1.1.

Introduction Through this report an individual can expect to have a good knowledge and unders tanding on the various methods of operation performed by BRAC Bank Limited parti cularly in the area of Financial Institutional Services. From the last three mon ths of the banks disbursement, everything is tried to include in precise form. We tried our level best to put more emphasis on the SME loan and its recovery proc ess since it was the topic of our internship program. This report is to be used only for the academic purpose. We have collected all the necessary and relevant data from various primary, secondary and tertiary sources. After three months lo ng hard labor, it has become possible for us to make the report comprehensive an d factual. The data is truly and strictly confidential and no one can use its co mponents in full or partial. We would like to give thanks to everyone who has he lped and encouraged us in the process of preparing this report. 1.2. Significance This report is the result of three-month internship in BRAC Bank Ltd. We enter as an internee in BRAC Bank Ltd beginning from 5th September 2011 to December 20 11, and we have completed this internship period successfully. This internship r eport contains all the information that we have gathered at the time of our inte rnee in BRAC Bank Ltd. We work hard and soul. Our topic is A Study on SME Loan Ho lder and Reconciliation of BRAC Bank Limited all this information will help the m anagement to identify various scopes and limitations of the Institution and Proj ect department and to take decisions regarding the improvement or reengineering of this Department. This is the basic rationale behind the study. Besides, it wo uld be a great opportunity for us to get familiar with this system. So this stud y is very significant for both the company and us.

1.3. Objectives of the Report 1.3.1. Broad Objectives The main objective of the study is to fulfill the requirement of BBA program as well as to gain practical exposures about SME Loan department especially to know SME loan financing of BRAC Bank Ltd. 1.3.2. Specific Objectives To To To To find out basic appraisal of SME loan analyze the repayment behavior of SME loan borrowers know the enterprise selection criteria to provide SME loan know the terms and conditions of SME loans

To To To To

know the disbursement and recovery procedures of SME loans access the key performance indicator of the department know how the SME loan borrowers would behave in repaying their loan. know whether SME loan borrowers are dully paying their installments or not.

1.4. Scope of the report The scope of the study is quiet wide as this report has covered the A study on SM E loan holder and reconciliation of BRAC bank Ltd.. While preparing this report, we had a great opportunity to have an in depth knowledge of most of the loan act ivities practiced by the BRAC bank Ltd. The internship program is helpful to ove rview of BRAC bank limited SME Loan Ocean of competition. The importance of fina ncial intermediaries in the development of the overall economy of country cannot be described in short. From the inception of the civilization the banking secto r dominate the economic development of a country by mobilizing the saving from t he general people and channeling those saving for investment and thus economic d evelopment and growth. 1.5. Methodology The study uses both primary data and secondary data. The report is divided into two parts. One is the Organization part and the other is the project part. The p arts are virtually separate from one and another. The information for the organi zation part of the report was collected from secondary sources like books, publi shed reports and web site of the BRAC Bank Limited (www.bracbank.com). For gener al concept development about the bank short interviews and discussion session we re taken as primary sources. The information for the project Analysis of BBL SME loan financing both were colle cted from primary and secondary sources. For gathering concept of SME loan, the product program Guideline (PPG) thoroughly analyzed. Beside this observation, di scussion with the employee of the SME department and loan administration divisio n they said bank was also conducted. More over a market survey was conducted wit h a specific questioner. To identify the implementation, supervision, monitoring , and repayment practice interview with the employee and extensive study of the e xisting file was and practical case observation was done.

