internship report on eastern bank sme_2

8/12/2019 Internship Report on Eastern Bank SME_2

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Internship Report

On

SME Banking in Eastern Bank Limited: Comparative

Analysis of SME Loan Prod!ts

S"mitted to

Mr# Mohiddin Ahmed

Assistant Professore

Institte of Bsiness Administration

$niversity of %haka

Prepared By

Bipl Sarker

Roll &o#'(

Bat!h &o# )*+E,

MBA Program

Institute of Business Administration (IBA)

University of Dhaka

February 06, 2008


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February 06, 2007

Mr. Mohiuddin Ahmed

Asstt. Professor

Institute of Business Administration

University of Dhaka

Subject: Submission of Internship Report.

ir,

It is my !"easure to submit the internshi! re!ort, #hi$h is done as a !art of a$ademi$$urri$u"um, to you for your kind eva"uation. %his re!ort is !re!ared on SME Banking inEastern Bank Limited: omparati!e Ana"#sis of SME Loan $roducts%.

I have !ut my best effort in !re!arin& this re!ort and to make it a #orthy one. 'a$h as!e$t of

the !rob"em is $onsidered and studied as re(uired.

If any $onfusion arises or any further e)!"anation is needed, I #i"" be readi"y avai"ab"e to

e)!"ain the matter to you, as the situation re(uired.

in$ere"y yours,

**********************

Bi!u" arker

+o"" -2

Bat$h /th'1

BA Pro&ram.

2


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-a"le of Contents

%o!i$ Pa&e

3etter of %ransmitta"

')e$utive ummary i4iii

&A$'ER( I)'R*+,'I*) 54

5.5 ri&in f %he +e!ort 5

5.2 be$tives 5

5. $o!e f %he +e!ort 2

5.8 our$es f Information 2

5.- ethodo"o&y 2

5.6 3imitation

&A$'ER- '&E*RA)I/A'I*): EAS'ER)BA)0LIMI'E+ 8428

2.5 9istory of the Bank 8

2.2 :ision of the Bank -

2. ission of 'B3 -

2.8 :a"ues of 'B3 -

2.- ;urrent Bankin& $enario In Ban&"adesh < 'B3= Position 6

2.6 ;or!orate >overnan$e < +e&u"atory ;om!"ian$e 7

2.7 Finan$ia" Performan$e f 'B3 7

2./ Finan$ia" tandin& f 'B3 ?

2.? Im!ort, ')!ort < >uarantee Business 50

2.? Business +evie# f 'B3 50

2.50 ;or!orate Bankin& 50

2.55 ;onsumer Bankin& 52

2.52 ' Bankin& 5

2.5 %reasury 5

2.58 !erations 58

2.5- Information %e$hno"o&y 5-

2.56 +isk Fa$tors f 'astern Bank 3imited 56

2.57 ;redit +isk ana&ement 56

2.5/ Prevention f oney 3aunderin& 20

2.5? 9uman +esour$es 20

2.20 ana&ement 9ierar$hy f 'astern Bank 3imited 22

2.25 Performan$e f 'astern Bank 3imited As A >"an$e 2

&A$'ER1 SME BA)0I)I)EAS'ER)BA)0LIMI'E+ 2-45.5. Introdu$tion 2-

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.2. Definition of ' 26

.. ;hara$teristi$s of ' 27

.8. ;ause of ' Finan$e 27

.-. !!ortunity of ' for Finan$ia" Institutions 2/

.6. Benefits to FIs@ 2/

.7. 's and '$onomi$ Deve"o!ment 2/

./. ' and 'astern Bank 3td 2/

.?. r&aniation tru$ture f ' Bankin& In 'B32?

.50 ' 3oan A!!rova" Pro$ess 0

.55 Disbursement 5

.52 "oan monitorin& 5

&A$'ER2. SME $R*+,'S*3EBL 2488

8.5. Asset !rodu$ts "oan !rodu$ts1 2

8.5.5 'B3 A9A 2

8.5.2 'B3 PUI 8

8.5. 'B3 UDD> -

8.5.8 'B3 A>+I 6

8.2. me %rade Finan$e Produ$t /

8.2.5 'B3 BACI /

8.. 3iabi"ity De!osit1 Produ$ts 85

8..5 'B3 9UBID9A 85

8..5 ;onventiona" ;redit Fa$i"ities of 'B3 8

&A$'ER4 : SME BA)0I)$R*+,'S*3*'&ERBA)0S 8-4-/

-.5. Bra$ Bank 3imited 8-

-.5.5 Anonno +in 86

-.5.2. A!urbo +in 87

-.5.. Pathsha"a +in 87

-.5.8. Aro&&o +in 8/

-.5.-. Di&oon +in 8/

-.5.6. u!!"ier Finan$e 8?

-.5.7 'nter!rise e"e$tion ;riteria For Bra$ Bank me 3oan -0

-.2. Dhaka Bank 3imited -5

-.2.5 ;ash ;redit -5

-.2.2 verdraft -2

-. Bank Asia 3imited -8

-..5. Produ$t %it"e E a$hondo ' "oan1 -8

-.8 tandard ;hartered Bank -7

-.8.5 verdraft Fa$i"ity -7

-.8.2 Business 3oan -7

"


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-.8. %rade Finan$e < orkin& ;a!ita" -/

-.8.8 ther %rade Produ$ts -/

&A$'ER5: *M$ARA'I6EA)AL7SIS*3SMEBA)0I)$R*+,'S

-?470

6.0. ' Produ$ts f 'B3 -?

6.5.5. Pur!ose f 3oan 62

6.5.2. Avai"abi"ity f 3oan 6

6.5.. %ar&et ;ustomers 6

6.5.8. 3oan Amount 68

6.5.-. Interest +ate 68

6.5.6. Pro$essin& Fee 6-

6.5.7. +e!ayment %enor 6-

6.5./. Partia" Payment G 'ar"y Payment 66

6.5.?. Disbursement ode 67

6.5.50. +e!ayment f 3oan 67

6.5.55. ;o""atera"Ge$urity 6/

6.5.52. +e!eat 3oan 6?

&A$'ER5: *)L,SI*) 7547

BIB3I>+AP9

#


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different business needs of ' se$tor. Present"y it !rodu$t offerin& in$"udes 6 different ty!es

of ' "oan !rodu$ts.

ome other Banks a"so enters the ' finan$in& market re$ent"y. %hey are fo""o#in& the ;entra"

Bank=s !rudentia" &uide"ines sma"" and medium enter!rise finan$in&. :ery fe# of the Banks

start their ' finan$in& in a stru$tured #ay.

'B3 starts their ' Bankin& in a stru$tured #ay in 2006 and s!ent most of their time and

ener&y in deve"o!in& !rodu$ts and devisin& !ro$esses, the business unit starts to $ontribute

throu&hout 2007. Due to "o#er &enera" !rovisionin& re(uirement 2 !er $ent on U; "oans1

$om!ared to $onsumer bankin& - !er $ent on U; "oans1, a strate&i$ shift in "oan asset bui"du!

into this area #as initiated in 2006. Besides, the se$tor itse"f is &ettin& more fo$us $om!ared to

any other &rou!s from various "o$a" and mu"ti"atera" donor &rou!s, &overnment and the $entra"

bank. As 's $an be "ent at hi&her rates "ike retai" $ustomers and the !rovision re(uirement is

!er $ent "esser, &ro#th in ' assets !ositive"y $ontribute to#ards both of our o!eratin& and

after ta) !rofit "ines. An astoundin& 555./6 !er$ent &ro#th is envisa&ed in ' "endin&

$onsiderin& the !otentia" market sie and 'B3Hs readiness in $a!turin& the same. For

$om!arative advanta&e in !rovisionin& re(uirement $om!ared to $onsumer "endin& 'B3 #i"" try

to rea$h any hei&ht in ' "endin& !ossib"e. ' de!osit &ro#th remained f"at sin$e the market

#as most"y "oanG$ash hun&ry. It o$$u!ies on"y 6 !er $ent "oan !ortfo"io and !er $ent de!osit

of 'B3 book as on year end 2006.

tru$tured bankin& !rodu$t for sma"" s$a"e ' borro#ers is an im!ortant too" for servin& '

finan$in& market. 'B3 has deve"o!ed 8 different ty!es of "endin& !rodu$t, one trade servi$e

!rodu$t and one "endin& !rodu$t for sma"" se&ment $ustomers. 'B3 has $reated substantia"

$ustomer base #ith the he"! of these "endin& and de!osit !rodu$ts.

Bra$ Bank is one of the !ioneers in ' bankin& in Ban&"adesh and it has a #ide ran&e of '

!rodu$ts. Present"y Bra$ Bank is the market "eader in ' bankin& in Ban&"adesh. Bank Asia

3imited has re$ent"y started their ' Bankin& in a stru$tured #ay #ith a sin&"e !rodu$t named

a$hondo.

%hree "endin& !rodu$ts of 'B3, Bra$ Bank 3imited BB31 and Bank Asia name A9A, ACCC overnmentHs bo"d and far4si&hted de$isions to a""o# banks in the

!rivate se$tors to !"ay its due ro"e in the e$onomy of Ban&"adesh, it has started the !ro$ess of

$reatin& ne# and dynami$ finan$ia" institutions. ne su$h institution is the 'astern Bank

3imited 'B31. %he emer&en$e of 'astern Bank 3imited in the !rivate se$tor is an im!ortant

event in the bankin& era of Ban&"adesh. 'astern Bank 3imited $ame into e)isten$e as a !ub"i$

"imited $om!any in$or!orated in Ban&"adesh on Au&ust /, 5??2 #ith the !rimary obe$tives to

$arry on a"" kinds of bankin& business in and outside of Ban&"adesh and to &ive effe$t to the

Bank of ;redit and ;ommer$e Internationa" verseas1 3imited +e$onstru$tion1 $heme, 5??2,

framed by Ban&"adesh Bank #ith a vie# to safe&uard the interest of the de!ositors of erst#hi"e

;;I. Under the $heme, 'B3 has taken over the entire business assets, $ash and "iabi"ities of

erst#hi"e B;;I in Ban&"adesh, #ith effe$t from 56th Au&ust, 5??2 as they stood after the

redu$tion or adustment in a$$ordan$e #ith the !rovisions of the Bank of ;redit and ;ommer$e

Internationa" verseas1 3imited +e$onstru$tion1 $heme, 5??2. 'B3 $ommen$ed its business

as s$hedu"ed bank #ith effe$t from Au&ust 56, 5??2 #ith four bran$hes4Prin$i!a" Bran$h,

DhakaN otihee" Bran$h, DhakaN A&rabad Bran$h, ;hitta&on& and Ohu"na Bran$h, #ith a motto

to &ro# as a "eader in the bankin& arena of Ban&"adesh throu&h better $ounse"in& and effe$t

servi$e to $"ients and thus to revita"ie the e$onomy of the $ountry. 'B3 resumed its

o!erationa" a$tivities initia""y #ith an authoried $a!ita" of %k. 5000 mi""ion. Into 50 mi""ion

shares of %k. 500 ea$h and !aid u! $a!ita" of %k. 50 mi""ion. Durin& 5??8, the !aid u! $a!ita"

has in$reased to %k. 600 mi""ion but the authoried $a!ita" remains un$han&ed at %k. 5000

mi""ion. %he first Board of Dire$tors of 'B3 $onstituted by the >ovt. of Ban&"adesh, $onsisted of

7 dire$tors from various business and !rofessions. r. Curu" 9ussain Ohan #as the $hairman of

the bank.

'B3 is the su$$essor of B;;I. In the 5??5 #hen B;;I has $o""a!sed internationa""y, the o!eration

of this bank has been $"osed sine die in Ban&"adesh. After a "on& time dis$ussions #ith B;;I

em!"oyees and takin& into $onsideration the de!ositors and $ustomers interest, Ban&"adesh

Bank has &iven !ermission to form a bank named 'astern Bank 3imited by takin& a"" assets and

"iabi"ities of erst#hi"e B;;I. %his is the brief history of 'B3.

