-Step Financing: The home loan can be availed in steps, depending on how much down payment one can arrange at every step. This greatly reduces the burden of having to pay the whole down payment at once.

HSBC •

Brand Image

•

Competitive rates

•

Convenient features •

Low processing fees

•

Clubbing of income is allowed for immediate family members, i.e. HusbandWife, Father-Child, Mother-Child etc.

• •

Options for partial prepayment and early settlement

Simple procedure

EBL •

Most convenient & practical Home Loan

•

No specific strategy, they are currently giving loan to their present clients

DBH

•

Home Loan Counseling: free specialist advice on legal documentation, project or builder approvals, and technical advice.

•

Home loan at 9% per annum

•

Door Step Service

•

List of property available at the preferred location of any specific developer absolutely free.

•

Loan Protection Insurance

•

Multiple Repayment Option (Flexi Plus Home Loan) •

Step Up Repayment Facility

•

Flexible Loan installments Plan

•

Tranche Based EMI

•

Accelerated Repayment Scheme

IDLC •

Quick and hassle-free

•

Home loan at 9% per annum

•

Equal consideration for all applications irrespective of any professions

•

Dedicated and supportive service both before and after disbursement

•

Option to choose either Fixed or Variable rate of interest

•

Loan sanction within shortest possible time and also before starting construction of the building or purchase of the apartment

•

Early pre-payment option either in part or full with convenient conditions

•

Income tax rebate on yearly interest payment on home loan up to Tk 2 million

•

Municipality holding tax rebate

•

Maximum loan offering to Non Resident Bangladeshi (NRB)

•

Competitive interest rate and lower fees

•

Home Loan Shield: IDLC now provides complete protection to its home loan borrowers.

Now home loans borrowers of IDLC can avail life insurance coverage equivalent to the amount of the outstanding home loan.

Special campaign: DBH Property Spotlight Program Launched: Delta Brac Housing Finance Corporation Ltd. known as DBH has launched a program titled ‘DBH Property Spotlight’ today (June 21, 2009) to highlight large housing projects aimed at

increasing home ownership levels of the middle and lower middle income population of the country. DBH will provide home loans on easy terms for the purchasers of flats in these housing projects.

SWOT Analysis of BBL 06: SWOT Analysis: Now, from all discussions about BBL’s Home Loan and other banks Home Loan features, I draw findings and recommendations for Brac Bank Limited. Before that, I made a SWOT analysis for BBL: Strengths •

Huge sales team that is young, energetic and efficient

•

Motivating the sales team with reward based on performance

•

Aggressive market penetration

•

Record Achievement of a portfolio of 100 Cr in only six months

•

Tie-up with developers.

Weaknesses •

Weak Marketing Strategy

•

High interest rate due to high cost of fund

•

Low ceiling of home loan

•

New into the business

•

Lack of co-ordination between departments

Opportunities •

Housing sector is booming due to high density of population, Rajuk is giving approval to a huge number of projects so the market is very big

•

Urbanization and improving lifestyle

•

Corporate clients

•

Non-Resident Bangladeshis

•

Capturing new customers by designing more flexible products

Threats •

Strong and well-established competitors in the market.

•

Stronger branding by competitors

•

Low interest rate offered by multinationals

•

Competitors have low cost of fund

•

Ceiling in the market is as high as 2.5 crore

Major Findings 07: Major Findings of Brac Bank Limited: •

BBL doesn’t give loan on vacant land. There has to at least one storied building on the land to get home loan from BBL.

•

BBL’s considerable deviation is now for 3 feet

•

BBL doesn’t give loan for commercial purposes which make it a little slower in market completion.

•

First loan installment is started from the day of disbursement.

•

Interest rate is little higher then SCB

•

Processing fee is higher then the other bank like HSBC & IDLC which is only 1%

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Low ceiling than the other banks

Recommendations 08: Recommendations: I have the practical experience in Mirpur Branch, BRAC Bank Limited for only three months, with my little experience in the bank with vast and complex Home Loan system, it is very difficult for me to recommend. I have observed some shortcomings regarding the operational activities of the bank. As per observation some suggestions for the improvement of the situation are given below:

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Loan procedure should be more flexible

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First loan installment should be started from 3 months to 6 months from the date of loan disbursement

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Interest rate should be reduced than others to match with the competition in the market

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Loan processing fee should be reduced from 1.5% to at least 1%

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BBL should give loan for commercial buildings

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BBL should give loan on a vacant land

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BRAC Bank should update its brochure and to be made advertisement on TV so that every initiative of the bank can go at the door of the customer.

Conclusion 09: Conclusion: I was working in Customer Service Department of Mirpur Branch, BBL. it would help me to build strong interpersonal skill within me and how politely I should response to my customers.

During my internship, I was assigned for different type of activities and there I had achieved a variety of performance appraisal.

Brac Bank Limited promotes broad-based participation in the Bangladesh economy through the provision of high quality banking services. Retail Banking is one of the most important services of BBL. Retail

Division offers a wide array of lucrative and competitive products and services to the individual customers of the bank. Currently there are several lending products and a number of other attractive new products will be launches shortly. Home Loan is one of them. BBL Home Loan has attractive features that can attract customers. It has a great future. There are lots of opportunities for BBL, comparing to other banks of the market. But it has some problem as well which can be decreased by taking some steps. BBL can improve their Home Loan features by focusing on some market strategy. BBL Home Loan has great future if they reduce their interest rate and loan processing fees than others. Then it obviously can give its customer a satisfied feature which can add value to their life style and at the same time BBL can get more recognition through out the country.

Bibliography

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Books, Publications and Journals of BRAC Bank Limited

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Valuable discussion with supervisors during the period of internship.

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Prospectus Of BRAC Bank Limited published in July 2008.

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BRAC Bank Limited (2008) Annual Report

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http://www.bracbank.com

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Practical knowledge from BRAC Bank Limited.