A REPORT ON-

BASIC BANK
LIMITED
 A Report On-

BASIC BANK LIMITED

Prepared for-
S M Zahidur Rahman
Assistant Professor
Business Administration Discipline
Khulna University

Prepared by-

Name ID
Md Masrul Mollah 070314
Md Nazmul Huda 070323

Date of Submission: July 23, 2008

BBA Program
Business Administration Discipline
Khulna University
Letter of Transmittal

July 23, 2008

S M Zahidur Rahman
Assistant Professor
Business Administration Discipline
Khulna University

Dear Sir,

Here is a report on “BASIC BANK LIMITED”, which you asked me to prepare on the
July 01, 2007.

To know about the functions, loan schemes and the deposit schemes, we have gone to the
local branch of the bank, which I observed as relevant to the topic of the report. The
information provided by you in your class lectures was also helpful to us.

In this report, we have tried our best to know about the different functions played by the
bank. Also we have collected information about the loan and deposit schemes of the bank.

Therefore, I hope that our report will fulfill the need to understand the functions, loan
schemes and deposit schemes of the bank. I assure you that the report is totally self-
explanatory.

We will be available anytime if you face any difficulty to translate any meaning of this
report.

Sincerely yours,

Md Nazmul Huda (070323)

Md Masrul Mollah (070314)

Acknowledgement

I would like to give thanks to those people who helped us to prepare this report and we
are very much grateful to them for their cordial assistance, helpful co-operation and
essential suggestion.

At first we would like to express deep gratitude to my honorable course teacher S M

Zahidur Rahman (assistant professor) of Business Administration Discipline, Khulna
University, for his sincere guideline and valuable remarks, thoughtful comments and
essential suggestion. He inspired us and gave us encouragement to complete this report.

We would also like to express our gratitude to the all managers and employees of the
organization, where I have gone to collect information for preparing my report. We are
really grateful to them.

All of the persons stated above played a great role by helping us to make this report a
successful one. So again, a special thanks to all of them.

IV
Table of Contents

Contents Page No.

Letter of Transmittal III
Acknowledgement IV

Summary of the report 01

Part 1: Introduction 01-04

Origin of the report 03
Purpose of the report 03
Scopes of the report 03
Limitations of making the report 03
Branch Problem 04
Shortage of Time 04
Methodology 04
Sources of collecting data 04
Methods of collecting data 04

Part 2: BASIC Bank & its functions 05-16

Background 06
Functions 06
Organizational Goals 07
Organizational Structures 07
A. Board of Directors 07
B. Management 07
Activities of the Bank 08
A. Industrial Credit 08
B. Commercial Credit 08
C. Micro Credit 08
D. Foreign Trade 09
E. Other Activities 09
Lending Criteria 09
1. Entrepreneur 09
2. Viability of the Project 10
A. Technical Viability 10
B. Commercial Viability 10
C. Financial Viability 10
D. Economic Viability 10
Resources & Capabilities 10
A. Physical and technological resources 10
B. Human Resources 11
 C. Training 11
D. Recruitment of New Officers 12
Monetary and Financial Resources 12
A. Mobilization of fund 12
1. Deposit 12
2. Borrowing 12
B. Utilization of Fund 13
Credit Facilities- BASIC Bank Limited 13
A. Working Capital 13
B. Term Loan 14
C. Trade Finance 14
Loan Categories 14
Deposits Offerings 14
Revised Interest Rates on Deposits 15

Part 3: Report Ending 17-18

Conclusion 18

Appendix 19-21
Bibliography 20
Reference 21
Summary of the Report

BASIC Bank Limited started its business in 1991 and their goal was to reach banking
system more closely to the general people. And this made this bank up to this time. Now
BASIC Bank Limited is an improved and modernized bank where the banking system has
been easier than the continuing banking system.

Basically BASIC Bank Limited performs major four types of functions – Term Loans to
Industries, Full-fledged commercial banking service, Technical Support to Small Scale
Industries (SSIs), and Micro-credit to urban poor.

BASIC Bank Limited is totally strict in its goal and for completing its objectives it has a
strong management system. It has three types of Deposit Categories and eight types of
Loan Categories.

In this report we have discussed detail about the functions and credit ratings of BASIC
Bank Limited. For this purpose we contacted with Md Anwar Hossain Rubel from
BASIC Bank Limited and we used our text books as references.

 
 Chapter 1 

Introduction 
 
 
 
 

 
ORIGIN OF THE REPORT

S M Zahidur Rahman (Assistant professor), the honorable course instructors of ‘Theory

and Practices of Banking’, assigned us to prepare a report on July 01, 2007 about the
“functions, Loan schemes and Deposit schemes of BASIC BANK LIMITED”. The date
of submission of this report is July 23, 2008.

