Brac Bank getting good response from SME entrepreneurs

FE Team | Published: August 21, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
Brac Bank, one of the country's fastest growing private sector bank, has been receiving encouraging response from the small and medium entrepreneurs as it is offering collateral-free loans for the SME sector.
"We are receiving tremendous response from the entrepreneurs across the country for collateral-free loans. Around 95 per cent of our total SME borrowers has received collateral-free loans," said Zahid Ibne Hai, Head of Marketing and Corporate Affairs told the FE Monday.
He claimed that the rate of repayment is 'surprisingly' 98 per cent.
Brac Bank offers collateral free loans to the country's SMEs (small and medium entrepreneurs) in the range between Tk 0.3 million and Tk 1.0 million.
However, sources at the Brac Bank said it has so far disbursed loans to 85,312 SME entrepreneurs from its 400 branches across the country.
"Our studies show that 90 per cent of them are first time SME borrowers," Zahid Ibne Hai claimed.
Currently, it has around Tk 14 billion in outstanding loans, which are being repaid in installments by the borrowers.
Bank officials said the bank disbursed Tk 2.0 billion in July this year.
Brac Bank sources said besides the collateral-free loan facility, the bank offers easy procedures for disbursement of loans to the clients.
"Entrepreneurs do not face any cumbersome procedure for obtaining SME loans from the bank. Access to credit in the bank is simple," Indrajit Sur, associate manager of the SME division, told the FE.
They said trade licence and experience in the sector are main requirements for such collateral-free loans.
Brac Bank officials claimed that an entrepreneur can get SME loan in 10 days time.
They said it has set a target for providing loans to around 5000 new entrepreneurs each month across the country.
Sources said it is providing collateral-free loans to diversified areas that cover grocery shops, manufacturing, trading, light engineering, agriculture, small textiles, garment accessories, plastic product factories, recycling plants, vermicelli factories.
In the meantime, the bank has taken a move for making transaction more speedy and cost-effective through automation.
"We have procured software for automation in the bank," one senior official told the FE.
Brac Bank sources said one such software is Finacle and the other is Kastle for ensuring speedy and transparent SME banking system.
Brac bank said the rate of interest for the SME loan ranges between 13 per cent and 24 per cent depending on the nature of products.
Bank officials said its operation cost relating to SME credit is high and it requires regular close supervision and monitoring.
They said 1600 bank staffs have been working for monitoring and supervising the loans.
Brac Bank said schools, hospitals, diagnostic centres are enjoying the lowest range of interest rate.
The bank also opened two separate cells for the SME operation. One is women entrepreneurship development cell and the other is manufacturing cell.
Brac Bank officials said it is conducting seminars and providing trainings to the customers.