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-.- 6ISI*)*3'&EBA)0

K%o be$ome the bank of $hoi$e by transformin& the #ay #e do business and deve"o!in& a tru"y

uni(ue finan$ia" institution that de"ivers su!erior &ro#th and finan$ia" !erforman$e and be the

most re$o&niab"e brand in the finan$ia" servi$es in Ban&"adesh.=

'B3 dreams to be$ome the bank of $hoi$e of the &enera" !ub"i$ in$"udin& both the $onsumer

and the $or!orate $"ients. It has ado!ted a ne# "o&o that "ooks very dynami$ in its attra$tive

$o"ors that ref"e$t a"" the $han&es that are takin& !"a$e in 'B3.

-.1 MISSI*) *3 EBL

e #i"" de"iver servi$e e)$e""en$e to a"" our $ustomers, both interna" and e)terna".

e #i"" $onstant"y $ha""en&e our systems, !ro$edures and trainin& to maintain a

$ohesive and !rofessiona" team in order to a$hieve servi$e e)$e""en$e.

e #i"" $reate an enab"in& environment and embra$e a team4based $u"ture #here

!eo!"e #i"" e)$e".

e #i"" ensure to ma)imie shareho"derHs va"ue.

-.2 6AL,ES *3 EBL

!enness.

%rust.

e #i"" $onstant"y $ha""en&e our systems, !ro$edures and trainin& to maintain a

$ohesive and !rofessiona" team in order to a$hieve servi$e e)$e""en$e.

e #i"" $reate an enab"in& environment and embra$e a team4based $u"ture #here

!eo!"e #i"" e)$e".

e #i"" ensure to ma)imie shareho"derHs va"ue.

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-.4 ,RRE)' BA)0I) SE)ARI* I) BA)LA+ES& ; EBL


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'astern Bank 3imited is a se$ond >eneration $ommer$ia" bank #ith 2- on"ine Bran$hes a$ross

maor $ities in Ban&"adesh and 652 fu"" time em!"oyees on year end 2006. It offers fu"" ran&e of

$ommer$ia" bankin& !rodu$ts and servi$es to the $or!orate, mid market and retai" se&ment.

Under the $or!orate bankin& se&ments the bank has $om!rehensive ran&e of finan$ia" !rodu$ts

in$"udin& $or!orate de!osit a$$ounts, syndi$ated finan$in& e)!ort E im!ort finan$in& #orkin&

$a!ita" and other finan$e , bonds and &uarantees , investment and business $ounse"in& ,

infrastru$ture finan$e , $ash mana&ement servi$es et$. ith urban bankin& fo$us the Bank is

offerin& various a"ternative de"ivery $hanne"s "ike A%s, bi""s !ay ma$hines, Oiosks and Internet

$ontinuous $ustomer servi$e et$. %he Bank has set u! a brand ima&e attribute in !art to its

!o"i$y of $ontinuous $ustomer servi$e e)$e""en$e, innovative !rodu$ts and servi$es and

ma)imies te$hno"o&y uti"iation. Un"ike $onventiona" bran$h bankin& $redit !ro!osa"s as #e""

as business o!erations are !ro$essed $entra""y at 'B3. Besides ain !eration, 'B3 has an

offshore bankin& Unit BU1 set u! in 2008 #hi$h &ives "oans and takes de!osits on"y in free"y

$onvertib"e forei&n $urren$y to and from non resident institutions, fu""y forei&n o#ned 'P

$om!anies et$.

-.5 *R$*RA'E *6ER)A)E ; RE,LA'*R7 *M$LIA)E

'astern Bank 3imited !ra$ti$ed the !rin$i!"es of &ood $or!orate &overnan$e over the years that

$overed $om!"ian$e of re&u"atory re(uirements, res!onsive to various stakeho"ders. !irit of

$or!orate &overnan$e a"so in$"uded !ra$ti$in& of the $or!orate $u"ture #ithin the or&aniationand shared this by the em!"oyees.

'astern Bank 3imited $om!"ied #ith a"" the re&u"atory &uide"ines !res$ribed by the Bankin&

;om!anies A$t, Ban&"adesh Bank, Cationa" Board of +evenue and e$urities < ')$han&e

;ommission, Internationa" A$$ountin& tandards, et$.

-.= 3I)A)IAL $ER3*RMA)E *3 EBL

Defyin& &ravitationa" im!a$t of un#ho"esome !o"iti$s and ever in$reasin& $om!etitive

!ressures, 'B3 has $omfortab"y a$hieved 2/.68 !er $ent &ro#th in !eratin& Profit in 2006 to

BD% 5,-/.5- mi""ion. %o $om!"y #ith the ne# !rovisionin& re(uirement by BB, !rovision has

soared by 5- !er $ent in 2006 BD% 22.75 vs. //.8 1 #hi$h a"so had an adverse im!a$t on

%a) Provision In$reased by 87.65 !er$ent in 20061 due to disa""o#an$e of !e$ifi$ Provision in

ta) $om!utation. Due to these t#o adverse issues $ombined, Profit after %a) had a ne&ative

&ro#th of 6.0? !er $ent to -5.20 from -86.-0 in 200- a"thou&h Profit before %a) &re# by

57.27 !er $ent in 2006. %herefore 'arnin& Per hare 'P1 dro!!ed to BD% 65.?/ in 2006 a&ainstBD% 66.00 in 200- #hi$h is sti"" $ommendab"e $om!ared to the !eer &rou! !erforman$e. +eturn

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on Assets and +eturn on '(uity #ere 5.62 !er$ent 2.57 !er $ent in 200-1 and 56.07 !er $ent

5?.57 !er $ent in 200-1 res!e$tive"y. !eratin& Profit 2006 revea"s fo""o#in&@ An e)traordinary

&ro#th of FQ in$ome By 50 !er$ent over 200-1 to the tune of BD% 8.7? mi""ion, more than

e)!e$ted &ro#th of investment in$ome on %4Bi""s By 87.8/ !er$ent over 200-1 to the tune of

BD% 8-?.5/ mi""ion and a $omfortab"e &ro#th of Fees < ;ommission in$ome By 0.- !er$ent

over 200-1 to the tune of BD% -50.75 mi""ion have out#ei&hed the a!!arent shrinka&e ne&ative

&ro#th1 of Cet Interest In$ome CII1 By ./7 !er$ent over 200-1 and in$identa" &ro#th of

o!eratin& e)!enses. %hese resu"ts on$e a&ain reinfor$e the fa$t that 'B3 is #e"" on the tra$k of

strate&i$ shift of enhan$in& off4ba"an$e4sheet in$ome in the ba$kdro! of fa""in& CII in the #ake

of shar! $om!etition #ith re&ard to "endin& < de!osit rates from !eer banks.

Income-Expense-Profit

Figure in Million Taka

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2002 2003 2004 2005 2006

Income Expense Profi

!on Performing "oan #aio

13$46% 13$61%

&$1'%

5$41%

3$&'%

0$00%

2$00%

4$00%

6$00%

($00%

10$00%

12$00%

14$00%

16$00%

2002 2003 2004 2005 2006

-.> 3I)A)IAL S'A)+I) *3 EBL:

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Loan !ortfo"io of the Bank in$reased by 86.86 !er$ent to BD% 26,007./6 mi""ion #hereas

+eposits&re# by 8.52 !er$ent to BD% 2-,78.8 mi""ion as on De$ember 5, 2006. In abso"ute

terms, 3oans &re# by BD% /,2-0.26 mi""ion #hereas De!osits &re# by BD% 7,7-.6 mi""ion in

2006. In$rease in Borro?ing by BD% 28-.80 mi""ion or -.? !er$ent over 200- to BD% 8,80-.80

mi""ion as on De$ember 5, 2006 !art"y made u! the &a! of 3oan4De!osit in$rease in 2006.

In!estment in$reased by 56.7? !er$ent to BD% -,/-0.0? mi""ion as on De$ember 5,2006

#hereas 3i@ed Assetsin$reased by 5/.66 !er$ent rea$hin& BD% -7?.?7 mi""ion as on year end

2006. ash and Ba"ance ?ith *ther Banks ; 3inancia" Institutions marked a $onsiderab"e rise

of 8/.?6 !er$ent in 2006 and stood at BD% ,0?6.-/ mi""ion as on year end 2006. in$reased by

Shareho"ders Euit#7.?8 !er$ent in 2006 and rea$hed BD% ,5-.5 mi""ion as on year end

2006. Fina""y, the Ba"an$e heet sie of 'B3 i.e. 'ota" Assets in$reased si&nifi$ant"y by 5.2/

!er$ent and rea$hed to BD% -,?70.68 mi""ion as on De$ember 5, 2006, thanks to the

vo"uminous in$rease of 3oans < Advan$es in 2006.

Loan Deposit RatioFigure in Million Taka

0

5000

10000

15000

20000

25000

30000

2002 2003 2004 2005 2006

"oan )eposi

-.C IM$*R'D E8$*R' ; ,ARA)'EE B,SI)ESS:

%rade Business vo"ume of 'B3 has been $onsistent"y on rise !rodu$in& enhan$ed fees and

$ommission in$ome in 2006. Durin& the year the Bank transa$ted an Im!ort vo"ume of BD%

?,87 mi""ion a&ainst /,/2200-@ 6,5/61 number of $ases #hi$h is 2.-5 !er$ent hi&her than

the vo"ume of 200-. n the other hand, the Bank hand"ed an ')!ort vo"ume of BD% 28,2/6mi""ion a&ainst 55,87 200-@ /,0?1 number of $ases #hi$h is 77 !er$ent hi&her than the

vo"ume of 200-. >uarantee Business vo"ume in 2006 #as BD% 6-5 mi""ion a&ainst -5 200-@ 87-1

number of $ases 57.25 !er$ent hi&her than the transa$ted vo"ume of 200-. Amon& the im!orted

items ;a!ita" ma$hinery, Industria" ra# materia"s, e"e$troni$ and $onsumer &oods et$. are

mention #orthy. Amon& the e)!ort basket +eady made >arments +>1 o$$u!ies the maor

!ortion and in$"udes ute < ute &oods, hrim!, 3eather items, Fresh ve&etab"es et$. n the

avera&e im!ort business vo"umes remain hi&her than e)!ort vo"ume in 2006.

-.C B,SI)ESS RE6IE *3 EBL

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%he Business atri) of 'B3 $onsists of ;or!orate, ;onsumer and ' Bankin& as $ore business

units havin& se!arate set of ana&ement Information ystem I1 for individua" !erforman$e

eva"uation and mana&ement de$ision. %reasury bein& the mana&er of funds maintains ;++, 3+

#ith Ban&"adesh Bank, makes investments, !"a$ements and borro#in& in money and $a!ita"

markets, dea"s #ith forei&n e)$han&e business et$. A"so there are tru$tured Finan$eN Con

+esident Business and ;ards units at 'B3 that $ontributes to#ards enhan$in& fee based earnin&.

-.(F *R$*RA'E BA)0I):

Divided into ei&ht re"ationshi! units, t#o ;ash ana&ement Units, one Proe$t Finan$e Unit and

one tru$tured Finan$e Unit in Dhaka and ;hitta&on&, 'B3 ;or!orate Bankin& has maor share

both in 3oans < Advan$e bookmeasurin& around /5 !er$ent of the tota" "oans as on De$ember

5, 20061 as #e"" as fee based in$ome. It a"so o$$u!ies a $onsiderab"e !ortion of 'B3 de!osit

book #ith 7!er$ent as on year end 2006. hi"e $or!orate re"ationshi!s and !roe$t finan$e

units !rovide $om!rehensive finan$ia" !rodu$ts in$"udin& trade finan$e, #orkin& $a!ita",

!roe$t finan$e et$., ;ash ana&ement Units are assi&ned to attra$t "o# $ost de!osit by

!rovidin& transa$tiona" va"ue to the $ustomers.

Structured 3inance ,nit GS3,H is en&a&ed in arran&in& syndi$ation finan$e, !rovidin& !a$ka&e

finan$ia" so"utions thruH $ounse"in& and fundin&, bui"din& finan$ia" ties #ith strate&i$ !artnersthrou&hout the year. Fo""o#in& are some of the mention #orthy dea"s made by FU@

In a &round breakin& move 'B3 has be$ome the trustee of #or"dHs first mi$ro $redit

se$uritiation of B+A;, the #or"dHs "ar&est !rivate C>. Under this dea" stru$tured by

+A ;a!ita", ;iti&rou!, F and Of and denominated in BD%, 'B3 #i"" !rovide an

a&&re&ate of BD% 52.6 bi""ion finan$in& to B+A; over a !eriod of si) years.

