Customer Satisfaction on credit card services provided by Brac Bank

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“Customer Satisfaction on credit card services provided by Brac Bank”

Chapter 01

1. Introduction

1.1. Objectives:

There are some objectives for the report and those are:

• To know about Brac Bank Ltd.
• To gather information on credit card department of Brac Bank Ltd.
• To identify the credit card holders.
• To identify the customer service department.
• To identify the customers perception about the customer service department.
• To identify the customers perception regarding the customer service officers.
• To identify the customers perception on the credit cards.
• To identify the customer’s satisfaction level on credit card services.
• To identify the respondents answer to each question.
• To analyze the respondents answers.

1.2. Methodology:

1.2.1. Selection of Sampling:

It is apparent that in this study the target samples are the credit cardholders of BRAC Bank. In order to know and measure the true picture of the over all satisfaction level of customers I have chosen specific number of customers, who:

a) Age 20 or older

b) Have income of at least TK. 14,000 per month

c) Have one of the credit cards

d) Have at least one land phone

e) Mainly resides in Dhaka city

To obtain a representative sample of qualified individuals with in short period in low cost, a convenience sampling method is used to select the respondent from the cardholders. Among all the cardholders, meeting the five qualifications from which some have been selected and asked according to the questionnaire. The steps in the sampling design process are as follows:

1.2.2. Target Population:

Adults meeting the five qualifications (elements) holding credit cards of BRAC Bank mainly living in Dhaka City during the survey period.

1.2.3. Sample Frame:

The computer generated record of the credit card holders of BRAC Bank.

1.2.4. Sampling Unit:

The sample unit of this project is the age group of people from 20 to 65 years old who are involved in different professions and sufficient income to get a credit card.

1.2.5 Sampling Techniques:

Convenience sampling is used here. The target population has been taken from the record and has been asked questions later.

1.2.6. Sample Size:

For this study sampling size has been restricted to 50. The different credit card holders (Visa classic and Gold, Universal Visa classic and gold) have been questioned randomly.

1.2.7. Data Collection Method:

Data has been collected from two sources:

a. Primary Sources:

The data on the satisfaction level of customer services have been collected from the cooperative respondents through a structured questionnaire & by observation and informal discussions with the personnel of BRAC Bank. More emphasize will be given on the primary data.

b. Secondary Sources:

Secondary data have been collected from informal discussion with the personnel of BRAC Bank and from the internet.

1.2.8 Data Measurement Techniques:

To measure the satisfaction level and expectations of the card holders, the data is collected through filling up a simple questionnaire and observation, which have been analyzed with frequency distribution table, cross tabs and regression analysis by software called SPSS.

a) Questionnaire: In the questionnaire mainly the numeric and scaling concept have been analyzed.

b) Observation: The direct examination of behavior, the results of behavior or psychological changes.

1.3. Scope of the Study:

This project is dealing with the customer services of BBL. It gives more emphasis on the various satisfaction levels of the existing customers and their expectations. On top of that, it is a research on the problems which customers face regularly. As this study mainly attempts to distinguish the overall customer satisfaction of credit card holder’s of BBL, the study is limited to the credit card holders of the bank.

1.4. Limitations:

• Lack of comprehension of the respondents was the major problem that created many confusions regarding verification of conceptual question.
• The time given for the research was not sufficient.
• Due to time limitation many aspects could not be discussed in the present study.
• Every organization has their own secrecy that is not revealed to others. While collecting data on BRAC Bank, it is obvious that personnel would not disclose enough information for the sake of confidentiality of the organization.
• The findings of the survey would be based on customer responses in different BRAC Bank’s different branches located in Dhaka City only. The result may not reflect the same for the other branches located outside.

Chapter 02

2. Company Profile

2.1 Statement of the Problem:

The new century is even more prosperous than the past, because of convenient transaction of money. The traditional shape of money is getting lost and it is now developed into different forms that satisfy the same needs executed by money. Now a day one of the very important mode of payment is the credit cards. Since free and open trade is the engine of economic development, everyone is going to be a part of it. We are living in the era of profound changes in transaction process, called the age of interdependence, it is a time of increasing expectation brought about by worldwide distribution, satellite communication, transportation system, ATMs, credit cards etc.

Bangladesh over the thirty years of its independence has gone through lots of transition and break-through to reach at the position it is today. Bangladesh being a third world country was always dominated and suppressed by the powerful and economically well off nation. Bangladesh become an independent country in 1971 began its journey to distant dream many years ago. The country with authentic natural beauty and enormous natural resources was not able to show the auspicious sign of prosperity because of the barriers that were created both locally and internationally. The country is not advance in terms of technology and has not yet adapted modern and efficient ways of producing goods and services that would minimize cost and maximize profit. But BRAC Bank has been trying to provide the modern approach of providing services to its valuable customers and trying to make this situation better.

Banking is one the most competitive industries of Bangladesh that has seen a huge amount of growth during the last decade. A large number of new banks have made their places in the industry and yet there are more to register in the list. In such a highly competitive service industry, the importance of customer satisfaction cannot be de-emphasized. Improved customer satisfaction and loyalty gives a firm better base than its rivals and allows it flourish in the industry.

