SME Banking Scope In Bangladesh (Part-5)

Corporate Lending

There are so many banks in Bangladesh providing SME banking services. But I choose 5 well reputed banks. They are also providing SME banking service. Not only this, they are doing this from the very beginning of the SME banking. The Banks are:

AB Bank BRAC Bank Dutch Bangla Bank Limited EXIM Bank Standard Chartered Bank.

Background of AB Bank Limited AB Bank Limited, the first private sector bank was incorporated in Bangladesh on 31st December 1981 as Arab Bangladesh Bank Limited and started its operation with effect from April 12, 1982. AB Bank is known as one of leading bank of the country since its commencement 29 years ago. It continues to remain updated with the latest products and services, considering consumer and client perspectives. AB Bank has thus been able to keep their consumers and clients trust while upholding their reliability, across time. During the last 29 years, AB Bank Limited has opened 82 Branches in different Business Centers of the country, one foreign Branch in Mumbai, India and also established a wholly owned Subsidiary Finance Company in Hong Kong in the name of AB International Finance Limited. To facilitate cross border trade and payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of the World. In spite of adverse market conditions, AB Bank Limited which turned 28 this year, concluded the 2008 financial year with good results. The Banks consolidated profit after taxes amounted to Taka 230 cr which is 21% higher than that of 2007. The asset base of AB grew by 32% from 2007 to stand at over Tk 8,400 cr as at the end of 2008. The Bank showed strong growth in loans and deposits. Deposit of the Bank rose by Tk. 1518 cr ie., 28.45% while the diversified Loan Portfolio grew by over 30% during the year and recorded a Tk 1579 cr increase. Foreign Trade Business handled was Tk 9,898 cr indicating a growth of over 40% in 2008. The Bank maintained its sound credit rating in 2008 to that of the previous year. The Credit Rating Agency of Bangladesh Limited (CRAB) awarded the Bank an A1 rating in the long term and ST-2 rating in the short Term. AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its past identity an identity that the bank carried as Arab Bangladesh Bank Limited for twenty five long years. As a result of this decision, the bank chose to rename itself as AB Bank Limited and the Bangladesh Bank put its affirmative stamp on November 14, 2007. The Bank decided to change its traditional color and logo to bring about a fresh approach in the financial world; an approach, which like its new logo is based on bonding, and trust. The bank has

developed its logo considering the contemporary time. The new logo represents our cultural Sheetal pati as it reflects the bonding with its clientele and fulfilling their every need. Thus the new spirit of AB is Bonding. The Logo of the bank is primarily red, as red represents velocity of speed and purity. Our new logo innovates, bonding of affiliates that generate changes considering its customer demand. AB Bank launched the new Logo on its 25th Anniversary year. AB Bank commits to nation to take a lead in the Banking sector through not only its strong financial position, but also through innovation of products and services. It also ensures creating higher value for its respected customers and shareholders. The bank has focused to bring services at the doorstep of its customers, and to bring millions into banking channels those who are outside the mainstream banking arena. Innovative products and services were introduced in the field of Small and Medium Enterprise (SME) credit, Womens Entrepreneur, Consumer Loans, Debit and Credit Cards (Local & International), ATMs, Internet and SMS Banking, Remittance Services, Treasury Products and Services, Structured Finance for Corporate, strengthening and expanding its Islamic Banking activities, Investment Banking, specialized products and services for NRBs, Priority Banking, and Customer Care. The Bank has successfully completed its automation project in mid-2008. It envisages enabling customers to get banking services within the comfort of their homes and offices. AB Bank has continuously invests into its biggest asset, the human resource to drive forward with its mission to be the best performing bank in the country. The bank has introduced Dress Code for its employees. Male employees wear designed ties and females wear Sharee or Salwar Kamiz, all the dresses are consisted with the unique AB Bank logo. AB is recognized as the peoples choice, catering to the satisfaction of its cliental. Their satisfaction is ABs success. Corporate Information of AB Bank Limited Name of the Company : AB Bank Ltd Legal Form: A public limited company incorporated on 31st December, 1981 under the Companies Act, 1913 and listed in the Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd. Vision & Mission Vision Statement To be the trendsetter for innovative banking with excellence & perfection Mission Statement To be the best performing bank in the country Core Values Our Compliances We consider adherence to national policies and objectives a priority for giving our customers the best financial support with corporate integrity, meaning a fully compliant bank along with involvement in social development. Our Customers We give the best priority on our customer demand and through our endless effort we assure the best satisfaction to our customers. Our Shareholders We assure the best return to our shareholders by commenced performance over a rolling year. Our Team Members We provide secure, satisfying employment, ensuring the contribution of each individual to the success of ABBL.