;ountryHs first ever oint venture !rivate e(uity fund #as $reated oint"y by 'B3 and

Aureos outh Asia Fund AAF1 #ith an initia" $ommitment of u! to UD 5- mi""ion. %his

fund vehi$"e #i"" !rovide e(uity so"utions to se"e$tive businesses !redominant"y 's

fo$usin& on e)!ansion and mana&ement buy outs.

In a uni(ue !rivate4!ub"i$ !artnershi! dea" 'B3 is &oin& to e)tend D+52.288 mi""ion

BD% 5.2 bi""ion e(uiva"ent1 "oan to three "ar&est C>s name"y B+A;, AA < % for

a&ribusiness deve"o!ment to he"! a""eviate rura" !overty in Ban&"adesh. Asian

Deve"o!ment Bank ADB1 is !rovidin& the finan$in& to 'B3 throu&h inistry of Finan$e,

>overnment of Ban&"adesh >B1 under A&ribusiness Deve"o!ment Proe$t.

Arran&ed a syndi$ation fa$i"ity of BD% 5,5-0 mi""ion as medium term "oan for settin& u!

a $hemi$a" $om!"e) by amuda ;hemi$a" ;om!"e) 3td, the "ar&est $hemi$a" $om!"e) in

!rivate se$tor #ith 55 other $ommer$ia" banks.

8


19/81

Arran&ed %erm 3oan of BD% -05 mi""ion < orkin& ;a!ita" of BD% 588mi""ion for Oarooni

Onit ;om!osite 3td #ith some other !arti$i!atin& banks.

Arran&ed a syndi$ation "oan of BD% 2/0 mi""ion as medium term "oan to hun hin&

Po#er 3td for settin& u! 50.56 !o#er !"ant for &rou! $onsum!tion.

'33$ signing ?ith A+B:

Asian Deve"o!ment Bank ADB1 and 'astern Bank 3imited 'B31 si&ned Issuing Bank Agreement

Re!o"!ing redit Agreementand in Dhaka on Covember 0?, 2006. %he A&reements are !art of

ADBHs %rade Finan$e Fa$i"itation Pro&ram %FFP1 to use finan$ia" intermediation to fa$i"itate

!rivate se$tor deve"o!ment and e$onomi$ &ro#th of deve"o!in& $ountries. %he Issuin& Bank

A&reement #i"" su!!ort 'B3 thruH issuan$e of ADB &uarantee to $onfirmin& Banks for !ayment of

3etters of ;redit 3;1 and other trade finan$e instruments of 'B3. Under the +evo"vin& ;redit

A&reement 'B3 #i"" be ab"e to borro# in forei&n $urren$y from ADB for "endin& to its $ustomers

to meet #orkin& $a!ita" re(uirements for internationa" trade.

'asy a$$ess to a "ar&e &"oba" net#ork of banks is fundamenta" to the su$$ess of trade finan$e.

%his !ro&ram #i"" add si&nifi$ant va"ue to 'B3 and its im!orters and e)!orters by $reatin& a

$om!rehensive &"oba" net#ork of trade finan$e !roviders that $an be mobi"ied to e)tend

effi$ient, res!onsive and $"ient4driven servi$e. ADBHs trust and $onfiden$e on 'B3, a

Ban&"adeshi Bank #i"" a"so enhan$e the ima&e of this $ountry. %hese initiatives are #e"" in "ine

#ith 'B3Hs obe$tive to be$ome a finan$ia" su!ermarket by meetin& a"" sorts of finan$ia"

re(uirement of $or!orate houses.

-.(( *)S,MER BA)0I):

In $om!"ian$e #ith &oa" $on&ruen$e and overa"" strate&y 'B3 $onsumer bankin& !ut thrust on

de!osit mobi"iation at reasonab"e rate. ')!andin& $onsumer "oan is under $autious survei""an$e

due to - !er$ent !rovisionin& s"a!. Des!ite havin& the in$reased !rovisionin& re(uirement

im!osed by $entra" bank, 'B3 o!ted to ado!t a $onservative "oan &ro#th strate&y for ;onsumer

Bankin& instead of !uttin& a sto!. As the $onsumer "oan !ortfo"io rea$hes a reasonab"e sie fe#

years do#n the road, the im!a$t of in$rementa" !rovisionin& #i"" be offset by the in$ome the

!ortfo"io #i"" &enerate. As the maor !rovider of funds #ithin the bank, $onsumer did and #i""

$ontinue to su!!ort asset &ro#th of $or!orate and ' business. It $ontributes 65 !er$ent

de!osit and 5 !er$ent of the "oan !ortfo"io of 'B3 as on year end 2006.

hanne" +istribution:

In "ine #ith the BankHs strate&y of makin& bankin& servi$es more a$$essib"e to $ustomers, it

o!ens ne# bran$hes every year. %hese bran$hes have a"ready started o!eration and are

e)!e$ted to he"! boost ;onsumer business, are e)!e$ted to attra$t a handsome amount of

%


20/81

Forei&n ;urren$y remittan$e and de!osit. A"so the other t#o bran$hes are #e"" !ositioned in

terms of business !ros!e$t. 'B3 some bran$hes to more $onvenient "o$ations, estab"ished

kiosks inibank1 durin& this !eriod and introdu$ed evenin& bankin& in some bran$hes so that

they are ab"e to a$$ommodate a &ro#in& vo"ume of transa$tions and !rovide more $onvenien$e

to $ustomers. By the end of 2007, 'astern Bank had 2/ bran$hes, 55 o#n A%s, 87 shared J4

$ash A%s and a$$ess to over - :IA A%s, and - Bi""s Pay a$hines a$ross the $ountry.

redit ard:

'astern Bank 3imited had -0,?8- Debit $ards First of its kind in Ban&"adesh1, 5/ ;oo" ;ards

and 782 3ifesty"e Pre!aid ;ards at the year end 2006.A maor $redit $ard !roe$t is no# on the

$ards and e)!e$ted to &o market sometime in 2007. ith a $om!rehensive $ard !o"i$y devised

in $onsu"tation #ith an internationa""y reno#ned $ard $onsu"tant, 'B3 envisa&e $a!turin& - !er

$ent of the tota" anti$i!ated market sie --,0001 by the year 200?. A"thou&h the e)istin&

market sie of $ards 2-,0001 is !resent"y dominated by ;B, 'B3 $ards division is (uite

o!timisti$ of &rabbin& a $onsiderab"e !ortion of this market throu&h innovative !rodu$t

!a$ka&in&, !ri$in& and media !"an. If su$$essfu", this !roe$t #i"" fet$h %k. 520 mi""ion

o!eratin& !rofit by 200?. %#enty five 2-1 ne# A%s are "aun$hed in 2007 to fa$i"itate rea$h

and $onvenien$e and thereby he"! $onsumer bankin& to in$rease its $ustomer base

si&nifi$ant"y.

)RB Remittance Business:

et u! in "ater ha"f in 200- 'B3 Con +esident Business C+B1 unit under ;onsumer Bankin& has

!assed a very su$$essfu" year 2006 #ith in#ard remittan$e of UD /?.86 mi""ion or e(uiva"ent

BD% 6,572.-7 mi""ion. %his unit has bui"t u! a net#ork of 5 e)$han&e houses based main"y in

idd"e 'ast and United Oin&dom and a$tive efforts are under #ay to s!read it to other strate&i$

$ountries in$"udin& audi Arabia. ith !rom!t and effi$ient servi$e !rovided to the forei&n

remitter, this unit has a"ready a$hieved a remarkab"e "eve" of $ustomer satisfa$tion manifested

by their enhan$ed remittan$e f"o#. %his su$$ess is hi&h"y attributab"e to &ovt initiatives to

en$oura&e remitter to use offi$ia" $hanne" and thereby he"! ri$h $ountryHs FQ reserve and make

stab"e FQ market. 'B3 re$o&nies the hu&e !otentia" of this business and understands the

e)!e$tation of this hi&h"y sensitive $ustomer se&ments and is e(ui!!ed #ith modern te$hno"o&y

to $ater those #ith u!beat servi$e mindset. u$$essfu" FQ business some#hat hin&es on the

su$$ess of this unit.

-.(- SME BA)0I):

A"thou&h ' Bankin& #as "aun$hed in 2006 and s!ent most of their time and ener&y in

deve"o!in& !rodu$ts and devisin& !ro$esses, the business unit starts to $ontribute throu&hout2007. Due to "o#er &enera" !rovisionin& re(uirement 2 !er $ent on U; "oans1 $om!ared to

20


21/81

$onsumer bankin& - !er $ent on U; "oans1, a strate&i$ shift in "oan asset bui"du! into this area

#as initiated in 2006. Besides, the se$tor itse"f is &ettin& more fo$us $om!ared to any other

&rou!s from various "o$a" and mu"ti"atera" donor &rou!s, &overnment and the $entra" bank. As

's $an be "ent at hi&her rates "ike retai" $ustomers and the !rovision re(uirement is !er

$ent "esser, &ro#th in ' assets !ositive"y $ontribute to#ards both of our o!eratin& and after

ta) !rofit "ines. An astoundin& 555./6 !er$ent &ro#th is envisa&ed in ' "endin& $onsiderin&

the !otentia" market sie and 'B3Hs readiness in $a!turin& the same. For $om!arative advanta&e

in !rovisionin& re(uirement $om!ared to $onsumer "endin& 'B3 #i"" try to rea$h any hei&ht in

' "endin& !ossib"e. ' de!osit &ro#th remained f"at sin$e the market #as most"y "oanG$ash

hun&ry. It o$$u!ies on"y 6 !er $ent "oan !ortfo"io and !er $ent de!osit of 'B3 book as on year

end 2006.

-.(1 'REAS,R7:

%his unit has !assed a very su$$essfu" year 2006 both in terms of FQ earnin& 50 !er$ent

&ro#th over 200-1 as #e"" as Cet Interest In$ome Investment < P"a$ement in$ome "ess

borro#in& $ost1. oney < Fore) market e)!erien$ed a "ot of vo"ati"ity in 2006. 'B3 %reasury

used this vo"ati"ity as an o!!ortunity to &enerate e)tra revenue for the Bank uti"iin& their

e)!erien$es and better risk mana&ement $a!abi"ities. oney arket overni&ht rate broke a"" its

!revious re$ords and UDGBD% rate moved more than 6 %aka in 2006. In this dynamism,

%reasury had hand"ed a tota" of UD ?5.68 mi""ion in this !eriod #hi$h is substantia""y hi&her

than 200-. %his $ommendab"e FQ dea"in& #as hi&h"y attributab"e to the fo""o#in& fa$tors@

%reasury !ositioned itse"f in the FQ vo"ati"ity $y$"e throu&h o!timum use of Ban&"adesh

Bank verni&ht !en Position 3imit #hi$h $reated an e)tra revenue stream for the

Bank.

arket vo"ati"ity a"so $reated a#areness in the "o$a" $or!orate #or"d to a &reat e)tent.

For $aterin& their need %reasury has introdu$ed ;or!orate Desk for $ustomied

so"utions for various $or!orate $ustomers. %his initiative added UD 8 i""ion vo"ume

in 2006.

%reasury estab"ished on"ine Forei&n ')$han&e !"atform #ith t#o "ar&e internationa"

banks. %his !"atform enab"es the bank to &et rea" time on"ine rates, e)e$ute dea"s and

a$$ess to internationa" finan$ia" market ne#s and vie#s #ith &reater a$$ura$y.

%reasury had e)tended their re"ationshi! #ith Forei&n $orres!ondent banks for

desi&nin& various FQ derivative !rodu$ts. %his enab"es the Bank to offer any FQ

derivative !rodu$ts to $ustomers.

De!endin& on the !o"iti$a"Ge$onomi$ situation or out"ook of the $ountry %reasury $ontinue to

further $ontribute to#ards 'B3 !rofitabi"ity. 'B3 %reasury is !"annin& to e)!and its ;or!orate

a"es Desk to foster business throu&h a #ider array of !rodu$ts for various $or!orate $ustomers.