This project deals with the service quality and customer satisfaction of BBL’s credit card service. A survey was conducted on the credit card holders of BBL, Dhaka. The objective was to assess the level of importance the credit card holders of BBL put across various service level attributes and also to determine how well BBL was satisfying the customers on those service grounds. The results of this survey are then analyzed to determine the most important aspects of the service and discover various drivers of overall satisfaction. Various important issues of customer satisfaction are also presented in light of the findings of the survey. Lastly, the findings are examined to prescribe a set of specific recommendations to improve the overall service quality according to customers expectations and also to solve the existing problems in the whole organizational level.

2.2. Brac Bank Ltd:

BRAC Bank is a scheduled commercial bank established under the Banking Companies Act, 1991 and incorporated as a public company limited by shares on 20 May, 1999 under the Companies Act, 1994 in Bangladesh. The primary objective of the Bank is to carry on all kinds of banking business. The Bank could not start its operation till 03 June, 2001 since the activity of the Bank was suspended by the High Court of Bangladesh. Subsequently, the judgment of the High Court was set aside and dismissed by the Appellate Division of Supreme Court on 04 June, 2001 and accordingly, the Bank has started operations from 04 July, 2001.

BRAC Bank has a unique institutional shareholding between BRAC, the largest DFO in the world, the International Finance Corporation (IFC), the commercial arm of the World Bank Group, and Shore Cap International, a concern of Shore Bank Corporation, America’s first and leading community development and environmental banking corporation. As a fully operational commercial bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprise Business, which has remained largely untapped within the country. Almost 40% of BRAC Bank’s clients had no prior experience with formal banking. The Bank has 313 regional marketing unit offices offering services in the heart of rural and urban communities and employs about 1,200 business loan officers – around 70% of total staff.

BRAC Bank Limited, a full service commercial bank with Local and International Institutional shareholding, is primarily driven by creating opportunities and pursuing market niches not traditionally met by conventional banks. BRAC Bank has been striving to provide “best-in-the-class” services to its diverse range of customers that spread across the country under an on-line banking platform.

The reason BRAC Bank is in business is to build a profitable and socially responsible financial institution focused on markets and businesses with growth potential, thereby assisting BRAC and stakeholders to build a “just, enlightened, healthy, democratic and poverty free Bangladesh,”which means to help make communities and economy of the country stronger and to help people achieve their dreams. We fulfill the purpose by reaching for high standards in everything we do; for our customers, our shareholders, our associates and our communities, upon which the future prosperity of our company rests. As such a career in the BRAC Bank Limited requires one to be versatile, to have genuine love and understanding towards others and to be able to take on different roles.

Remarkably, BRAC Bank, despite being one of the newest Banks in the country, has attained a reputation for being in the forefront of the industry. Our retail business and corporate business have gained new ground over the last two years and today  BRAC Bank began it’s operations with a mind to provide formal banking services to all levels of people in the urban, semi-urban and rural spectrum through the nearly 300 unit offices across the country. The Bank has seen that goal a long way through – providing Bangladesh with a degree of services and professionalism that the traditionally underserved class could ever dream of.

The issue manager, in addition to the issuer company, shall ensure the due compliance of the above mentioned conditions and shall submit the compliance report to the Commission within seven days of expiry of the  fifteen days time period allowed for refund the subscription money.

Since inception in July 2001, the Bank’s footprint has grown to 26 branches, 349 SME unit offices and 37 ATM sites across the country and the customer base has expanded to 210,000 deposit and 55,000 borrowers through 2006. In the last four and half years of operation, the Bank has disbursed over BDT 2,100 crore in loans to nearly 50,000 small and medium entrepreneurs. The management of the Bank believes that this sector of the economy can contribute the most to the rapid generation of employment in Bangladesh. 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.

2.2.1. Achievements:

i. Fastest growing bank in the country for the last two years.

ii. Leader in SME financing through 350 offices.

iii. Biggest suit of personal banking & SME products.

iv. Large ATMs (Automated Teller Machine) & POS (Point of Sales) network.

2.2.2. 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 to build a just, enlightened, healthy, democratic and poverty free Bangladesh.

2.2.3. Mission:

• Sustained growth in Small & Medium Enterprise sector.
• Continuous low-cost deposit Growth with controlled growth in retail assets.
• Corporate Assets to be funded through self-liability mobilization. Growth in Assets through syndications and investment in faster growing sectors.
• Continuous endeavor to increase non-funded income.
• Keep its debt charges 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 full controlled environment with no compromise on service quality.
• Keep a divers, far flung team 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.

2.2.4. Core Values:

• Value the fact that one is a member of the BRAC family.
• Creating an honest, open and enabling environment.
• Have a strong customer focus and build relationships based on integrity, superior service and mutual benefit.
• Strive for profit & sound growth.
• Work as team to serve the best interest of our owners.
• Relentless in pursuit of business innovation and improvement.
• Value and respect people and make decisions based on merit.
• Base recognition and reward on performance.

2.2.5. Major Functions of Brac Bank:

The major functions are described below:

2.2.5.1 Basis of Accounts:

The financial statements have been prepared on a going concern basis under the historical cost convention and in accordance with the first schedule (Sec 38) of the Bank Companies Act 1991, Bangladesh Accounting Standard (BAS-30), Companies Act-1994 and the forms of financial statements as prescribed by Bangladesh Bank vide BRPD circular No. 14 dated 25 June 2003.