Products & Services Retail Banking Personal Banking Loan Products Product Name Purpose Personal Loan

Personal loan may be availed for any purpose deemed appropriate for lifestyle and personal exigencies including purchase of household items, marriage, travel, medical treatment, CNG conversion, Festival, renovation etc. Loan Limit MinimumTk.50,000/Maximum Tk. 5,00,000/- ( upto Tk. Ten lac covered by tangible security acceptable to the bank.) Applicationfee: Tk.500/Charges Processing fee: 1% on the approved loan amount or Tk. 2000/- whichever is higher Min 12 months Tenor Max 36 months Max 60 months (for house/office renovation loan) 14.50% p.a. 17.50% p.a. Rate of Interest Hypothecation of the product to be purchased. Security Guarantee Personal guarantee of spouse/parents only. Product Auto Loan Name 1. Purchase of Brand new cars Purpose 2. Purchase of Re-conditioned cars Loan Limit 80% of the value of the brand new car or reconditioned car but not exceeding BDT 20,00,000/Application fee: Tk. 500/Charges Processing fee: 1% on the approved loan amount or Tk. 5000.00 whichever is higher Reconditioned Car: Max 60 months Tenor Brand new Car: Max 72 months 14.50% p.a. 17.50% p.a. Rate of Interest Hypothecation of the vehicle to be purchased. Security Guarantee Personal guarantee of spouse/ parents only. Product Education Loan (disbursed to parents/guardian) Name To assist Parents/guardians for Admission/Education Fees, Semester Fees, Study abroad Purpose for their children/wards Loan Limit Minimum Tk. 50,000/Maximum Tk. 5,00,000/- (upto Tk.Ten lac covered by tangible security acceptable to the bank) Application fee: Tk. 500/Charges Processing fee: 1% on the approved loan amount or Tk. 1000.00 whichever is higher Min 12 months Tenor Max 48 months 14.50% p.a. 17.50% p.a. Rate of Interest Guarantee Personal guarantee of spouse/parents only Product Education Loan (for executive)

Name Purpose

To assist Executives pursue Higher Studies/professional qualification at local/overseas institutions Loan Amount Minimum Tk. 50,000/Maximum Tk. 5,00,000/- (upto Tk.Ten lac covered by tangible security acceptable to the bank) Application fee: Tk. 500/Charges Processing fee: 1% on the approved loan amount or Tk. 1000.00 whichever is higher Min 12 months Tenor Max 48 months 14.50% p.a. 17.50% p.a. Rate of Interest Guarantee Personal guarantee of spouse/parents Product Name Home Loan 1. Purchase of apartment/house within the Municipal areas of town/cities in Purpose Bangladesh. 2. Purchase of independent house not more than 5 years old. 3. Completion of construction of a new house. Minimum BDT 500,000/Loan Limit Maximum 80% of the value of the flat or construction cost for completion but not more than Tk. 1,00,000,00/Application fee: Tk. 500/Charges Processing fee: 1% on the approved loan amount Minimum 3 Years Tenor Maximum 15 Years Rate of Interest Security Guarantee Secured Loan Product Name Purpose Loan Amount Charges Tenor Rate of Interest Security Product Name Purpose Loan Amount Charges Tenor Rate of Interest Security Personal Loan To meet personal requirement of fund Maximum 95% of the present value of the security Processing fee: Tk. 1000/Min 12 months Max 36 months For ABBL FDR, 3% higher than the rate of deposit 12.00 % p.a. -15.00 % p.a. (for other Bank FDR) Lien over FDR, ICB Unit Certificate, RFCD, NFCD, CD account(s) etc. One personal guarantee in case of third party cash collateral Personal Overdraft To meet personal requirement of fund Maximum 95% of the present value of the security Processing fee: Tk. 1000/Revolving with annual review For ABBL FDR, 3% higher than the rate of deposit 12.00 % p.a. -15.00 % p.a. (for other Bank FDR) Lien over FDR, ICB Unit Certificate, RFCD, NFCD, CD account(s) etc. One personal guarantee in case of third party cash collateral 13.00% p.a. Registered mortgage of property supported by a registered irrevocable general power of attorney Personal guarantee of spouse/ parents/legal heir