2


22/81

-.(2 *$ERA'I*)S:

ith the obe$tive of !rovidin& faster servi$e to the $ustomers #hi"e ensurin& in$reased $ontro"

over o!erationa" a$tivities, 'B3 has estab"ished a $entra" o!erations unit named as Ser!ice

+e"i!er#. %his unit based on Dhaka and ;hitta&on&, $entra"ied a"" the ba$k offi$e !ro$esses

#hi$h #ere !revious"y $ondu$ted at bran$h "eve". %his initiative has freed the bran$h !eo!"e

from maor !ro$ess obs #hi$h he"!ed them fo$us on !rovidin& better servi$e and sa"es of 'B3

!rodu$ts to the $ustomers. %hatHs #hy 'B3 $a"" them a"es and ervi$e ;entre ;1 not

bran$hes. Fo""o#in& #ere the broad obe$tives of this $entra"iation of o!erations@

B,SI)ESS S,$$*R':

U!&radin& $a!a$ity for offerin& best su!!ort to 'B3 front and midd"e offi$es.

i&nifi$ant redu$tion in bu"k transa$tion !ro$essin& time.

Deve"o!ment of sa"es and servi$e oriented $u"ture in bran$hes.

Bui"din& $om!rehensive and $ustomied I.

RIS0 MA)AEME)':

'nhan$ed $ontro" of day to day o!erationa" risk thruH $entra"ied monitorin& enera" Provisionin& for these !rodu$ts are $arried out on a !ortfo"io basis. 9o#ever s!e$ifi$

!rovision is determined by the bankHs "oss e)!erien$e of a !arti$u"ar $"ient.

%he ;entra" Banks 3oan 3oss Provision >uide"ines re$ommends in &enera", #hen interest or

!rin$i!a" on a $onsumer "oan is overdue for ?0 days or more, any further a$$rua" of interest is

sus!ended and su$h "oans are then $"assified as non a$$rua". Doubtfu" and non4!erformin& "oans

are $"assified as doubtfu" as soon as there is eviden$e about the borro#erHs "a$k of abi"ity to

meet its !ayment ob"i&ations to the bank in a$$ordan$e #ith the ori&ina" $ontra$tua" terms.

here deemed ne$essary, an a""o#an$e for "oan "osses is determined on a !er item basis,

takin& into a$$ount the va"ue of the $o""atera". Additiona""y, the bankHs $redit offi$ers

$ontinua""y monitor the (ua"ity of "oans. hou"d the (ua"ity of a "oan or the borro#erHs finan$ia"

stren&th deteriorate to the e)tent that doubts arise over the borro#erHs abi"ity to re!ay the

"oan, mana&ement of the re"ationshi! is transferred to !e$ia" Asset ana&ement Unit AU1.

After makin& an assessment of the s!e$ifi$ !rovision that shou"d be made takin& into a$$ount

the va"ue of $o""atera", ;+ revie#s s!e$ifi$ !rovisions on the !ortfo"io at the $"ose of ea$h

(uarter"y re!ortin& !eriod, to ensure their ade(ua$y.

Market Risk:

arket risk is the risk that arises from f"u$tuations in interest rates, e)$han&e rates, and the

!ri$e of instruments in the money and $a!ita" markets, #hi$h may affe$t the finan$ia"

!erforman$e of the Bank.

Interest Rate Risk:

%he "eve" of interest rates is a maor fa$tor that determines the BankHs interest in$ome from

assets and interest e)!enses on "iabi"ities. %he Bank is e)!osed to an interest rate risk arisin&

2#


26/81

from the fa$t that the assets and "iabi"ities are sube$t to different interest rate re!ri$in&

!eriods or $ontra$tua" maturities, or #hen movements of interest rates on assets and "iabi"ities

are in$onsistent, thus im!a$tin& on the BankHs net interest in$ome. %he Bank has set u! the

Asset and 3iabi"ity ;ommittee A3;1 to be res!onsib"e for estab"ishin& &uide"ines for the

mana&ement of assets and "iabi"ities. A3; is a"so res!onsib"e for monitorin& and maintainin&

interest rate risks at an a$$e!tab"e "eve" #ith minima" f"u$tuations throu&h interest rate

sensitivity ana"yses. %hese &uide"ines are in a$$ordan$e #ith the !o"i$y &uide"ines issued by

Ban&"adesh Bank time to time.

Foreign Exchange Rate Risk:

Forei&n e)$han&e rate risk arises #hen the Bank is invo"ved in forei&n $urren$y transa$tions,

#hi$h may resu"t in defi$its or sur!"uses in the BankHs forei&n $urren$y !osition. %hese

transa$tions in$"ude, for instan$e, forei&n $urren$y e)$han&e, investments, "oans, borro#in&s

and $ontra$tua" $ommitments et$. %hey may in$ur &ains or "osses on e)$han&es as a resu"t of

movements in e)$han&e rates. In &enera", the BankHs !o"i$y is to mat$h forei&n $urren$y assets

and "iabi"ities fo""o#in& stri$t"y the overni&ht "imit of o!en !osition issued by the $entra" bank.

%he %reasury Division mana&es and $ontro"s day4to4day tradin& a$tivities under the su!ervision

of A3; #hi$h in turn ensures that the "eve" of assumed risks, as !er the various desi&nated

measures, is maintained #ithin the a!!roved "eve".

Liquidity Risk:

3i(uidity risk is the risk that the Bank may not be ab"e to meet $ash f"o# ob"i&ations #ithin asti!u"ated timeframe. %he !ur!ose of the BankHs "i(uidity risk mana&ement is to maintain

suitab"e and suffi$ient funds to meet !resent and future "i(uidity ob"i&ations #hi"st uti"iin& the

funds a!!ro!riate"y to take advanta&e of market o!!ortunities as they arise. %he Bank has

severa" sour$es of "i(uidity and mana&es its "i(uidity main"y throu&h domesti$ money and

$a!ita" markets in$"udin& re!ur$hase markets. %he Bank seeks to minimie its "i(uidity $osts in

"ine #ith the market situation by $"ose"y mana&in& the "i(uidity !osition on a dai"y basis and

restri$tin& the ho"din& of $ash he"d above an a!!ro!riate "eve" at any &iven time. As !art of

"i(uidity mana&ement, the Bank adheres to its fundin& !"an, and e)er$ises due $are in usin&

medium4term borro#in&s.

Capital Adequacy Risk:

;a!ita" ade(ua$y risk is a risk #here the Bank does not have suffi$ient $a!ita" reserves to do

the business or to absorb une)!e$ted "osses arisin& from $redit, market and o!erationa" risks.

%he !rin$i!a" obe$tive of the BankHs $a!ita" mana&ement !o"i$y is to ensure that the Bank

maintains an ade(uate "eve" of $a!ita" to su!!ort &ro#th strate&ies and meets re&u"atory

re(uirements and market e)!e$tations. ;ommer$ia" banks in Ban&"adesh #i"" be re(uired to

$om!"y #ith the Bank for Internationa" ett"ements Base" II A$$ord by 200/, #hi$h #i"" resu"t in$han&es to $a!ita" ade(ua$y re(uirements. %he Base" II A$$ord #i"" affe$t the risk #ei&htin&s of

26


27/81

different ty!es of assets in$"udin& !rovisionin& for market and o!erationa" risks. %his in turn

#i"" have a dire$t effe$t on the BankHs $a!ita" ade(ua$y ratio. Ban&"adesh Bank is in the !ro$ess

of estab"ishin& detai"ed methodo"o&ies and !ro$edures to suit the domesti$ market.

Operational Risk:!erationa" risk is the risk of !otentia" "osses from a breakdo#n in interna" !ro$esses and

systems, defi$ien$ies in !eo!"e and mana&ement or o!erationa" fai"ure arisin& from e)terna"

events. %he obe$tive of the o!erationa" risk mana&ement frame#ork is to ensure that the Bank

has in !"a$e a!!ro!riate !o"i$ies, #ork !ro$esses and !ro$edures. %his re(uires &atherin&

information !ertainin& to o!erationa" risks so as to avoid o!erationa" fai"ures and minimie

re"evant "ossesN #hi"e enab"in& the Bank to (ui$k"y res!ond to and !ursue ne# business

o!!ortunities #ith a!!ro!riate risk $ontro"s and monitorin&. %he BankHs o!erationa" risk

mana&ement !o"i$y embra$es the $on$e!ts of risk identifi$ation, risk assessment, risk

monitorin&, and risk miti&ation and $ontro". %he !rimary res!onsibi"ity for mana&in& this risk

rests #ith ea$h o!eratin& unit, throu&h the ado!tion of !ro!er interna" $ontro" measures in the

o!eratin& environment.

-.(> $RE6E)'I*) *3 M*)E7 LA,)+ERI):

A$$ordin& to BB &uide"ine, banks and finan$ia" institutions shou"d vie# money "aunderin&

!revention as a !art of their re!utation and o!erationa" risk mana&ement, as it has adverse

im!a$t on nationa" e$onomy, se$urity and so$ia" va"ues. 'astern Bank 3td. formed its o#n Antioney 3aunderin& A31 manua" as !er BB &uide"ine. %he ;hief Anti oney 3aunderin&

;om!"ian$e ffi$er ;A3;1 of 9ead ffi$e is !rimari"y res!onsib"e for e)e$utin& bank #ide

A3 o!eration su!!orted by hisGher fo""o#ers at ea$h bran$h. In the !ro$ess of A3, the Bank

starts #ith ;ustomer Due Di"i&en$e O; !rofi"e1 to $o""e$t $ustomer detai"s, risk $ate&oriation

of different a$$ounts et$. For hi&h risk &raded a$$ounts the transa$tion !rofi"e is u! dated

annua""y. %he senior mana&ement is invo"ved e)$"usive"yN to dea" #ith hi&h risk $ustomer "ike

!o"iti$a""y e)!osed !erson or !ub"i$ fi&ure. Besides this, to au&ment the A3 $a!a$ity, every

a"es and ervi$e ana&er 1 initiate a year end A3 assessment at ea$h bran$h "eve" #ith

the su!!ort of Anti oney 3aunderin& ;om!"ian$e ffi$er A3;1. In the re!ortin& frame#ork

of 'B3, every A3; submit his findin& to and a"so to ;A3;, if re(uired. ;A3;

eventua""y re!orts to the ;' of the Bank and Ban&"adesh Bank re&ardin& A3 asso$iated

matters.

-.(C &,MA) RES*,RES:

In an in$reasin&"y $om!etitive business environment, the Bank is ever more mindfu" of theim!ortan$e of its !eo!"e as a key su$$ess fa$tor. 'astern Bank therefore aims to $reate a #ork

2$


28/81

environment that enab"es staff to rea"ie their fu"" $a!abi"ities and bui"d for themse"ves a

fu"fi""in& $areer. %he Bank has sou&ht to enhan$e the effe$tiveness of its re$ruitment and

orientation !ro$esses. It a"so further deve"o!ed its trainin& $urri$u"um and method in su!!ort

of the BankHs !hi"oso!hy of enab"in& !eo!"e to $ontinua""y deve"o! themse"ves to their fu""est

!otentia". taffs #ere en$oura&ed to $ontinua""y "earn and take on ne# $ha""en&es. ana&ers

#ere !rovided #ith further trainin& to ensure they su!!ort their staff throu&h effe$tive

$ommuni$ation, $oa$hin& and $onstru$tive feedba$k. oreover, the Bank has a"so enhan$ed

and im!"anted effe$tive !erforman$e mana&ement !ra$ti$es. %his is to ensure that in !"annin&,

a"" em!"oyees and mana&ers $on$entrate on the most im!ortant business issues, and in

e)e$utin& the !"an, on monitorin& and eva"uatin& the !ro&ress. oreover, they are en$oura&ed

to $ontinua""y take on more $ha""en&es, at both the individua" and business unit "eve"s.