2.2.5.2 Loans and Advances:General provision on:

. Unclassified loans and advances 1%

. Small enterprise 2%

. Consumer finance for house building loan and loans for professional setup 2%

. Consumer finance 5%

. Special mention account 5%

. Specific provision on: Substandard loans and advances 20%

. Doubtful loans and advances 50%

. Bad/ loss loans and advances 100%

Interest on loans and advances is calculated on daily product basis, but charged and accounted for monthly and quarterly on accrual basis.

Provision for loans and advances is made based on the period and review by the management and the instructions contained in Bangladesh Bank BRPD Circular No. 16 dated December 6 1998, No. 09 dated May 14 2001, No. 10 dated August 20 2005, No. 19 and 20 dated December 20 2005 and No. 8 dated February 8 2006 respectively.

Interest is calculated on classified loans and advances as per BRPD Circular No. 16 of 1998, No. 09 of 2001 and No. 10 of 2005 respectively and recognized as income on realization.

2.2.5.3 Foreign Exchange Risk Management:

Foreign exchange risk is defined as the potential change in profit/loss due to change in market prices. Today’s financial institutions engage in activities starting from imports, exports and remittances involving basic foreign exchange and money market to complex structured products. Within the bank, Treasury Department is vested with the responsibility to measure and minimize the risk associated with bank’s assets and liabilities.

All treasury functions are clearly demarcated between treasury front office and back office. The front office is only involved in dealing activities and the back office is responsible for all related support and monitoring functions. Treasury front and back office personnel are guided as per BBL core risk management and their job descriptions. They are barred from performing each other’s job. As mentioned in the previous section, ‘Treasury Front Office’ and ‘Treasury Back Office” has separate and independent reporting lines to ensure segregation of duties and accountability and also helps minimizing the risk of compromise.

Dealing room is equipped with Reuter’s information, a voice screen recorder for recording deals taking place over the phone. Counter party limit is set by the Credit Committee and monitored by Head of Treasury. Trigger levels are set for the dealers, Chief Dealer and Head of Treasury. Any increase to trigger the limit of the Head of Treasury requires approval from the MANCOM. Before entering into any deal with counter party, a dealer ensures about the counter party’s dealing style, product mix and assess whether the customer is dealing in an appropriate manner.

2.2.5.4 Prevention of Money Laundering:

In recognition to the fact that financial institutions are particularly vulnerable to the money launders, BRAC Bank has established Anti-Money Laundering Policy. The purpose of the Anti-Money Laundering Policy is to provide  guidelines within which to comply with the laws and regulations regarding money laundering both at country and international levels and thereby to safeguard the bank from potential compliance, financial and reputationl risk. KYC procedure has been set up with address verification. As part of monitoring account transactions, the estimated transaction profile and high value transactions are being reviewed electronically. Training has been taken as a continuous process for creating/developing awareness among the officers.

2.2.5.5 Internal control and compliance:

Internal Control is the mechanism in place on a permanent basis to control the activities in an organization, both at a central and at a departmental/divisional level. Management through Risk Management Department controls operational procedures of the bank. Internal Audit and Inspection team under Risk Management undertakes periodical and special audit of the branches, SME Unit Offices and Departments at Head Office for review of the operation and compliance of statutory requirements. In addition to the Internal Audit and Inspection team the Monitoring team conducts surprise inspection at the Branch, SME Unit and the Departments at Head Office as well. The Board of Audit Committee reviews the reports of the Risk Management Department periodically.

2.2.5.6 Asset Liability Management:

Changes in market liquidity and interest rate expose Bank’s business to the risk of loss, which may, in extreme cases, threaten the survival of the institution. As such emphasize has given so that the level of balance sheet risks are effectively managed, appropriate policies and procedures are established to control and limit these risks and proper resources are available for evaluating and controlling these risks. The Asset Liability Committee (ALCO) of the bank monitors Balance Sheet risk and liquidity risks of the Bank. Asset liability Committee (ALCO) reviews country’s over all economic position, Bank’s Liquidity position, ALM Ratios, Interest Rate Risk, Capital Adequacy, Deposit Advanced Growth, Cost of Deposit and yield on Advance, F.E. Gap, Market Interest Rate, Loan loss provision adequacy and deposit and lending pricing strategy.

2.2.5.7 Lease rental:

Lease hold assets have been accounted for as operating lease and accordingly lease rentals have been charged to revenue in these interim financial statements for the period 1 January 2006 to 31 March 2006. Accounting of leased assets will, however, is done as per BAS-17 “Leases” considering the leases as finance lease in preparing year end financial statements.