Corporate Lending Our specialist teams offers a comprehensive service providing finance to large and medium-sized business based in Bangladesh. For more information as to how we might best meet your corporate debt needs, please contact us at our Corporate Head Office. Structure Finance We have a specialist Structured Finance Team who arrange and underwrite finance solutions including Debt and Equity Syndication for financial sponsors, management teams and corporates. Also we provide corporate advisory services. We aim to provide tailored financing solution with a dedicated team who can rapidly respond to client needs. Following are some of the products and financial tools of Corporate Banking:

Project Finance Working Capital Finance Trade Finance Cash Management Syndicated Finance, both onshore & off-shore Equity Finance, both onshore & off-shore Corporate Advisory Services

SME Banking SME Loan Considering the volume, role and contribution of the SMEs, in the last two decades AB Bank has been patronizing this sector by extending credit facilities of different types and tenor. As of now 54% of the banks total loan portfolio is segmented to the SMEs which deserve all out attention in our plans, projections and forecasting. As such the bank has emphasized on the following issues:

To provide the best services to the SME sector To increase the SME portfolio of ABBL significantly To improve the quality of ABBLs portfolio

SME Sectors in which AB Bank has participated so far:

Agro machinery Poultry Animal Feed Dairy Product Fruit Preservation Hotel & Restaurants Garments Accessories Leather products Plastic product Furniture : Wooden & Metal Ink Paint Printing & Packaging

Wire & Cable Aluminum Cement and Lime Plaster Clinics and Hospitals Engineering & Scientific Instruments

Large Loan & Project Finance

In order to cater the demand of client AB Bank has segmented its portfolio in terms of loan size. As per this segmentation any loan over Tk. 10.00 Crore falls under the purview of Large Loan Unit. In AB Bank, there is also a separate Project Finance unit who evaluate the business. The unit is entrusted to handle the portfolio in a focused manner. AB Bank is always in fore front to support establishment of new projects of diverse nature which will help to broaden the manufacturing arena vis--vis to generate to employment. At the moment AB Bank s exposure in Large Loan & Project Finance portfolio is distributed in the following sectors: SL Sector ABBL Exposure (Limit) (Fig. in Lac Tk.) 12,717.56 38,691.92 21,855.00 36,057.53 18,106.42 1,414.70 27,044.24 2,505.26 3,928.62 11,867.61 10,451.49 5,763.15 9,441.63 94,826.13 18,029.20 42,824.97 11,479.89 77,579.89 444,585.21 51,560.29 3930,24.92

1 Agro- Business 2 Cement Power, Glass 3 Consumer Products 4 Edible Oil 5 Engineering & Construction 6 Financial Institution 7 Food & Beverage 8 Hotel 9 Health Care 10 Printing & Packaging 11 Real Estate 12 Micro-finance 13 Export 14 RMG & Backward Linkage 15 Ship Breaking 16 Steel 17 Telecom & Computer Accessories 18 Trading Total ( including syndicated exposure) Less Syndicated Exposure Total Large Loan & Project Finance portfolio without syndicated exposure Loan Syndication

Syndication or club financing is a growing concept in Banking Arena of Bangladesh. Syndicated finance diversifies the risk of one bank on a single borrower and increases the quality of loan through consensus or cumulative judgment and monitoring of different banks / financial institutions. AB Bank, the first bank in the private sector also took initiative to adapt to this growing concept.