28


29/81

-.-F MA)AEME)' &IERAR&7 *3 EAS'ER) BA)0 LIMI'E+

ana&in& Dire$tor < ;'

De!uty ana&in& Dire$tor

enior ')e$utive :i$e President

')e$utive :i$e !resident

enior :i$e President

:i$e President

enior Assistant :i$e President

First Assistant :i$e !resident

Assistant :i$e !resident

enior Prin$i!a" ffi$er

Prin$i!a" ffi$er

enior ffi$er

u!ervisory ffi$er

unior ffi$er

2%


30/81

-.-( $ER3*RMA)E *3 EAS'ER) BA)0 LIMI'E+ AS A LA)E

$articu"ars -FFF -FF( -FF- -FF1 -FF2 -FF4 -FF5

Authoried ;a!ita" 5,000 5,000 5,000 5,000 5,000 ,00 ,00

Paid U! ;a!ita" 600 720 720 /2/ /2/ /2/ /2/

+eserve 2,260 2,22 2,88/ 2,-60 2,7 ,52 ,586

De!osits < ther A$$ounts 52,7- 5,277 5,665 55,?-2 5-,68? 5?,?6 2-,78

3oans < Advan$es /,585 ?,?86 50,/?5 55,2// 58,?7 57,7-/ 26,00/

')!ort 7,2/5 -,802 8,-/ ,- /,0 5,2? 28,2/6

Im!ort 3;1 52,- 55,85- 52,682 56,2-6 28,858 2?,6?2 ?,87

>uarantee Business 5,7/? 5,0-8 5,5/ -8 ?87 --- 6-5

!eratin& In$ome 5,?56 2,022 5,?/6 5,?/- 2,285 2,?-7 8,272

!eratin& ')!enses 5,282 5,5? 5,2-- 5,226 5,8? 5,?05 2,?5

!eratin& Profit 678 70 75 7-? /?2 5,0-6 5,-/

Cet Profit before %a) 87- -- 65 6/ /-5 ?67 5,58

%ota" Assets e)$"udin&$ontin&ent 1

56,//0 5/,2/8 5/,88- 5/,756 2,08/ 27,800 -,?75

Above fi&ures are in mi""ionBD% 1

Book :a"ue !er share%aka1

266.07 26-.02 2?-.2? 2/5./7 57.7 70.? 800./

arket :a"ue !er share %aka 1

5/6 2?5 0 /2 7/0 5,222.7- 7?2.-0

'arnin& !er share 80.?5 88./6 -5.8? 8.25 -/./ 66.00 65.?/

Dividend !er share %aka1 0 0 - 20 8 80 8-+eturn on '(uity Avera&e 1

5-./ 56.? 57.88 5-. 5/.88 5?.57 56.07

+eturn on AssetsAvera&e1

5.-7 5./8 2.08 5.?8 2.2 2.57 5.62

;"assified 3oan as a oftota" "oans

/.25 55.-2 5.86 5.65 7.5? -.85 .7?

;a!ita" Ade(ua$y +atio 28.57 22.8? 22.2 5/.27 58./2 5/.76 58.02

;ost to In$ome +atio 2/.78 2?.0 27.?5 2/.57 0.? .66 -.67

Cet Interest ar&in .88 .86 .8? 2.87 .26 2./5 2.55

+A to %ota" Assets CGA CGA -8.50 75.6 /5.70 65.6/ 75.-0

Cumber of Bran$hes 22 22 22 22 22 22 2-Cumber of 'm!"oyees 6-2 8?2 8/8 8?- -22 -6 652

!0


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*apial +e-uac. #aio

0$00%

5$00%

10$00%

15$00%

20$00%

25$00%

2002 2003 2004 2005 2006

Fi&ure@ ;a!ita" Ade(ua$y +atio of 'B3

Expor-ImportFigure in Million Taka

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2002 2003 2004 2005 2006

Expor Impor

Fi&ure@ ')!ort4 Im!ort Performan$e of 'B3

!


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hapter 1

SME BA)0I)

I)

EAS'ER)BA)0LIMI'E+

1.(. Introduction:

ma"" and edium 'nter!rises '1 in Ban&"adesh $ontributed 2- of &ross domesti$ !rodu$t

>DP1 and /0 of the industria" obs of the $ountry in 2008. A$$ordin& to ADB, the $ountryHs

estimated 6 mi""ion 's and mi$ro enter!rises firms of "ess than 5-0 em!"oyees have a

si&nifi$ant ro"e in &eneratin& &ro#th and obs. %his is a se$tor that has its o#n distin$t needs

and re(uires s!e$ia"ied fo$us. 'astern Bank 3td. 'B31 has "aun$hed ' Bankin& in ear"y 200-

#ith this vie# in mind.

%he most va"uab"e natura" resour$e of Ban&"adesh is its !eo!"e. As a nation #e stru&&"ed for our

inde!enden$e and no# the attainment of e$onomi$ u!"ift is the main &oa". i$ro "enders are

#orkin& here in the finan$ia" fie"d, !rovidin& very sma"" amount and on the other hand re&u"ar

$ommer$ia" banks have been !rovidin& bi&&er amount of "oans to "ar&er industries and tradin&

or&aniations. But the sma"" and medium entre!reneurs #ere over"ooked. %his missin& midd"e

&rou! is the sma"" but strivin& entre!reneurs, #ho be$ause of "a$k of fund $annot !ursue their

finan$ia" u!"ift, as they have no !ro!erty to !rovide as e(uity to the $ommer$ia" banks.

ith this end in vie#4 'B3 #as o!ened to serve these sma"" but hard #orkin& entre!reneurs

#ith doub"e bottom "ine vision. As a so$ia""y res!onsib"e bank, 'B3 #ants to see the

eman$i!ation of &rass4roots "eve" to their e$onomi$ hei&ht and a"so to make !rofit by servin&

the interest of missin& midd"e &rou!s. -0 of our tota" !ortfo"io usua""y $o""e$ted from urban

areas, are $hanne"ed to su!!ort these entre!reneurs #ho in future #i"" be$ome the !otentia"

stren&th of our e$onomy.

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1.-. +efinition of SME:

As per Industria" $o"ic# -FF5:

Sma"" Enterprise:

)ature of

enterprise

6a"ue of assetGe@c"uding "and ;bui"dingH

Manpo?er 'urno!er

Manufacturing BD% -0000 to

50000000

a)imum 60 BD% -00000 to

200000000

'rading BD%-0000 to -000000 a)imum 20

Ser!ice BD% -0000 to 000000 a)imum 0

Medium Enterprise:)ature of enterprise 6a"ue of asset

Ge@c"uding "and ;bui"dingH

Manpo?er 'urno!er

Manufacturing BD% 500000 to

-,0000000

a)imum 00 BD% 5000000 to

800000000

'rading BD%500000 to

0000000

a)imum -0

Ser!ice BD% 500000 to

50000000

a)imum 7-

Sma"" Segment:

:a"ue of fi)ed assets e)$e!t "and < bui"din&1 u! to tk 5- mi""ion in $ase of manufa$turin&

enter!rise and ma)imum 2- #orkers in tradin& or servi$e enter!rise.

Medium Segment:

:a"ue of fi)ed assets e)$e!t "and < bui"din&1 u! to tk 500 mi""ion in $ase of manufa$turin&

enter!rise and ma)imum 500 #orkers in tradin& or servi$e enter!rise.

3o""o?ing Enterprisecompanies ?i"" not be treated as SME it ?i"" be consider as corporate

c"ients.

A"" !ub"i$ "imited $om!anies

>ovt. and semi &ovt. bodies

A"" $hambers

A"" C>=s

'du$ationa" institutions of Dhaka < ;hitta&on&

A"" infrastru$ture !roe$t Uti"ity $om!anies P%C, IP=s, ;ab"e ervi$e Providers1

!!


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1.4 *pportunit# of SME for 3inancia" Institutions

3ar&e underserved market !otentia" for si&nifi$ant &ro#th

3evera&e finan$ia", information < $ommuni$ation te$hno"o&ies to redu$e transa$tion

$osts and im!rove !ortfo"io risk mana&ement thus e)!andin& servi$es to 's !rofitab"y

1.5 Benefits to 3Is:

Potentia""y !rofitab"e

+isky but mana&eab"e

1.= SMEs and Economic +e!e"opment:

's are e)!e$ted to boost effi$ien$y and &ro#th and "ead to e$onomi$ deve"o!ment be$auseR

;an $ontribute 9i&her Profit ar&in.

'n&ine of ob ;reation.

eedbed for innovation and entre!reneurshi!

Ce# entry, $om!etition and f"e)ibi"ity

's !"ay an im!ortant ro"e in !romotin& &ro#th and deve"o!ment, in$"udin& for the

!oor

9as so$ia" dimension in e$onomi$ deve"o!ment.

1.>SME and Eastern Bank Ltd

A"thou&h ' Bankin& #as "aun$hed in 2006 and s!ent most of their time and ener&y in

deve"o!in& !rodu$ts and devisin& !ro$ess, the business unit #i"" sure"y start to $ontribute

throu&h 2007.Due to "o#er &enera" !rovidin& re(uirement $om!ared to $onsumer bankin& a

strate&i$ shift in "oan asset bui"d u! into this area #as initiated in 2006. Besides the se$toritse"f is &ettin& more fo$us $om!ared to any other &rou!s from various "o$a" and mu"ti"atera"

donor &rou!s, >overnment and the $entra" bank. As ' s $an be "ent at hi&her rates "ike retai"

$ustomer and the !rovision re(uirement is !er$ent "esser, &ro#th in ' assets #i"" !ositive"y

$ontribute to#ards both of our o!eratin& and after %a) !rofit "ines. An outstandin& 555./6

!er$ent &ro#th is envisa&ed in ' "endin& $onsiderin& the !otentia" market sie and 'B3=s

readiness in $a!turin& the name. For $om!arative advanta&e in !rovidin& re(uirement

$om!ared to $onsumer "endin& #e #i"" try to rea$h any hei&ht in ' "endin& !ossib"e. '

de!osit &ro#th remained f"at sin$e the market #as most"y "oan !ortfo"io and !er $ent de!osit

of 'B3 book as on year end 2006.

!#


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'B3 ' Bankin& is a $on$e!t that #orks for finan$in& the ma"" and edium 'nter!rises in

business industry. ' se&ment re(uires s!e$ia" tender from finan$ia" institutions. Oee!in& that

in mind 'B3 desi&ned ' Bankin& #ith s!e$ia" dimensions.

'B3 ' Bankin& is en&ineered #ith e)!erts from home and abroad. %he #orkfor$e is #e""trained to #ork s!e$ifi$a""y in this se&ment.

1.C *RA)I/A'I*) S'R,',RE *3 SME BAB)0I) I) EBL

&ead of SME

9ead of Produ$tDeve"o!ment uarantee

Post Dated ;he(ues for ea$h insta""ment and oneundated $he(ue for 550 of the san$tioned "oan amount mandatory1

im!"e 9y!othe$ation on Business fi)ed andG or f"oatin&

assets. 9y!othe$ation of &oods and $ommodities

9y!othe$ation of book debts and re$eivab"es.

"0


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$he(ue for the fu"" amount of the "oan in$"udin& fu""interest mandatory1

o +e&istered mort&a&e on "and or bui"din&, tit"e du"y vetted

by bank=s a!!roved 3a#yer G A&en$yo im!"e hy!othe$ation on business fi)ed or f"oatin& asset

o Insuran$e on sto$ks #ith re(uired risk $overa&e.

ort&a&e Pro!erty:a"uation

:a"uation must be done by Bank=s a!!roved !rofessiona"va"ue and va"ue must be at !ar #ith the "oan amount.9o#ever, va"uation done oint"y by BD and 3oan ffi$ers on>overnment 9ousin& P"ots are a$$e!tab"e.

2.(.1 EBL ,++*

%here are around 506,000 bankab"e sma"" and medium enter!rises 's1 in Ban&"adesh

a$$ordin& to a market survey. Based on the estimate, there is a tota" fundin& re(uirements of

BD% 200 Bi""ion. A "ot of banks are finan$in& for their #orkin& $a!ita", fi)ed asset !ur$hase, and

other business !ur!oses throu&h $om!"i$ated or "ess friend"y $redit ana"ysis methods by takin&

"and and G or bui"din& as !rimary $o""atera". 'B3, as s!e$ified in its ma"" 'nter!rise Finan$in&

Po"i$y, #ou"d "ike to offer sim!"y stru$tured, !ro$ess based, yet risk miti&atin& bankin& !rodu$t

to the 's. 'B3 LUDD>M has been desi&ned based on the above obe$tives to a$hieve

EBL ,++* is a terminatin& "oan fa$i"ity 'I based1 for #orkin& $a!ita", fi)ed asset !ur$hase,

or any other business !ur!ose. Bank #ou"d finan$e a&ainst net $ash f"o# of the so$io e$onomi$entity derived from $ash f"o# of any $redit#orthy business and se$ure the "endin& a&ainst "ien

of 'B3 fi)ed de!osit amountin& -0 of "oan vo"ume. %he !rodu$t #i"" a""o# the Bank to $a!ture

the e)istin& market o!!ortunity.