2.2.6 Description of Various Functional Departments:

BBL activities are performed through functional departmentalization. So, the departments are separated according to the functions they perform (HR, Personal Banking, etc.). There are 6 major functional departments at BBL: Human Resources, Services, Small and Medium Enterprises (SME), Retail, Corporate Banking and Cards. Within these major departments there are some other subsidiary departments that allow smooth operation of their own major departmental function. A structure of all the departments is shown in the following page. A brief functional description of these departments is discussed below:

Functional Departments of BBL (BRAC Bank Limited):

2.2.6.1 Human Resource Department:

The Human resource Manager heads this department. The major functions of this department are Recruitment, Training and developments, Personnel Services and Security. The HR department is much concerned with the discipline that is set up by the BBL group. BBL group has got strict rules and regulations for each and every aspect of banking, even for non-banking purposes; i.e. The Dress Code. All these major personnel functions are integrated in the best possible way at BBL, which results in its higher productivity. The Human resource officer monitors the employee staffing and administration activities. The Training officer supervises Training, development & rotation activities. The structure of the HR department is shown below:

Structure of Human Resource Department:

BBL Bangladesh limited follows a standard procedure for recruitment and selection. However there is no set time period when this recruitment and selection takes place. Each Departmental Head places the requisition for recruitment to the Human resource officer, if any vacancy is created due to (1) Retirement, (2) Resignation (3) Death, or (4) Extra work load.The process for the recruitment of personnel for managerial and non-managerial level differs slightly but the basic steps are same in both the cases. The steps are:-

1. Initial Screening
2. Screening by Departmental Heads
3. Filling of the BBL Job Application Form
4. Screening on the basis of SAF
5. Initial Interview
6. Selection for written test
7. Written test
8. Evaluation of test papers
9. Selection of Final interviewees
10. Final interview
11. Documentation Check
12. Medical Examination
13. Probationary Appointment
14. Confirmation

In order to enhance the efficiency of the employees, BBL gives emphasis on the both theoretical and practical training for its personnel. All the training and development programs are aimed at two basic reasons – (1) skill development (2) motivation through counseling and persuasion to change value system. For the top management or senior managers there is provision for overseeing training arranged by BBL group. For the mid-level manager or other managerial level there is provision for regional training courses. Besides, for non-management level there are training programs arranged in different institution and also with in the organization. For the operatives, various job-training programs are conducted within the company. Finally, BBL follows a performance based promotion system for all levels of its employees.

2.2.6.2. Services Department:

This is an integral and vital part of the bank. The Services Department ensures smooth operation and functioning within all the departments of BBL. It also provides continuous support to the core banking activities of BBL. The Manager of Services leads this department who formulates and manages various critical issues of the services function of BBL. He is followed by a group of executives who are the heads of various subsidiary divisions that operate within the services department. The services department is considered as the backbone of all other departments. The various subsidiary divisions within this department are Administration, IT, Internal Control (IC), Network Services Center (NSC), and HUB.

(i) Administration:

Like any other organization, the Admin departments of BBL makes sure that the organization moves on with all its departments and staffs operating according to all the rules and regulations of the company. It also prevents any bottlenecks within the work process and ensures smooth functioning. The admin department has two divisions – general administration and business support services.

The general admin division is pretty much similar to the admin departments of other companies that ensures discipline and regulatory concerns. The business support services provide supports to the departments during employee leaves and sudden terminations so that the department can function without problems.

(ii) IT:

This department gives the software and hardware supports to different departments of the bank. As BBL is engaged in online banking, the role of IT is very crucial for the bank. This department is the most active department of BBL where employees always stand by to solve any problems in the system. The managers and executives of IT division work continuously to develop the total IT system of BBL so that it can be operated with ease, accuracy and speed.

(iii) Internal Control:

BBL has internal auditors who visit on regular basis and submit the report to the higher authority for audit purposes. This gives different departments the chance to know their mistakes and take necessary corrective actions. Again, the Bank annually administrates a wide audit program to evaluate the overall performance of the bank in Bangladesh.

(iv) Network Service Center (NSC):

This department can be described as the ‘Power House” of BBL Bangladesh. NSC does the back office job for the bank. The main four jobs that are performed by NSC are Clearing, Scanning of signature cards, Issuing checkbooks and Sending & receiving remittances. NSC looks after the clearing process of BBL and makes necessary contacts with the central bank for maintaining account flows. All the customers’ signatures are scanned in this department and are entered into the system. NSC also issues checkbook for new and old accounts based on requisition from various branches. ‘Remittance’ is a banking term, which means ‘Transfer of funds through banks’. When a bank remits on behalf of its customers, it is termed as outward remittance. On the other hand, when the bank receives the remittance on behalf of its customes, it is inward remittance. The following are the methods that NSC uses to remit money for customers:

. Telegraphic Transfer (TT)

. Demand Draft (DD) &

. Cashier’s Order.

2.2.6.3. Small & Medium Enterprises (SME):

BBL has established strong infrastructure for SME financing all over the country. Date as on 31st March 2006 shows total number of zonal and unit offices stood at 51 and 285 respectively. There are 652 customer relationship managers and 7 territory Managers. BBL is the market leader in SME financing. Total number of staff in SME stood at 686 as on 31st March 2006. Disbursement in SME financing has been increasing significantly. SME five years Business Plan provides the road map of maintaining the leadership position of BBL. At present, Government and Non-Government supports for promoting SME in Bangladesh encouraged different banks for participating more in SME financing. The experience in SME financing provided BBL strategic strength to maintain its growth of assets by extending its network in untapped areas in the country.