In 1997, AB Bank for the first time arranged a club financing with Dhaka Bank Ltd to raise Tk. 6700 lac out of which ABBL financed Tk. 5700 Lac and Dhaka bank financed Tk. 1000 Lac. In 1999, AB Bank arranged its second syndicated credit facility with IPDC to raise Tk 3563 Lac. Since then AB Bank did not look back. Since 1997 to 2007 (till date), AB Bank has raised total Tk. 25989.56 Lac as Lead Arranger. The following banks from time to time have been our partners in these syndications : Dhaka Bank, IPDC, EXIM Bank, Bank Asia, Oriental Bank, NCC Bank, The City Bank, Trust Bank, Bank Asia. AB Bank has also participated in different syndications arranged by other Banks, out of which till date 6 (six) syndication has successfully been completed. AB Bank exposure in these completed syndications was Tk. 4700 Lac. At the moment AB has participation in 19 (nineteen) syndicated facilities. AB Banks exposure in the ongoing syndication is Tk. 51560.29 Lac which is diversified in the following ten sectors: SL Sector 1 2 3 4 5 6 7 8 9 10 Textile Micro-finance Cement Energy & Power Telephone (PSTN) Glass Sugar Steel Mills Paper Chemical Total ABBL Participation (Fig. in Lac Tk.) 9,533.57 3,000.00 7,990.00 11,997.00 5,500.00 900.00 900.00 9081.72 1158.00 1,500.00 51,560.29

Lending Rates Interest Rate W.E.F September 19, 2011 13.00% 13.00% 13.00%

Products 1) Agriculture (As per Bangladesh Bank Directives) 2) Large and medium scale industries (Term) (As per Bangladesh Bank Directives) 3) Small Industries (Term Loan) (As per Bangladesh Bank Directives) 4) Working Capital a) Large and medium scale industries b) Small Industries 5) Export (As per Bangladesh Bank Directives) 6) Commercial Lending 7) Housing Loans 8) Consumer Credit 9) Credit Card 10) Finance to NBFIs 11) Others i) Cash Collateral ABBL FDR

Mid Rate 13.00% 13.00% 13.00%

15.50% 14.00%-17.00% 16.50% 15.00%-18.00% 7.00% 7.00% 15.50% 14.00%-17.00% 15.50% 14.00%-17.00% 18.50% 17.00%-20.00% 2.00% per month 2.00% per month 14.50% 13.00%-16.00% 16.50% 15.00%-18.00%

ii) Cash Collateral Other Banks FDR or WDB iii) Women Enterpreneur upto Tk 50.00 lac (As per Bangladesh Bank Directives) iv) Special Scheme Loans SME v) Import Finance against essential items (Rice, wheat, edible oil (refined & crude), lentils, peas, onion, dates and sugar) (As per Bangladesh Bank Directives) vi) Import Finance against chemical fertilizer(As per Bangladesh Bank Directives) Notes:

16.75% 10.00% 16.50% 12.00% 14.00%

15.25%-18.25% 10.00% 15.00%-18.00% 12.00% 14.00%

1. For lending against ABBL FDR, the rate is minimum 3.00% above the rate of the instrument or minimum 15.00% p.a. 2. Exposure under cash collateral of other banks requires clearance from FI & Treasury. 3. For taking exposure on Digun Loan under Special Scheme, the rate will be 8% above the instruments rate; subject to maximum 18% p.a. 4. For Women Entrepreneur (above Tk. 50.00 lac) under Special Scheme, the rate will be 14.00%-17.00%. Deposit Rates Interest Rates with effect from August 08, 2011 Products Savings Deposits FSP (Family Savings Plan) SND (Special Notice Deposit) Upto 1,00,00,000 1,00,00,001 to 25,00,00,000 25,00,00,001 to 50,00,00,000 50,00,00,001 to 100,00,00,000 Above 100,00,00,000 Security Deposit Receipts(SDR)/Call Deposit NFCD FC & RFCD (Minimum balance USD 1000 or GBP 500 or its equivalent for other currency & minimum tenor one month) Fixed Deposit (Time Deposits) 1 (One) Month 3 (Three) Months 6 (Six) Months 1 (One) Year 2 (Two) Years MSDS (Monthly Savings Deposit Scheme) 3 (Three) Years 5 (Five) Years 7 (Seven) Years 10 (Ten) Years MIDS (Monthly Income Deposit Scheme) 1 (One) Year 3 (Three) Years Interest Rate 6.00% 8.00% 4.00% 5.00% 6.00% 7.00% 8.00% 3.00% Rate as per Daily FX rate Rate as per Daily FX rate