$roduct 3eatures:

Pur!ose Any "e&a" business !ur!oses

Avai"abi"ity A"" 'B3 bran$hes and ' ;enters throu&h dire$t sa"es by '+e"ationshi! ana&ers G 3oan ffi$ers.

%ar&et ;ustomers ma"" < edium 'nter!rises as defined by 'B3

3oan Amount minimumand ma)imum1

inimum BD% 600,000G4 a)imum BD% -,000,000G

Interest +ate 5/ !.a. $a"$u"ated on month"y de$"inin& ba"an$e methodInterest rates $an be $han&ed by A3; from time to time basedon market situation1

Pro$essin& Fee 5 of "oan amount, $har&ed u!on disbursement, e)$"usive of :A%

+e!ayment %enor inimum 52 months. a)imum 60 months As !er $"ients !ayment$a!a$ity $a"$u"ated as !er $ash f"o# method1

"2


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Disbursement ode %o $"ient=s ;AA a$$ount #ith 'B3 in fu"".

+e!ayment -thG50thG 5-thG 20th G2-th day of the month

ystem #i"" auto debit the ;AA a$$ount.

Partia" Pre !ayment G

'ar"y Payment

A""o#ed after 06 months. in. 5- of the "oan outstandin& to be

!re !aid. Fee@ 5 of the !re !aid G ear"y !ayment amount.

Insta"ment Fai"ure ;har&e Pena" interest of 8 !.a. on the overdue amount

'I ;he(ue Boun$e;har&e

BD% -00 e)$"usive of :A%

tam! ;har&es A"" re"evant stam! $har&es #i"" be on borro#er=s a$$ount and #i""be debited from the a$$ount at the time of disbursement

%akeover from other Bank In $ase of takeover from other bank after "oan a!!rova", the "oanamount #i"" be &iven in form of P.. SPay rderT to the otherbank to sett"e the outstandin& as #e"" as $"osin& $har&e.

;o""atera" G e$urity

In $ase of !ro!rietorshi! $on$ern t#o !ersona"&uarantees to be obtained S$riteria mentioned in these$tion of PP>T.

In $ase of Private 3td. ;o. or !artnershi! $om!any P> ofa"" the dire$tors G !artners to be obtained.

PD; SPost Dated ;he(ueT for SthreeT insta"ment and 05SoneT UD; SUndated $he(ueT for the fu"" amount of the"oan in$"udin& fu"" interest.

Fire < f"ood insuran$e is mandatory on inventory < otherasso$iated assets of the business as it $overs at "east

550 of 'B3 finan$in& amount. For #aiver of f"oodinsuran$e $"ause, unit to !rovide stron& ustifi$ation inthe ;.

im!"e hy!othe$ation on fi)ed or f"oatin& asset and onthe !ur$hase fi)ed assets of the business.

3ien on fi)ed de!osit -0 of "oan amount for ne#borro#er of ' Bankin&. FD+ tenor must be in "ine #ith3oan aturity. In $ase of FD+ tenor is "esser than the "oanmaturity, auto rene# instru$tion to be obtained from the$"ient. Any !rior en$ashment of FD+, no interest #i"" be&iven on it.

In $ase of Pay rder issued for takin& over otherinstitutiona" "iabi"ity, $o!y of P.. de!osit s"i! #ithmentionin& "oan AG$ number du"y verified by ' Unite)$e!t 3 #i"" be a$$e!tab"e as no "iabi"ity $ertifi$ate.

2.(.2 EBL ARIM

' se$tor has emer&ed as one of the fastest &ro#in& se$tors in Ban&"adesh. >overnment ofBan&"adesh has &iven to! !riority to the deve"o!ment of this se$tor as she has rea"ised that the

"!


44/81

eman$i!ation of e$onomi$ &ro#th "ies in it. In order to &rab ma)imum benefit from this and to

be a !art of e$onomi$ deve"o!ment of Ban&"adesh, 'B3 a"ready has e)tended a"" out effort to

this se$tor. As !er survey, it has been revea"ed that there are around 506,000 bankab"e sma""

and medium enter!rises 's1 in Ban&"adesh. Based on the estimate, there is a tota" fundin&

re(uirement of BD% 200 Bi""ion. A "ot of Ban&"adeshi banks are finan$in& this se$tor in

unstru$tured #ay e)$e!tin& on"y fe# "ike B+A; Bank, ;B, 'B3 et$. 'B3 has a"ready "aun$hed

0 three1 ' 'I based !rodu$ts name"yN A9A, PUI and UDD> to $ater the re&u"ar #orkin&

$a!ita" re(uirement of the $"ients. Besides the e)istin& !rodu$ts of 'B3, there is hu&e demand

for short time or one time finan$e durin& some s!e$ia" events "ike 'id4U"4Fitre, Dur&a Pua, 'id4

U"4 Aha et$. o, to fa$i"itate those $ustomers, 'B3 initiated this !rodu$t. 'B3, as s!e$ified in

its ma"" 'nter!rise Finan$in& Po"i$y, #ou"d "ike to offer sim!"y stru$tured, !ro$ess based, yet

risk miti&atin& bankin& !rodu$t to the 's. LEBL ARIMM has been desi&ned based on the

above obe$tives to a$hieve.

%he tar&et market for the sma"" businessman, manufa$turer #ho re(uires e)tra finan$e for

short time to sto$kG manufa$ture their &oods durin& any events time i.e. 'id4u"4Fitre, 'id4u"4

Aha, Dur&a Pua et$. %he tar&et &rou! #i"" be $redit#orthy sma"" business !erson.

EBL ARIM is a terminatin& very short term "oan fa$i"ity Payment on maturity1 for #orkin&

$a!ita" and any other "e&itimate business !ur!ose. Bank #ou"d finan$e a&ainst net $ash f"o# of

the so$io e$onomi$ entity derived from $ash f"o# of any $redit#orthy business. %he !rodu$t

#i"" a""o# the Bank to $a!ture short term benefit from the e)istin& market o!!ortunity.

$roduct 3eatures:

$urpose %o he"! the ma"" < edium 'ntre!reneurs to meet e)tra finan$ere(uired durin& any events.

A!ai"abi"it# A"" 'B3 bran$hes and ' ;enters throu&h the ' +e"ationshi!ana&ersG 3oan ffi$ers.

'arget ustomers ma"" < edium 'nter!rises as defined by 'B3 < Ban&"adesh Bank.

%ar&et $ustomers are +> manufa$turer and tradin&1, Foot#ear,Imitation e#e"ry < ;osmeti$s, '"e$troni$s item %:, Freee, Fan1et$.

Loan Amount inimum BD% 200,000a)imum BD% ?-0,000

Interest Rate 5? !.a. $a"$u"ated on month"y de$"inin& ba"an$e method Interest+ate $an be $han&ed by A3; from time to time based on marketsituation1.

$rocessing 3ee 5 of "oan amount, $har&ed u!on disbursement e)$"usive of :A%.

+isbursement $eriod +isbursement ?i"" be comp"eted 1F da#s before the e!ent

Loan 'enor %he "oan tenor amount #i"" be a""o#ed for 5 month to 6 months!eriod de!endin& u!on the nature of business. i.e. formanufa$turin& ma)imum 6 months, for tradin& ma)imum months.

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$artia" $a#ment Ear"#$a#ment

Partia"G'ar"y sett"ement fee #aived.

+isbursement Mode ;redit to $ustomer=s ;AA a$$ount #ith 'B3 in fu""Gor Pay rder&iven to the su!!"ierGvendor.

Repa#ment 3u"" amount ?i"" be repaid ma@imum -( da#s after the e!entGEid or $ujaH. Interest shou"d be rea"ied on month"# basis.ystem #i"" auto debit the ;AA a$$ount.

Insta""ment 3ai"ureharge

Pena" interest of 8 !.a. on the overdue amount.

Stamp harges A"" re"evant stam! $har&es #i"" be on borro#er=s a$$ount and #i""be debited from the a$$ount at the time of disbursement

o""atera" Securit# In $ase of !ro!rietorshi! $on$ern t#o !ersona" &uaranteesto be obtained S$riteria mentioned in the se$tion ofPP>T.

In $ase of Private 3td. ;o. or !artnershi! $om!any P> ofa"" the dire$tors G !artners to be obtained.

05 SoneT UD; SUndated $he(ueT for the fu"" amount of the"oan in$"udin& fu"" interest.

Fire < f"ood insuran$e is mandatory on inventory < otherasso$iated assets of the business as it $overs at "east 550of 'B3 finan$in& amount. For #aiver of f"ood insuran$e$"ause, unit to !rovide stron& ustifi$ation in the ;.

im!"e hy!othe$ation on fi)ed or f"oatin& asset and on the!ur$hase fi)ed assets of the business.

2.-. SME 'RA+E 3I)A)E $R*+,'

2.-.( EBL BA)I97*

%he ro"e of sma"" and medium enter!rises 's1 to e$onomi$ &ro#th of a $ountry is #e""4

re$o&nied. A$ross the &"obe it is stron&"y !er$eived that 's do !"ay a vita" ro"e in the

industria" deve"o!ment of a $ountry. %here are about 577000 enter!rises #orkin& under the

umbre""a of mi$ro, sma"" and medium enter!rises in the $ountry. >ro#th of e$onomy of a state

is heavi"y de!endent on the deve"o!ment of 's and deve"o!in& $ountries have sho#ed the

su$$ess !ath to#ard the rest of the #or"d. A"" deve"o!in& $ountries are $"ose"y eyein& on the

deve"o!ment of 's and finan$ia" institutions are a"so fo$usin& on the o!!ortunities of #orthy

business. Ban&"adesh ' is main"y based on tradin& of different items ran&in& from industria"

ra# materia"s to finished &oods. '=s have "ar&e stake in im!ortin& industria" ra# materia",

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mobi"e set, e"e$troni$ items, $osmeti$s, $"oths, shoes and $ommodities. +enderin& trade

fa$i"ity to this se&ment a""o#s non funded e)!osures as #e"" as fees earnin& from $ommitment

and interest earnin& from the !ost im!ort finan$e. Present"y ' $ontributes around 2- of our

tota" im!ort and #hi$h is about BD%62-00 $rore in a year.

EBL BA)I97*is a $om!osite !a$ka&e offered to the $ustomer #ho has sett"ed tra$k re$ord in

the same "ine of business #ith &ood re!utation. It=s the thirst of the market to have 3; fa$i"ity

in "ess mar&in #ith !ost im!ort finan$e. oreover ' has the mindset to sett"e do#n their

business and to earn hi&h stake and usua""y are abide by the re&u"ation, if they are #e""

informed. 9u&e !otentia" ' trade market is unta!!ed thou&h it is !re&nant #ith !otentia"ity.

'B3 takes the drive to e)!"ore the market to &et the ma)imum benefit out of it.

$roduct 3eatures:

Pur!ose Im!ort of any "e&itimate marketab"e !rodu$ts

Avai"abi"ity A"" 'B3 bran$hes and ' ;enters throu&h dire$t sa"es by '+e"ationshi! ana&ers G 3oan ffi$ers.

%ar&et ;ustomers ma"" < edium 'nter!rises as defined by 'B3. ore s!e$ifi$a""ysma"" im!orter of easi"y marketab"e !rodu$ts "ike mobi"ea$$essories, toys, a!!are"s, shoe, batteries $osmeti$s,stationeries, $ho$o"ates, food items B%I a!!roved1, %e)ti"ea$$essories, $hemi$a"s et$.$erishab"e item to be imported ?ith (FFJ margin as the"onge!it# is too short.

%erms of BB= Prudentia"+e&u"ation of ' finan$e

Cot mandatory

>eneri$ Produ$ts i&ht 3etter of ;redit < Post Im!ort 3oan

a)imum 3imit o 3;GU3; @ BD%20

o Im!ort "oan@ BD%20

o G4 - of "imit #i"" be a""o#ed for e)$han&es rate

f"u$tuationo

Pri$in& o 0.-0 $ommission for first (uarter for 3;GU3;. 0.2- for

subse(uent (uarter.o 5- interest rate !er annum for Im!ort "oan. It ma# be

re!ised as per BB or EBL guide"ines from time to time.