The most valuable natural resource of Bangladesh is its people. As a nation we struggled for our independence and now the attainment of economic uplift is the main goal. Micro lenders are working here in the financial field, providing very small amount and on the other hand regular commercial banks have been providing bigger amount of loans to larger industries and trading organizations. But the small and medium entrepreneurs were overlooked. This missing middle group is the small but striving entrepreneurs, who because of lack of fund cannot pursue their financial uplift, as they have no property to provide as equity to the commercial banks. With this end in view, BRAC Bank was opened to serve these small but hard working entrepreneurs with double bottom line vision. As a socially responsible bank, BRAC Bank wants to see the emancipation of grass-roots level to their economic height and also to make profit by serving the interest of missing middle groups. 50% of our total portfolio usually collected from urban areas, are channeled to support these entrepreneurs who in future will become the potential strength of our economy. We are the market leaders in giving loans to Small and Medium Entrepreneurs. We have been doing it for the last five years.

(a) Small & Medium Enterprise (SME) Product Details:

(i) Ananya:

This business loan is offered for the expansion of small and medium sized trading, Manufacturing, Service, Agriculture, Non–farm activities, Agro-based industries etc. with a valid trade license and in operation for at least 1 year. The size of the loan amount is between Tk.3 lac to Tk.8 lac.

(ii) Apurbo:

This business loan is offered for the expansion of Small and Medium sized trading, Manufacturing, Service, Agriculture, Non–farm activities, Agro-based industries etc. with a valid trade license and in operation for at least 3 years. The size of the loan amount is between Tk.8lac to Tk.30lac.

(iii) Educational institution (Pathshala):

The loan is offered to educational institutes (School/College/ University) that has been in operation for at least 3 years, for loans up to Tk.5lac, or at least 5 years, for loan in excess of Tk.5lac. The loan is provided for the purchase of any fixed assets, infrastructure development, or shifting to a new address for any government recognized educational institution. The size of the loan amount is between Tk.3lac to Tk.30lac.

(iv) Health service provider (Aroggo):

This loan is provided for health service providers i.e. clinics; diagnostic centers located around the unit offices towards the purchase of relevant medical equipment. The medical centre should have permission to operate and be in operation for at least 2 years. Doctors with at least five years of experience in the profession may also apply for this loan. The size of the loan amount is Tk.3lac to Tk.30lac, of which Tk.9.5lac in loans may be disbursed collateral-free.

(v) Digoon Rin:

Digoon Rin is a loan facility for Small and Medium enterprises. Entrepreneurs with 2 (two) year’s experience in Small and Medium sized trading, manufacturing, service, agriculture, non-farm activities, agro-based industries etc. located surrounding the branches of BRAC Bank in Dhaka, Chittagong, Sylhet, Narayangong, Dhaka EPZ and Sonagazi (Feni) can avail this loan facility. To get the benefit of ‘Digoon Rin’ facility the enterprise has to provide 50% cash security (BRAC Bank FDR) of the loan amount. One can get the loan from Tk.5lac to Tk.30lac. The product offers terminating loan facilities for working finance and fixed asset purchase under equated monthly installment and/ or a single installment based repayment plan.

(vi) Prothoma Rin:

“Prothoma Rin” is a loan facility for small and medium sized trading, manufacturing, service, agriculture, non-farm activities, and agro-based industries etc. which are operated by women entrepreneur. The product offers terminating loan facilities for the purpose of working capital finance or fixed assets purchase. Eligibility for this loan are as follows:

. Entrepreneurs aged between 18 to 55 years.

. Entrepreneurs with minimum 2 years experience in the same line of business.

. Minimum 1 (One) year of continuous from minimum BDT 3 lac up to maximum of BDT 10 lac.

Retail is the most flourishing department of BBL Bangladesh. This department basically deals with the management of products and services offered to the in individual consumers. Within a span of only seven years, BBL Retail has grown tremendously and is still growing with its innovative products and service offerings. Manager of retail is the person behind the astounding growth of Retail department in BBL Bangladesh. Chief of Retail manages and supervises the Personal Banking activities of the branch network of BBL Bangladesh.

(b) Loan Products:

(i) Car Loan:

Brac Bank offers easy, customer-friendly car loans for customers who wish to purchase either a brand new car or a reconditioned one. All BRAC Bank account holders aged between 21 and 65 are eligible to apply. The loan can be repaid over a maximum of 4 years through equal monthly installments (EMI).

1. No down payment.
2. BBL offers the highest loan amount in the market, going up to Tk. 2,000,000 in some cases.
3. There is a low processing fee.

(ii) Teachers Loan:

The Teachers Loan is an “any-purpose” loan offered to a teacher permanently employed at an educational institute for at least three years. The customer is eligible for a loan up to 10 times his or her current monthly salary without a requirement for security.Repayment can be made in equal monthly installments for 1 to 4 years.

(iii) Secured Loan/OD:

Special schemes are offered by the Bank that allows customers to avail cash at nominal interest rates. The security is kept untouched in Bank’s custody and the value grows. All BRAC Bank account holders aged from 21 to 65, people from all income groups – salaried employees and self-employed business-persons – with security in their possession are eligible to avail these facilities.The maximum amount can go up to Tk. 5 crore, and customers may avail the facilities in single or in joint names. BBL allows loans for up to 100% of the value of the securities (conditions, however, apply). In case it is an overdraft, the customers repay only interest at quarterly intervals. In case it is a Loan, the customer is allowed to choose between the quarterly repayment option and the monthly installment option.