12.00% 12.00% 12.00% 12.00% 12.00% Rate of Return on Maturity 11.79% 11.84% 11.30% 11.87% Interest Rate 10.20% 11.00%

5 (Five) Years DDS (Deposit Double Scheme) Deposit Doubles Foreign Exchange Rates

12.00% Tenor After 6 years

THE FOLLOWING FOREIGN EXCHANGE RATES IN TAKA ARE EFFECTIVE FOR TRANSACTIONS WITH PUBLIC PER ONE UNIT OF FOREIGN CURRENCY CURRENCY BUYING RATES SELLING RATES T.T. T.T. Doc. O.D.SIGHT O.D. CASH CASH T.T. & O.D. B.C. CLEAN EXPORT TRANSFER 76.2500 76.1800 76.0500 75.6427 76.1500 78.1500 77.2000 77.2500 USD 118.1297 117.9097 117.8989 117.2633 114.9210 GBP 123.1097 122.8769 122.9769 101.3898 101.2398 101.2018 100.6055 98.0310 105.7526 106.0141 106.1641 EURO 0.9825 0.9802 0.9735 1.0239 1.0249 JPY 18.5515 18.4762 18.3662 21.7797 21.9297 AED LIBOR INDICATIVE FORWARD RATES TENOR TENOR USD GBP EUR USD/BDT 1 MONTH 0.25656 0.72938 1.13813 DAYS BUY SELL 30 DYS 76.3506 78.0060 2 MONTHS 0.36883 0.83969 1.25000 60 DYS 76.7004 78.8763 3 MONTHS 0.48778 1.01869 1.41500 90 DYS 77.0980 79.6664 4 MONTHS 0.56139 1.10800 1.48813 180 DYS 78.7049 81.8780 6 MONTHS 0.69861 1.30544 1.65063 12 MONTHS 1.01811 1.79625 2.00313 NOTE: FORWARD RATES TO BE OBTAINED FROM DEALING ROOM, TREASURY, HEAD OFFICE, DHAKA. USANCE EXPORT BILLS BUYING RATES TENOR 30 DAYS 60 DAYS 90 DAYS 120 DAYS 180 DAYS 75.3828 74.9380 74.4932 74.0485 73.1589 USD 100.5118 99.9203 99.3289 98.7375 97.5546 EUR ALL THESE RATES ARE INDICATIVE ONLY. IN CASE OF TRANSACTIONS OVER USD10,000.00 AND/OR IN EQUIVALENT OTHER CURRENCIES, BRANCHES ARE ADVISED TO INTIMATE ABBL,DEALING ROOM, HEAD OFFICE. TEL: 880-2-9564169,PABX 9560312-6, EXT :148, 256, FAX: 9566265 DAILY MARKET COMMENTARY In the call money market the rate was 7.00%-9.00% on Sunday and we forecast that it may range between 7.00% to 09.00% today. In the local FX market Dollar was traded at Tk 76.55 Tk 76.58 on Sunday and we forecast that it will be traded at Tk 76.57 -Tk 76.60 today. NFCD FC & RFCD TENOR USD GBP EUR USD GBP EUR 1 MONTH 0.14 0.44 0.78 0.06 0.29 0.40 2 MONTH 0.25 0.55 0.89 3 MONTH 0.36 0.72 1.04 6 MONTH 0.56 0.99 1.27 12 MONTH 0.87 1.46 1.60 As a Primary Dealer, we Sell/Buy T-Bills and T-Bonds to customers. Cut-off Yields for T-Bills and TBonds of last Auction is given above for reference only. For customer transactions, rates to be obtained

from Dealing Room, Treasury, Head Office, Dhaka. BD Govt. T-Bonds TENOR YIELD 5 YEARS TENOR YIELD 91 DAYS 8.60 10 YEARS 182 DAYS 8.90 15 YEARS 364 DAYS 9.00 20 YEARS

BD Govt. T-Bills 8.50 9.55 11.00 11.50