PURPOSE OF THE REPORT:

We are very much passionate to be an executive of the coming days. So, we have to
gather more experience beside our study. We do not want to concentrate our lessons only
in classroom but to implement it in my practical life that will help me in my professional
life. The purposes of preparing of this report are-

• To relate my theoretical report writing knowledge with the practical working

experience.

• To know about the functions played by the bank.

• To know about the loan schemes and the deposit schemes of the bank.

SCOPE OF THE REPORT

We have collected data from the local branch of BASIC Bank in Khulna; we have mainly
tried to cover all the information needed to know about the functions played by the bank
as well as the various loan schemes and deposit schemes offered by the bank. The entire
interviews are taken from the Managing Directors or Managers or various upper level
officers of the bank.

LIMITIONS OF THE REPORT

Though we are lucky to get the chance to prepare this report but unfortunately we have
faced some difficulties. We tried to overcome the difficulties and gave our best effort.
When preparing this report, some difficulties we faced:

 
Branch problem

Some employees of the bank told us that they are not authorized to tell anything about the
matter. They also told that only the head office can provide information about this. So it
becomes a problem working within branch office.

Shortage of time

This extensive type of report needs too much time to prepare it. But we had to prepare
this report within a very short span of time. The managers are also very busy, so it was
hard to bring their concentration on the matter.

METHODOLOGY:

Sources of collecting data:

The report is based on data & information, which have been collected from various
sources. They are stated below:

a) Primary source
- Interview
- Search through the internet

b) Secondary sources
- Various books related with banking.

Method of collecting data:

To do this report first we have gone to the local branch of the bank. We have also
collected information about the banks past history on the internet. Then we have related
all those information with the currently studying course “Theory and Practices of
Banking”.

 
 

Chapter 2 

BASIC Bank & its

 
functions
 
 

 
Background

BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited)
registered under the Companies Act 1913 on the 2nd of August, 1988, started its
operations from the 21st of January, 1989. It is governed by the Banking Companies Act
1991. The Bank was established as the policy makers of the country felt the urgency for a
bank in the private sector for financing small scale Industries (SSIs). At the outset, the
Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares
and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The
BCC Foundation being nonfunctional following the closure of the BCCI, the Government
of Bangladesh took over 100 percent ownership of the bank on 4th June 1992. Thus the
Bank is state-owned. However, the Bank is not nationalized; it operates like a private
bank as before.

BASIC Bank Limited is unique in its objectives. It is a blend of development and

commercial banks. The Memorandum and Articles of Association of the Bank stipulate
that 50 percent of loan able funds shall be invested in small and cottage industries sector.

Functions

The Bank Offers:

a. Term loans to industries especially to small-scale enterprises.

b. Full-fledged commercial banking service including collection of deposit, short

term trade finance, working capital finance in processing and manufacturing
units and financing and facilitating international trade.

c. Technical support to Small Scale Industries (SSls) in order to enable them to

run their enterprises successfully.

d. Micro credit to the urban poor through linkage with Non- Government
Organizations (NGOs) with a view to facilitating their access to the formal
financial market for the mobilization of resources.

In order to perform the above tasks, BASIC Bank works closely with its clients, the
regulatory authorities, the shareholders (GOB), banks and other financial institutions.

6
Organizational Goals

• To employ funds for profitable purposes in various fields with special emphasis
on small scale industries.
• To undertake project promotion on identify profitable areas of investment.
• To search for newer avenues for investment and develop new products to suit such
needs.
• To establish linkage with other institutions which are engaged in financing micro-
enterprises.
• To cooperate and collaborate with institutions entrusted with the responsibility of
promoting and aiding SSI sector.

Organizational Structure

To achieve its organizational goals, the Bank conducts its operations in accordance with
the major policy guidelines laid down by the Board of Directors, the highest policy
making body. The day to day operation of the Bank is looked after by the management.

A. BOARD OF DIRECTORS

As stated earlier the Government holds 100 percent ownership of the Bank. All the
Directors of the Board are appointed by the Government of Bangladesh. The secretary of
the Ministry of Industries is the Chairman of the Bank. Other Directors of the Bank are
senior Government and central Bank executives.

The Managing Director is an ex-officio member of the Board of Directors. There are at
present 7 Directors including the Managing Director.

B. MANAGEMENT

The management is headed by the Managing Director. He is assisted by the General

Managers and Departmental Heads in the Head Office. BASIC Bank is different in
respect of hierarchical structure from other banks in that it is much more vertically
integrated as far as reporting to the Chief Executive is concerned.

The Branch Managers of the Bank report direct to the Managing Director and, for
functional purposes, to the Heads of Departments. Consequently, quick decision making
in disposal of cases is ensured.

7
Activities of the bank

A. Industrial Credit

BASIC Bank's services are directed towards the entrepreneurs in the small industries
sector. A small industry, as per Industrial policy 1999 approved by the Cabinet, has been
defined as an industrial undertaking whose total fixed investment is less than Tk.100
million.