(iv) Unsecured Personal Loan:

This is a package specially designed for salaried employees- eligible customers are offered this “any-purpose” loan without any security. Employees of multinational companies or local corporate bodies; also employees of midrange companies, govt. officials and self-employed business-persons are eligible to apply. Customers may apply for up to 8 times gross salary or 5 times gross monthly income (maximum Tk.5 lacs) as loan repayable through equal monthly installments (EMI) for 1 to 4 years.

(v) Credit Card Loan:

Customers holding a credit card from any financial institution, for at least 1 year, may apply for this loan. Customers with a minimum credit limit of Tk. 40,000 on their credit card are being eligible for the loan. The Credit Card Loan offers loan up to 5 times the credit card limit on the card.

2.2.6.4 Corporate Banking:

This division of BBL provides financial services to organizational clients. Whether it is locally or around the nation, BBL offers a comprehensive range of services that can be tailored to the individual needs of the company. Two offices of BBL offers corporate banking services to corporate clients. These are the Dhaka Head Office and Chittagong office. Corporate Banking of BBL includes Corporate Institutional Banking (CIB). These sub-divisions are discussed briefly in the following sections:

(i) Corporate Institutional Banking (CIB):

Operating through the major centers and in close liaison with BBL Investment Bank, Corporate and Institutional Banking provides the full range of the Group’s capabilities at nationwide, with a particular focus on payments and cash management, trade and securities custody. BBL also offers local financial institutions and banks access to wide range of financial services available on countrywide. The services are tailored to suit the needs of the companies. CIB has a separate wing- Relationship management department. This is discussed below:

(ii)  Relationship Management Department:

The RM department consists of various relationship managers who are assigned to different corporate client to better satisfy their needs. These RM departments communicate with the clients and are solely responsible for the companies they deal in. Any information regarding a corporate client must be communicated through the respective RM assigned to that corporate client. A relationship manager may be assigned more than one company and this decision depends on the Head of Corporate Banking.

2.2.6.5 Cards:

This department just started its journey officially on February 6^th 2007 in Bangladesh. This department has different wings – sales, customer services, credit, operations, acquiring and portfolio management. BBL Cards division is mainly operated by the Senior manger and First assistant president-Mamun Rashid. Some other mangers working under him are as follows who are in charge of different wings: Sales-Imran Habib, Acquiring-Khandaker Bappy, Customer services-Sazzad Hossain, Operations-Kabir Ahmed, Credit-Nahid Bin Zafar, Portfolio management-Masuma Yesmin. Under sales there are MIS (management information system), TELE Sales, Direct sales, retention unit.

These are the major departments of BBL Bangladesh. Except the branches all other departments are situated at BBL Bangladesh head offices located at Annex Building 1, Shooting Club, Gulshan 1. Most of BBL’s operation and activities are operated centrally from the head office. But to deal with customers more completely, the branches are given considerable authority and they operate in a more decentralized manner but subject to verification of the respective departments.

Chapter 03

3. Industry Analysis

3.1 Industry Analysis of Brac Bank:

Industry analysis builds on customer & competitor analysis to make more strategic judgment about a market & its dynamics. Porter’s approach can be applied to an industry, but it can also be applied to a market or sub-market within the industry. The basic idea is that the attractiveness of an industry or market as measured by the long-term return investment of the average firm depends largely on five factors.

3.1.2 Porter’s five Forces at BBL:

(i) Rivalry among existing competitors:

The rivalry among the competitors and the growth in the industry depends upon the intensity of competition. A high amount of competition is observed in the banking sector of Bangladesh. There are more than 50 commercial banks in Bangladesh that fight for their own share of the market. The national banks have the highest banking network in Bangladesh. They compete against the banks with their low cost of operation and government support. Again, Standard Chartered bank is the largest multinational banking network in Bangladesh that has its network in many metropolitans of Bangladesh. There are other international banks that also take part in the competition and are aggressive in nature. This high intensity of competition makes companies difficult to sustain in the long run.

(ii) Threat of new entrants:

The next force highlights the possibility of new competitors entering the market. Existing firms may try to discourage new competition by aggressive expansion & other types of entry barriers. The banking sector of Bangladesh seriously faces the threat of new entrants. However the threat comes from two directions. The first threat comes with the arrival of the multinational banks and its branch expansion particularly due to the booming energy sector. Secondly, the continuous entry of local banks with lower cost structure also poses a severe threat to this industry.

In the context of BBL the various new & upcoming Banks pose a significant threat, being new entrants in the banking sector of Bangladesh. But BBL is aware of these potential competitors and is trying to expand countrywide to make the sector unattractive & to create entry barrier.

(iii) Threat of substitute products:

This force considers the potential impact of substitutes. New products that satisfy the same customer needs are important sources of competition including alternative products in the definition of product market structure.

BBL continuously faces the threat of various substitute products launched by its strong competitors in the market place. For example, the launch of premiere banking by SCB poses a strong threat on BBL’s premium customer group and BBL is at a condition where it should launch an even better product. More over the various consumer credit schemes offered by various local banks with lower interest rates and cost also pose a strong threat on the BBL personal banking products. Again the lower service charges at national banks also discourage a wide group of customers to hold account in BBL. These are some of the threats posed by substitute products in the market place.