Pro$essin& Fee F.-4J or minimum B+'4FFF.FF of "imit amount, $har&ed u!ondisbursement, e)$"usive of :A%

Fa$i"ity tenor o SL,L:a)imum 5 year #ith 1F to (>F da#s re!o"!ing.

o Import "oan:a)imum 5 year #ith ma)imum 5/0 days

revo"vin& as !er $ash $y$"e.

ar&in o ,sua""# 2FJ4FJmar&in in the form of 'B3 FD+ at the

time of o!enin& the 3;. It ma# f"e@ib"e as per bankerc"ient re"ationship.

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Disbursement of Im!ort"oan

o Ma@imum (FFJof the do$ument va"ue #i"" be disbursed in

the form of im!ort "oan #hen mar&in at the time of o!enin&3; is in the form of $ash

o a)imum 500 of the do$ument va"ue #i"" be disbursed in

the form of Im!ort "oan #hen 80mar&in at the time ofo!enin& 3; is in the form of FD+.

o ;"ient may retire the do$ument by makin& 500 !ayment ofdo$ument va"ue and may not enoy the im!ort "oan.

Adustment of Im!ort 3oan o 'ntire Im!ort "oan #i"" be adusted a"on& #ith a$$rued u! to

date interest on or before maturity from the sa"es!ro$eeds Go#n sour$es of the $"ient.

o ;"ient may !artia""y adust the "oan by en$ashin& the FD+ and

the rest from o#n sour$es.o ;"ient may sett"e do#n the entire im!ort "oan fa$i"ity from

$ash and re"ease the FD+ #hen mar&in is in the form of FD+.o e #i"" en$ash the FD+ if $"ient fai"s to adust the Im!ort

"oan at maturity and $o""e$t the residua" amount from the$"ient.

tam! ;har&es for

do$umentation

A"" re"evant stam! $har&es #i"" be on borro#er=s a$$ount and #i"" be

debited from the a$$ount at the time of "oadin& the "imit

ri&ina" I+; ri&ina" I+; is !referred to be ke!t #ith 'B3. If $"ient has other bank,$o!y of I+; a"on& #ith C; of that !arti$u"ar bank must be en$"osed#ith the $har&e do$uments.In $ase of 3; a&ainst indent, indentor=s I+; and BB !ermission mustbe u!dated.

Bi"" of entry o ;"ient must &ive an undertakin& that there is no overdue Bi""

of entry #ith any banks in Ban&"adesho oreover if $"ient has o!ened any 3; from any bank ear"ier,

$"ient must submit a $ertifi$ate from the !revious Banks1re&ardin& $onfirmation of no overdue Bi"" of entry.

o If I+; is ke!t #ith other bank, that bank a"so has to &ive a

$ertifi$ate that there is no over due bi"" of entry under thisI+;.

FD+ %enor o %enor of the FD+ must be of at "east months. If outstandin&

is remained FD+ #i"" be automati$a""y rene#ed a"on& #ithinterest.

Fa$i"ity #ithhe"d Co fa$i"ity #i"" be e)e$uted to the fo""o#in& $ases@o I+; not u!dated

o %rade "i$enseG%ICG:A% not u!dated

o embershi! of any asso$iation Business or trade body1 is

not u!datedo Fai"s to submit Bi"" of entry in due time Before &ettin&

the status of over due1o If any Im!ort "oan is over due or any dis!ute in the 3;

;o""atera" G e$urity o

80 mar&in in the form of $ash or 'B3 FD+ at the time ofo!enin& the 3;o +e&istered $har&e must be $reated on

inventoryGa$hineryG'(ui!ment. It $an be 5stG2nd or rd

$har&e in $ase of "imited $om!any1o im!"e hy!othe$ation of inventoryGa$hineryG'(ui!ment in

$ase of !ro!rietorshi! and !artnershi! firm.o Persona" >uarantee of a"" the Pro!rietorGdire$torsG!artners

of the ob"i&oro A"" ne$essary $har&e do$ument !res$ribed by bank.

o A UD; e(uiva"ent to 550 of the "imit "oan amount #ith

memorandum of cheue deposit.o FireGF"ood insuran$e of the sto$kGma$hineryGe(ui!ment

$overin& 550 of the im!ort "oanGA$$e!tan$e.

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2.1 LIABILI'7 G+E$*SI'H $R*+,'S

2.1.( EBL S&,BI+&A

EBL S&,BI+&A%is dai"y interest bearin& and ha"f4year"y interest !ayin& ;urrent A$$ount, "ink

#ith hort %erm De!osit a$$ount.

E"igibi"it# ust have va"id %rade "i$enseG!artnershi! deedGdo$uments for

"imited "iabi"ity $om!any issued by !ro!er authority to $ondu$t the

business.

Photo ID

ther do$uments as !er A$$ount o!enin& re(uirements s!e$ified by

Ban&"adesh Bank.

Co individua" $an o!en this a$$ount.

A!ai"abi"it# A"" 'B3 bran$hes

Minimum *peningAmount

%O 5 3a$ %aka ne 3a$1 on"y

Interest Rate V - P.A.

Rate change Interest rate #i"" be reset !eriodi$a""y u!on revie# by 'astern Bank3imited=s Asset 3iabi"ity ;ommittee and #i"" be sube$t to $han&e as !erde!osit rate sheet

Interesta"cu"ation

Interest #i"" be $a"$u"ated on dai"y basis. ;ustomer #i"" re(uire BD% 500O as

minimum day end ba"an$e in this a$$ount to entit"e the interest. Co

interest #i"" be a""o#ed for the day #hen any day end $redit ba"an$e is "ess

than BD% 500O

Interest $a#mentInterest #i"" be $redited to the "ink hort %erm de!osit A$$ount on ha"fyear"y basis.

'a@ +eduction Interest is ta) dedu$tib"e and #i"" be dedu$ted at sour$e as !er >B ru"es

E@cise +ut# ;6A'

i"" be dedu$ted as !er CB+ ru"es

Ledger 3ee?ai!er

3ed&er fee #aiver #i"" be a!!"i$ab"e if month"y avera&e ba"an$e is BD%

500,000.00 or more. In a"" other $ases BD% 00 #i"" be $har&ed as

"ed&er fees on ha"f year"y basis but no "edger fee from the + A.+ebit ard Debit ;ard fa$i"ity #i"" be !rovided to any of the si&natories

!ro!rietorshi!G!artnershi! as !er mode of a$$ount o!eration1 of the

a$$ount.

Debit ;ard issuin& $har&e #i"" be BD% -7- In$"udin& :A%1 !er year.

*n Line 3aci"it# %here #i"" be no on"ine $har&e for de!ositG#ithdra#a" for an amount u! to

BD% 50.00 "a$ from a$$ount o!enin& Bran$h to other Bran$hes of other

$ities. Above BD% 50.00 "a$, de!ositG#ithdra#a" $har&e #i"" be rea"ied as

!er s$hedu"e of $har&es of ' Bankin&. 9o#ever, there #i"" be no on"ine

$har&e for any transa$tion in the same $ity

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*thers terms ;conditions

Day end ba"an$e of ;D a$$ount #i"" be automati$a""y transferred to the

%D a$$ount by ''P4U% fa$i"ity at free of cost

''P4IC fa$i"ity #i"" be ta&&ed in ;D a$$ount so that system $an

automati$a""y $redit fund in ;D a$$ount from the %D a$$ount in $ase

of need. ;he(ue book #i"" be issued on"y a&ainst the ;D a$$ount.

+e&u"ar statement of the ;urrent A$$ount to be sent to the $ustomers

on month"y basis and "ink %D A$$ount on ha"f year"y basis at free of

$har&e.

)omination ;+eath of accountho"der

n"y one !erson $an be nominated by the a$$ount ho"der for ea$h

a$$ount

Comination #i"" be $an$e""ed if the nominee dies in the "ife time of the

a$$ount ho"der. %he a$$ount ho"der in su$h $ases #i"" advise in #ritin& a

ne# nominee.

%he a$$ount ho"der, #ith #ritten instru$tion, may $han&e the nominee

any time.

In the event of a$$ount ho"der=s death, hisGher nominee #i"" not be

a""o#ed to $ontinue the a$$ount and the avai"ab"e !ro$eeds of the

a$$ount after a"" the dedu$tions, if any1, #i"" be $redited in the name

of the Cominee or to the a$$ount of Cominee #ith 'B3.

In $ase #here there is no nominee the u$$ession ;ertifi$ate from thea!!ro!riate $ourt #i"" be re(uired for re"easin& the ba"an$e amountafter the death of the a$$ount ho"der.

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2.2 *)6E)'I*)AL RE+I' 3AILI'IES *3 EAS'ER) BA)0 LIMI'E+H

)ame +escription $urpose Risk 3actor 'enor6a"idit#

$A+ Payment a&ainstdo$ument

5. Advan$ea&ainst i&ht3G;2.For$ed 3oan

+e$ourse on %it"eto Im!ortDo$ument

25 Days !erBan&"adesh Bank

&7$* ;ash ;redita&ainst9y!othe$ationInventory andbook debts

5.%o finan$einventory2. therbusinesso!erations. >enera"!ur!oses

5.+e$ourse onsa"es2.'ver &reen

52 months

AE$'E)E A$$e!tan$e

a&ainst U3;

%o finan$e

!"ed&einventory

5.+e$ourse on

a"es

52 months

*A$ #n a$$e!tan$e!ur$hase

5.%o refinan$eBanksa$$e!tan$e2.For$ed "oan

Co re$ourse$"ean finan$e

52 months

LB$+ 3o$a" bi""Pur$hased

5.%o !ur$haseda&ainst "oan2. U!frontinterest to berea"ie

5.+esour$es onBanks throu&ha$$e!tan$e2.+esidua" on;"ient

8-G5/0 days

LA3B+ 3oan a&ainst

forei&n bi""do$umentary

5.%o !ur$hase

e)!ort $onta$tusann$e2.U!frontinterest to berea"ied

+e$ourse on

e)!ort do$ument!ayment onresidua" on $"ient

8-G5/0 days

SL i&ht "etter of$redit

For im!ortation +e$ourse on tit"eto im!ortdo$ument

52 months

S*+ e$uredoverdraft

>enera" Pur!ose 5.500 $ash$overed2.Co $redit risk.'ver >reen

52 months

*+ ver Drafta&ainst other$o""atera"

>enera" !ur!ose 5.9i&h $redit risk2. +e$ourse onsa"es. 'ver &reen

52 months

IM$*R'L*A)G&7$*H

Im!ort "oana&ainst9y!othe$ationinventory andbook debts

%o finan$eim!ort 3G; ora&ainst $ontra$t

+e$ourse onsa"es

5/0 days

IM$*R'L*A)G$LE3E+H

Im!ort "oana&ainst im!ortedmer$handise!"ed&ed andhy!othe$ation ofBook debts

% finan$eim!ort 3G;mer$handiseunder !"ed&ed

5.+e$ourse on!"ed&e inventory2.9i&h monitoryrisk

5/0 days

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+EMA)+ L*A)po

Demand "oana&ainst9y!othe$ation ofinventory andBook debts

5.%o finan$einventory!ro$edure"o$a""y2. %o finan$eDuty G %a)

+e$ourse ona"es

5/0 days

+EMA)+ L*A)p"edge

Demand "oana&ainst !"ed&einventory!ro$edure "o$a""yandhy!othe$ation ofbook debts

%o finan$einventory!ro$edure"o$a""y under!"ed&e

5.+e$ourse on!"ed&e inventory2. 9i&h emory+isk

5/0 days

L 3etter of>uarantee

For ;ontra$tua"ob"i&ation

5.Performan$erisk2.'ver &reen

5. !e$ifi$ !eriod2.!en 'nded

'ERM L*A) %erm "oana&ainst fi)ed

assets

%o finan$e fi)edassets

+e$ourse onfi)ed assets hi&h

risk

5.ver 52 months2. a) 7 years

#


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hapter 4SME BA)0I)

$R*+,'S*3*'&ERBA)0S

4.( BRA BA)0 LIMI'E+

B+A; Bank 3imited, #ith institutiona" shareho"din&s by B+A;, Internationa" Finan$e ;or!oration

IF;1 and hore$a! Internationa", has been the fastest &ro#in& Bank in 2008 and 200-. %he Bank

o!erates under a Wdoub"e bottom "ineW a&enda #here !rofit and so$ia" res!onsibi"ity &o hand in

hand, as it strives to#ards a !overty4free, en"i&htened Ban&"adesh.