Figure: Data Collection Method Data can be collected through two sources:

Primary Data Raw data is a term for data collected on source which has not been subjected to processing or any other manipulation. (Primary data), it is also known as primar y data. It is a relative term. New data gathered to help solve the problem at hand. As compared to secondary da ta which is previously gathered data. As example is information gathered by a qu estionnaire. Information collected directly from the source through observation, conversation , and/or participation. The degree of reliability, validity, and precision requi red depends on how we intend to use the information. Visitor response to surveys is one example of primary data. In this report we have usedInterviews of Customer relationship officers (CROs) Focus group meetings Direct observation Secondary Data In research, secondary data is collecting and possibly processing data by people other than the researcher in question. Information collected by others such as government agencies and/or nonprofits th at pertains to your area of interest. The degree of reliability, validity, and p recision secondary data depends on how it was collected and interpreted. Census data is one example of secondary data. Any information collected from intermediate sources. Industry figures, databases library sources, and so forth are example of secondary data. In this report we have usedOperational manual Official Website Banking journals BBL newsletters Research papers After collecting all the data they will be coded and data will be processed anal yzed and graphically presented. Quantitative and qualitative data were collected and analyzed according to acceptable standards of practice. Different tables an d graphs were used to make the data meaningful and comparable. Qualitative data were analyzed rationally and in comparison with current market condition. Necess ary percentages and averages were calculated and the analyzed results were descr ibed step by step. To achieve the objectives we collected the 40 customers befor e BRAC bank loan purpose and after the loan taken purpose is used in the Questio nnaire. The average Questionnaire administered time 25 min. for the customer. 1.6. Limitations of the report The study has suffered from a number of barriers Data from BRAC Bank is highly confidential for the outside people and we had no authority to use the core banking software. BBL changes its core banking software, MBS to Finical thats why all the employees are very busy with their work, sometimes we had to wait more than one week for a piece of information. Time is also a big constraint for our research. We have to submit a broader deal in a shorter form of outcome. It was difficult to communicate with the customers, as many of them were unable to give us much time for interview. As we have taken a sample of 40 observations, there may be sampling error.

2.1. Background of the Organization BRAC Bank Limited is a scheduled commercial bank in Bangladesh. It established i n Bangladesh under the Banking Companies Act, 1991 and incorporated as private l imited 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 prov ide all kinds of banking business. At the very beginning the Bank faced some leg al obligation because the High Court of Bangladesh suspended activity of the Ban k and it could fail to start its operations till 03 June 2001. Eventually, the j udgment 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 fro m July 04, 2001. The importance of financial intermediaries in the development of the overall eco nomy of country cannot be described in short. From the inception of the civiliza tion the banking sector dominate the economic development of a country by mobili zing the saving from the general people and channeling those saving for investme nt and thus economic development and growth. In ancient time, the importance of commercial banks after the ravage of the liberation war to develop a better econ omy was severally needed and it is needed now and will be required in future als o. In time-to-time Government of Bangladesh agreed to permit the private commerc ial banking in the country. BRAC bank will be knowledge-based organization where the BRAC Bank professional s will learn continuously from their customers and colleagues worldwide to add va lue. It will work as a team, stretch, they will innovate and break barriers to s erve customers and create customers loyalty through a value chain of responsive and professional delivery. The bank promotes broad-based participation in the Ba ngladesh economy through the provision of high quality banking services. BRAC Ba nk will do this by increasing access to economic opportunities for all individua ls and business in Bangladesh with a special focus on currently under-served ent erprises 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 thei r asset base and access market opportunities will increase the economic well bei ng 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 su pport the activities of BRAC, the Banks major shareholder. Development and povert y alleviation on a countrywide basis needs mass production, mass consumption and mass financing. BRAC Bank goal is to provide mass financing to enable mass prod uction and mass consumption, and thereby contribute to the development of Bangla desh. BRAC Bank has 100 Branches, 60 SME Service Centers More than 300 ATMs and 424 SME Unit offices across the country. It has disbursed over BDT10,000 crores of SME loan . BRAC Bank intends to set standard as the market leader in Bangladesh by providin g 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 26 branches up-to this year. This org anization achieved customers confidence immediately after its establishment. With in this short time the bank has been successful in positioning itself as progres sive and dynamic financial institution in the country. It is now widely acclaimed by the business community, from small entrepreneur to big merchant and conglomerates, including top rated corporate and foreign inves tors, for modern and innovative ideas and financial solution. Thus within this s hort time it has been able to create an unique image for itself and earned signi ficant 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 countrys finan cial 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 milli on. Shareholders Percent BRAC 31.74% IFC 9.50% Shore Cap International General Public through IPO Non-Residents Bangladeshis