(iv) Bargaining power of suppliers:

The fourth force is the power of suppliers that may have impact on the producers in an industry. Companies may pursue vertical integration strategies to reduce the bargaining power of suppliers.

In the context of BBL, suppliers are those customers and organizations that provide financing to the firm via depository schemes. If the cost of financing rises, then BBL will have to increase the interest rate that it charges to its customer in order to remain in the business. This may result in severe customer dissatisfaction & as a result poor profitability. BBL is aware of this devastating situation.

(v) Bargaining power of buyers:

Finally, buyers may use their purchasing power to influence the producers or service providers. Understanding which organizations have power & influence in the distribution channel provides important insight into the structure of competition.

In the banking sector of Bangladesh, customers have a strong bargaining power since there are a large number of commercial banks providing similar services. Customers have a wide range of options in deciding where to bank. They can either go for the multinationals or turn to new local banks for getting quality service. Others may also consider the national banks for large credit facilities. Therefore banks have to pursue the customers with attractive interest rates and provide them with tailor made customized services in order to attract the customer or hunt depositors.

In the context of BBL, the firm is more or less free from the cope of the bargaining power of the buyers. BBL has its own policies to carry out its operations & employees follow those rules to deal with the customers. But too much rigidity of the prevailing policies when to deal with the clients may under cut its client base as well as profitability. To overcome this worst scenario – a positive & personalized approach to the needs of customer has become BBL’S motto.

3.3. SWOT Analysis of BBL:

(i) Strengths:

Strong Corporate Iidentity	BBL is the leading provider of financial services nationwide. With its strong corporate image and identity it can better position in the minds of customers. This image has helped BBL grab the personal banking sector of Bangladesh very rapidly.
Distinct Operating Procedures	BBL is known nationwide for its distinct operating procedure. The company’s Managing for Value strategy better satisfy customers needs and also keeps the firm profitable.
Efficient Performance	The selection & recruitment of BBL emphasizes on having the skilled graduates & postgraduates who have little or no previous work experience. The logic behind is that BBL wants to avoid the problem of ‘garbage in & garbage out’. This type of young & fresh workforce stimulates the whole working environment of BBL.
Young Enthusiastic Workforce	The human resource of BBL is extremely well thought & perfectly managed. As from the very first, the top management believed in empowered employees, where they refused to put their finger in every part of the pie. This empowered environment makes BBL a better place for the employees. The employees are not suffocated with authority but are able to grow as the organization matures.
Companionable Environment	All office walls in BBL are only shoulder high partitions & there is no executive dining room. Any of the executives is likely to pop down at a table in its cafeteria & join in a lunch chat with whoever is there. One of the employees has said, “It’sexciting to know you may see & talk to the top management at any time. You feel a part of things”.
No Communication Barriers	BBL has tried hard to avoid communication barriers & structural bureaucracies. The little existence of authoritative barriers among the different level of management stimulates a feeling of importance as their work get priority over the position.
MBO	BBL also has Management by Objectives (MBO) everywhere. Each person has multiple objectives. All the employees must have to get the approval of their bosses on what they are going to do. Later they review as how well they have performed their job with their management as well as the peer group.
Modern Equipment & Technology	BBL owns the best banking and information technology equipments in Bangladesh. It ultra modern banking systems starting from terminal PC’s to HUB’s are based on the international banking standards and are the latest.

(ii) Weaknesses:

Absence of Strong Marketing Activities	BBL currently don’t have any strong marketing activities through mass media: Television. TV ads play a vital role in awareness building. BBL has no such TV ad campaign.
Lack of Customer Confidence	As BBL is fairly new to the banking industry of Bangladesh, average customers lack the confidence in BBL and judge the bank as an average new bank.
Too Many Contract Workers	BBL has contract workers who lack the commitment with superior quality service and also are pretty dissatisfied as being a contract worker. This hampers the bank’s service quality as a whole.

(iii) Opportunities:

High Demand of Housing Loans	Since housing is one of the basic needs of people, there is a high demand of housing loans. BBL personal banking division can focus on this category of products and grab these segments of customers.
Distinct Operating Procedures	BBL is noted for its distinct operating procedures. Repayment capacity as assessed by BBL of individual client helps to decide how much one can borrow. As the whole lending process is based on a client’s repayment capacity, the recovery rate of BBL is close to 100%. This provides BBL financial stability & gears up BBL to be remaining in the business for the long run.
Countrywide Network	The ultimate goal of BBL is to expand its operations to whole Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase BBL’s profitability but also will secure its existence in the long run.
More Experienced Managerial	The top management team of BBL is expert in banking activities. The operating policies established by them are unique & unified. They equally contributed to BBL’s superior leadership by carrying out their unique roles. They worked well together, respecting each other’s abilitie sand arguing openly without any rancor when they disagree.

(iv) Threats:

Upcoming Banks	The upcoming private, local & multinational banks pose a serious threat to the existing banking network of BBL. It is expected that in the next few years more commercial banks will emerge. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against and win the battle of banks.
Lose of Customers	Absence of various products such as housing loans are causing various customers to detract from BBL. This is a serious threat for BBL Bangladesh.
Moderate Levels of Customer Satisfaction	BBL should continuously improve its customer service strategies and the overall service quality to win the customer satisfaction undoubtedly.
Default Culture	As BBL is a very new organization, the problem of non-performing loans or default loans is very minimum or insignificant. However, as the bank becomes older this problem will arise enormously and the bank may find itself in a more threatening environment. Thus BBL has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem.