As an o!erationa" ;ommer$ia" Bank, B+A; Bank fo$uses on !ursue une)!"ored market ni$hes in

the ma"" and edium 'nter!rise Business, #hi$h hitherto has remained "ar&e"y unta!!ed

#ithin the $ountry. In the "ast five years of o!eration, the Bank has disbursed over BD% 5-00

$rore in "oans to near"y -0,000 sma"" and medium entre!reneurs. %he mana&ement of the Bank

be"ieves that this se$tor of the e$onomy $an $ontribute the most to the ra!id &eneration of

em!"oyment in Ban&"adesh. ver the years, the bank is e)!andin& its servi$e $overa&e

throu&h introdu$in& ne# bran$hes at different strate&i$a""y im!ortant areas of the $ountry.

It is s!onsored by a number of entre!reneurs re!resentin& various business &rou!s #ith

e)!osure in >arments, %e)ti"e, tee" < 'n&ineerin&, Finan$ia", Insuran$e, '"e$troni$s, and

;ement and ;onstru$tion e$tors. %he bank has its authoried $a!ita" %k. 2,00 $ores. It

!rovides a #ide ran&e of $ommer$ia" bankin& servi$es. As a #ho"e, $or!orate "oans

a$$ount for 80 of the bankHs "oan !ortfo"io, #hi"e retai" "oans a$$ount for the rest 60 as

on 5st De$ember 2008. %he bank has 22 bran$hes, #ith staff stren&th of ?2- as on 5st

De$ember 2008.

Bra$ Bank is ho"ds the maor share in ' finan$in& area by $ommer$ia" Banks. It is the !ioneer

in ' bankin& in Ban&"adesh. Bra$ Bank has #ide ran&e of ' bankin& !rodu$ts to meet the

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different business needs of ' se$tor. Present"y it !rodu$t offerin& in$"udes 6 different ty!es

of ' "oan !rodu$ts. %hey are@

Anonno Rin

Apurbo Rin

$athsha"a Rin

Aroggo Rin

+igoon Rin

Supp"ier 3inance

4.(.( A)*))* RI)

%his is a sma""4s$a"e "oan desi&ned to finan$e sma"" s$a"e tradin&, manufa$turin& and servi$e

ventures, es!e$ia""y to aid the !ur$hase of fi)ed assets, and to finan$e #orkin& $a!ita".

E"igibi"it#

'ntre!reneurs a&ed bet#een 5/ to 60 years

'ntre!reneurs #ith minimum 2 years e)!erien$e in the same "ine of business

A business #hi$h must be a &oin&4 $on$ern #ith more than 5 year in o!eration

Ma@imum Amount

From minimum BD% "a$ u! to ma)imum of BD% / "a$

3eatures

3oan #ithout mort&a&e

For e)$e""ent borro#ers #ho have !aid or are !ayin& in due times, #e offer dis$ounted

rates

Jui$k, (ua"ity bankin& throu&hout the $ountry

Potentia" #omen entre!reneurs #i"" a"so &et the fa$i"ities of this "oan

Loan 'erm Insta""ment Repa#ment Interest Repa#ment

months4?months ne sin&"e !ayment at

maturity

onth"y

52, 5-, 5/, 25, 28, 27, 0, ,

6 months

onth"y Insta""ment onth"y Insta""ment

4.(.-. A$,RB* RI)

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In order to he"! our ' borro#ers for finan$in& #orkin& $a!ita" or to !ur$hase fi)ed assets,

B+A; Bank offers APU+B. It $aters to the need of entre!reneurs #ho are o!eratin& in

tradin&, manufa$turin&, servi$e, a&ri$u"ture, non4farm a$tivities, a&ro4 based industries and

other se$tors of our e$onomy.

E"igibi"it#

'ntre!reneurs havin& a minimum of years of some business a$tivities

A business #hi$h must be a &oin& $on$ern for years

A&e minimum 2- years and ma)imum u! to 60 ears

Ma@imum Amount

tartin& from BD% / "a$ to ma)imum of BD% 0 "a$

3eatures

ithout mort&a&e for "oan be"o# 50 "a$

im!"e "oan !ro$essin& for e)!andin& your business

Jui$k disbursement

Disbursement in one or t#o insta""ments

F"e)ib"e month"y re!ayment !"an

4.(.1. $A'&S&ALA RI)

%his is a "oan desi&ned to meet the needs of sma"" and medium sied !rivate edu$ationa"

institutions, su$h as kinder&artens, s$hoo"s and $o""e&es et$.

E"igibi"it#

A sma"" < medium edu$ationa" institution that is in o!eration for minimum years

%he institution shou"d be so"e !ro!rietorshi!, !artnershi!, Private 3imited ;om!any, or

o$iety

%he edu$ationa" institute must be a !rofit makin& $on$ern

Ma@imum Amount

inimum BD% "a$ to ma)imum BD% 0 "a$

3eatures

ithout mort&a&e for "oan be"o# 50 "a$

3oan for fi)ed assets !ur$hase < $ivi" $onstru$tion

3oan re!ayment $an be s!read u! to 8 years

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inimum do$umentation

onth"y re!ayment !"an

Jui$k disbursement

F"e)ib"e interest rate based on se$urity

4.(.2. AR** RI)

%his "oan is suitab"e for !rivate $"ini$s, dia&nosti$s $enters and do$torsH $hambers to !ur$hase

fi)ed assets under e(uated month"y insta""ments.

E"igibi"it#

Institutions #ith at "east 2 years in o!eration < a !rofit makin& $on$ern

Do$tors havin& - years of e)!erien$e

Ma@imum Amount

inimum of "a$ to ma)imum of 0 "a$

3eatures

3oan #ithout mort&a&e u! to / "a$

'asy "oan !ro$essin&

3oan re!ayment s$hedu"e is s!read u! to years

5 "oan !ro$essin& fee

F"e)ib"e interest rate based on se$urity

4.(.4. +I**) RI)

DI>C +IC is a "oan fa$i"ity for ma"" and edium enter!rise. %his !rodu$t=s main obe$tive

is to he"! various ma"" and edium entre!reneurs to meet their short4term $ash f"o#

shorta&es or brid&e the fund4f"o# &a!s.

Doub"e "oan on your de!osit. For your business e)!ansion, you do not need to en$ash your

savin&s rather you $an take doub"e amount of "oan on your de!osit.

E"igibi"it#

'ntre!reneur havin& minimum 2 years of business a$tivities

%he business #hi$h must be a &oin& $on$ern for 2 years

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A&ed bet#een 5/ years to -- years

Ma@imum Amount

inimum of - "a$ to ma)imum of 0 "a$ BD%

3eatures

Doub"e amount of "oan on your de!osit

Attra$tive return a&ainst the de!osit

F"e)ib"e re!ayment !"an in month"y insta""ment and sin&"e insta""ments

Jui$k disbursement

4.(.5. S,$$LIER 3I)A)E

UPP3I'+ FICAC;' is a "oan fa$i"ity for the en"isted u!!"iers of various "ar&e retai"ers,

marketin& $om!anies, distributors, e)!orters et$. %his !rodu$t=s main obe$tive is to he"!

various u!!"iers to meet their short4term $ash f"o# shorta&es or brid&e the fund4f"o# &a!s.

E"igibi"it#

If you are an en"isted su!!"ier of a $or!orate house #ith #hi$h B+A; Bank has a

$or!orate tie4 u!

9ave minimum years of $ontinuous o!eration

9ave 5 year $ontinuous re"ationshi! #ith the !ur$hasin& firm

Ma@imum Amount

inimum BD% "a$ u! to ma)imum BD% 0 "a$

3eatures

'(ua" month"y insta""ment and revo"vin& "oan fa$i"ity

5 of "oan amount as the !ro$essin& fee

4.(.= E)'ER$RISE SELE'I*) RI'ERIA 3*R BRA BA)0 SME L*A):

%he 'ntre!reneur must be !hysi$a""y ab"e and bet#een 2-4-0 a&e

%he business must be "e&a""y va"id, i.e. have va"id trade "i$ense, in$ome ta) or :A%

re&istration herever a!!"i$ab"e1. %he business must be in o!eration for at "east one year

#6


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%he business must have a"" ne$essary infrastru$ture fa$i"ities and ade(uate #ork for$e

%he entre!reneur must be so$ia""y a$$e!tab"e

%he entre!reneur must have $"ear4$ut and s!e$ifi$ sour$e of in$ome and abi"ity to save

%he business must have a defined market #ith $"ear &ro#th !otentia"s

%he entre!reneur must have ne$essary kno#"ed&e and e)!erien$e on the business, i.e.

a$ademi$ or vo$ationa" trainin&, re"evant #ork e)!erien$e in other institution or a fe#

years of e)!erien$e in the same "ine of business

#$


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59/81


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Margins Gindicati!eH %he (ua"ity of re$eivab"es #ou"d be of im!ortan$e in fi)in&

mar&ins u! to #hi$h #orkin& $a!ita" is made avai"ab"e.

'enor a)imum 52 months rene#ab"e1

$ricing +isk based !ri$in& strate&y, in "ine #ith the market rates.

Securit#

Primary@

X ;har&e on the inventory and re$eivab"es.

X ;har&e on other $urrent assets

X Persona" &uarantee of !ro!rietor G!artnersG dire$tors.

X ;har&e on fi)ed assets.

e$ondary@

X ;o""atera" se$urity on a $ase4to4$ase basis.

Interest Fi)ed +ate, ty!i$a""y for 52 months.

Re!ie? Fa$i"ity terms < !ri$in& are both revie#ed at "east annua""y

$rocessing fee Pro$essin& fee of 5 is &enera""y $har&ed on sma"" "oans. A$tua"

fee $har&ed is determined on a $ase4to4$ase basis.

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4.1 BA)0 ASIA LIMI'E+

%ar&etin& s!e$ified $ustomer se&ments i.e. tradin&, manufa$turin&, servi$e et$. a"" over

Ban&"adesh throu&h bran$hes, Bank Asia intend to offer A;9CD, a business "oan to

re"ative"y ma""er 'nter!rises.

For the !ur!ose of #orkin& $a!ita" finan$e and fi)ed assets !ur$hase under '(uated onth"y

Insta""ment, Juarter"y Insta""ment and in&"e Insta""ment based re!ayment !"an the product

offers terminating "oan faci"ities. %he "oan is se$ured by hy!othe$ation on the inventory,

re$eivab"es, advan$e !ayments, !"ant < ma$hineries, $har&e on immovab"e !ro!erties, third

!arty !ersona" &uarantee, re&istered mort&a&e of "anded !ro!erty, !artia" or fu"" $ash $over in

the form of readi"y en$ashab"e &overnment bonds, mutua" fund unit $ertifi$ates and de!ositsG

fi)ed de!osits in Bank Asia or in other Banks if the $ustomers offerG a&ree to furnish1.

4.1.(. $R*+,' 'I'LE K SA&*)+* GSME LoanH

ustomer Segment

3eve" 5@ %his se&ment $onsists of business enter!rises re(uirin& "oan of %k. 2.00 "a$ to -.00 "a$.

3eve" 2@ %his se&ment $onsists of business enter!rises re(uirin& "oan of more than %k. - "a$ to

50 "a$.

3eve" @ %his se&ment $onsists of business enter!rises re(uirin& "oan of more than %k. 50 "a$ to

-0 "a$.

E"igib"e entrepreneur o?ner

Cationa"ity@

a1 Ban&"adeshi by birth

b1 Forei&nerG forei&n investor havin& va"id "e&a" !a!ers and has been residin& in

Ban&"adesh for at "east 2 years.

')!erien$e@

3eve" 5@ %he entre!reneur must have minimum 2 t#o1 years e)!erien$e in the same "ine of

business for "oans u!to %k. - "a$s.

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3eve" 2 < @ %he entre!reneur must have minimum 8 four1 years e)!erien$e in the same "ine of

business for "oans over %k. - "a$s.

A&e@

inimum 5/ years and ma)imum u! to 60 years

internship report on eastern bank sme_2

Documents