8.76% 40% 5%

Table 3.1 Shareholder of BRAC Bank

Figure 3.2 Shareholders of BRAC Bank Limited The Chairman of the Bank is Mr. Fazle Hasan Abed. Now the Managing Director of t he bank is Mr. Mr. Muhammad A (Rumee) Ali. The bank has made a reasonable progre ss due to its visionary management people and its appropriate policy and impleme ntation. 2.2. Corporate Vision BRAC Bank will be a unique organization in Bangladesh. It will be a knowledge-ba sed 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 c ustomer loyalty through a value chain of responsive and professional service del ivery. BRAC Bank will serve its customers with respect and will work very hard to inst ill a strong customer service culture throughout the bank. It will treat its emp loyees with dignity and will build a company of highly qualified professionals w ho have integrity and believe in the Banks vision and who are committed to its su ccess. BRAC Bank will be a socially responsible institution that will not lend to busin esses that have a detrimental impact on the environment and people. So BRAC Bank operates following a specific vision like: Building a profitable and socially re sponsible financial institution focused on Markets and Business with growth pote ntial, thereby assisting BRAC and stakeholders build a "just, enlightened, healt hy, and democratic and poverty free Bangladesh". 3.3. Corporate Mission Sustained growth in small & Medium Enterprise sector Continuous endeavor to increase fee based income

Keep our Debt Charges at 2% to maintain a steady profitable growth Achieve efficient synergies between the bank s Branches, SME Unit Offices and BR AC field offices for delivery of Remittance and Bank s other products and servic es Manage various lines of business in a fully controlled environment with no compr omise on service quality 3.4. Goals BRAC Bank will be the absolute market leader in the number of loans given to sma ll and medium sized enterprises throughout Bangladesh. It will be a world-class organization in terms of service quality and establishing relationships that hel p 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 wor ld 3.5 Company Profile BRAC Bank Limited, with institutional shareholdings by BRAC, International Finan ce Corporation (IFC) and Shore cap International, has been the fastest growing B ank in 2004 and 2005. The Bank operates under a double bottom lone agenda where pr ofit and social responsibility go hand in hand as it strives towards a poverty-f ree, enlightened Bangladesh. A fully operational commercial Bank, BRAC Bank focu ses on pursuing unexplored market niches in the Small and Medium Enterprise Busi ness, which hitherto has remained largely untapped within the country. In the la st five years of operations, the Bank has disbursed over BDT 1500 core in loans to nearly 50,000 small and medium entrepreneurs. The Management of the Bank believes that this sector of the economy can contribu te the most to the rapid generation of employment in Bangladesh. Since inception in July 2001, The Banks footprint has grown 100 branches, 419 SME unit offices and 300 ATM sites across the country, and the customer base has expanded to 200, 000 deposit and 45,000 advance accounts through 2006. In the years ahead BRAC Ba nk expects to introduce many more services and products as well as add a wider n etwork of SME unit offices, Retail Branches and ATMs across the country. BRAC, a national, private organization started as an almost donor funded, smallscale relief rehabilitation project initiated by Fazle Hasan Abed to help the co untry overcome the devastation and trauma of the Liberation War and focused on r esettling refugees returning from India. BRAC has emerged as an independent, vir tually self-financed paradigm in sustainable human development. It is one of the largest Southern development organizations employing 97,192 people, with 61% wo men, and working with the twin objectives of poverty alleviation and empowerment of the poor. 3.6. 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 hold s meetings on a regular basis. The current management teams and board of directo rs name and picture are given in bellow: 3.6.1. Board of Directors of BRAC Bank Mr. Muhammad A. (Rumee) Ali Chairman