Chapter 04

4. Credit Cards of BBL

4.1. Different Credit Cards of BBL:

BBL has offered 5 credit cards to its customers. These credit cards are:

(i) VISA Classic

(ii) VISA Gold

(iii) Universal VISA Classic

(iv) Universal VISA Gold

(i) VISA Classic:

Visa Credit Card 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.

(ii) VISA Gold:

This is a local Visa Credit Card which is valid only in Bangladesh and transaction currency is in BDT. The basic difference between Classic & Gold cards is that the Gold card has higher credit limit than that of classic card. Credit limit of Visa Gold Card ranges from BDT 75,000 to BDT 500,000.

(iii) Universal Cards:

This is a Dual Visa Currency Credit Card with worldwide acceptability. Its USD credit limit will be within approved BDT limit assigned for the cardholder. A secured dual card’s limit will be maximum USD 30,000 against lien on RFCD or ERQ account.

As per customer request, dual card will be offered to customers against his/her Travel Quota, Residence Foreign Currency Deposit (RFCD) account and Export Retention Quota (ERQ) account. Dual card can be used in local currency within the country and foreign currency outside the country.

Travel Quota limit is USD 1500 for SAARC Countries (India, Pakistan, Sri Lanka, Nepal, Afghanistan, Bhutan, Maldives & Myanmar) and USD 5000 for Non SAARC Countries.

(iv) Universal VISA Classic:

Dual Visa Credit Card is valid not only in Bangladesh but abroad as well. It can be used in local currency (BDT) within the country and foreign currency outside the country. This type of credit card has a limit ranging from BDT 10,000 to BDT 74,999.

(v) Universal VISA Gold:

This is a Dual Visa Credit Card which is valid both in Bangladesh as well as abroad. It can be used in local currency (BDT) within the country and foreign currency outside the country. The basic difference between Classic & Gold cards is that the Gold card has higher credit limit than that of classic card. Credit limit of Visa Gold Card ranges from BDT 75,000 to BDT 500,000.

(vi) Co-branded Universal ICDDR,B Credit Card:

BRAC Bank ICDDR,B co-branded Credit Card is a new variant product of the existing credit card, which is designed to leverage the high brand value of ICDDR,B, which is a renowned international institute for Health and Population research.

This card has similar functionality as BRAC Bank Credit Card with extra advantage of donating money to ICDDR,B hospital endowment fund.

4.2. Facilities for Credit Cards:

BBL gives its credit card holders the following facilities:

(i) Annual fee is your choice:

Payment of Annual fee of the Credit Card is totally the customer’s choice. BRAC Bank allows to pay no Annual fee as long as the user transact at least 18 times (including 10 POS transactions) in a physical year.

(ii) Card Cheque Facility:

With BRAC Bank Credit Card customers can enjoy cheque facility against their credit card limit. They can make payment (account payee only) to any person or organization where Credit Card facility is not available. They can use 100% limit through card cheque with a minimum processing fee.

(iii) FAST Rewards Program:

It is a special loyalty program that allows the customers to earn some points every time they spend money through POS with Credit Card in Bangladesh. For every Tk. 50 spent through POS on credit Card, they get the opportunity to earn 1 Reward point. The accumulated Reward Points can be redeemed against exciting 74 gift items from the bank’s reward catalogue. The enrollment of this program is free.

(iv) E-Statement Service:

BRAC Bank has brought more convenience through e-statement that helps to receive monthly Credit Card statement via e-mail and this is absolutely free. No doubt nowadays e-statement is the fastest, reliable and efficient service, which ultimately minimizes paper work and maximizes the convenience. E-Statement will be sent maximum up to 3 (Three) e-mail addresses.

(v) Balance Transfer:

BRAC Bank has brought Balance Transfer facility for its Cardholders. If the customers have other bank Credit Cards then they have the option to transfer their current outstanding balance at a much cheaper rate of 22% to their BBL Credit Card. The processing fee for Balance transfer is 2% or 150 + VAT whichever is higher.

(vi) Credit Shield Facility:

Credit shield facility is a triple benefits Insurance Plan for the BBL 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. For any kind of accidental death, Gold Card holder is covered up to BDT 2 lacs and Classic Cardholder up to BDT 1 lac under Credit Shield. A very nominal charge of 0.35 paisa for every TK.100/- of your Credit Card outstanding balance will be applicable for this coverage.

(vii) Extensive SMS Service & Transaction Alert:

BBL SMS Service is the simplest way to find out Credit Card details through mobile. This includes Push & Pull service which can be availed free of cost. Through Pull Service customers can access to their Credit Card information from anywhere anytime within Bangladesh. Through Push service BBL provides information on BBL Card even when customers are on the move.

BRAC Bank brings an extensive Transaction Alert Service for its Cardholders. BRAC Bank Transaction Alert – a service that allows customers to stay updated on Credit Card transactions. For each predefined transaction an alert will be generated and sent to the customer’s mobile instantly. At a nominal monthly fee of BDT 5 + VAT, card holders can enroll to the service.