The industrial loan reflected a significant growth of 29.85 percent over the previous
year. Total outstanding industrial loans including term and working capital stood
at Taka 9,987.50 million at the end of 2005 compared to Taka 7,691.20 million of 2004.
Total outstanding term loan stood at Taka 3,517.85 million as on December 31,
2005 compared to Taka 2,553.26 million in 2004 reflecting a growth of 37.78
percent. The outstanding working capital finance extended to industrial units stood at
Taka 6,469.71 million at the end of the reporting period compared to Taka 5,137.95
million in 2004. Growth rate here was 25.92 percent. BASIC Bank's services are
specially directed towards promotion and development of small industries. Its exposure
to small and medium industries sector accounted for 51.70 percent of the total loans
and advances. During the year total of 175 projects were sanctioned term loan. Out of
which 109 were new and the rest were under BMRE of the existing projects. As on 31
December, 569 projects were in the portfolio of the bank. The textile sector including
garments being one of the major contributors to national economy dominated the loan
portfolio of the Bank. Other sectors financed include engineering; food and allied
industries; chemicals, pharmaceuticals and allied industries; paper, board, printing and
packaging; glass; ceramic; and other non-metallic goods and jute products. Recovery rate
of project loan was 89 percent.

B. Commercial Credit

The Bank also supports development of trade, business and other commercial activities in
the country. It covers the full range of services to the exporters and importers extending
various facilities such as cash credit, export cash credit, packing credit, short term loans,
local and foreign bills purchase facilities. As on December 31, 2005 total outstanding
commercial loans stood at Taka 5,013.55 million compared to Taka 4,024.70 million in
2004.

C. Micro Credit

BASIC Bank launched a Micro Credit Scheme in 1994. Micro Credit Scheme provides
for the poor for generation of employment and income on a sustainable basis particularly
in urban and suburban areas. The Bank follows three systems of credit delivery.

8
These are-

1. Lending to the NGOs who on-lend to their members. At present there are 15
such NGOs.

2. Lending direct to the targets groups or ultimate borrowers under the Bank’s
own management.

3. Lending direct to the member-borrowers and NGOs providing nonfinancial

services like group formation and monitoring and supervision on exchange for
a supervision fee.

At the end of 2005, total amount of Taka 338.30 million remained outstanding as against
Taka 284.10 million in 2004. Recovery rate during this period remained at a satisfactory
level of 100.00 percent.

D. Foreign Trade

The bank achieved substantial growth in export in 2005 and the performance of the bank
in import business was also satisfactory. The Bank handled total export business of Taka
11,097.23 million and import business of Taka 14,094.96 million in 2005. The export and
import business grew by 40.33 percent and 12.69 percent respectively. Major items of
exports were garments, jute products, textile, leather etc. Items of import included
mainly industrial raw materials, garments accessories, capital machinery, food items and
other essential commodities.

The Bank became a proud member of SWIFT (Society for Worldwide Interbank
Financial Telecommunication) that would pave the way to achieving uninterrupted
communication related to banking for international trade, business and fund transfer.

E. Other Activities

The Bank provides services for remittance, underwriting, guarantee, public offering of
shares etc. The bank also provides funds to investment and leasing companies. The Bank
has recently created a venture capital fund for equity support to innovative but risky
projects.

Lending Criteria

1. Entrepreneur
Entrepreneur / promoter has to be creditworthy and competent enough to run the
proposed industry.

9
2. Viability of the project
The project should be viable from organizational, technical, commercial, financial and
economic points of view.

A. Technical Viability

• The project should be technically sound and environment-friendly.

• Technology transfer in case of borrowed know-how ought to be ensured.
• Building should be well planned and well constructed.

B. Commercial Viability

• Market prospect and potential for the product has to be fully assured at
competitive prices.
• Marketing channel for the product should be accessible to the entrepreneur.

C. Financial Viability

• There should be reasonable debt equity ratio as determined by the Bank on

individual case basis.
• Debt service coverage ratio should be at least 2.5 times at the optimum level of
production.
• IRR should preferably be not less than 20 percent.

D. Economic Viability

The project should ensure benefit to the national economy and create sufficient
employment opportunity and be environment friendly.

Resources & Capabilities

BASIC Bank Limited is well prepared to and capable of meeting the demand for a broad
range of banking services. It has got adequate resources, both human and physical, to
provide the customers with the best possible services.

A. Physical and technological resources

A great deal of investment for developing the physical resource base of the Bank has been
made. The Bank has its presence in all the major industrial and commercial hubs
of Bangladesh in order to cater to the needs of industry and trade. At present, there
are twenty-seven conveniently located branches throughout Bangladesh. There

10
are ten branches in the capital city of Dhaka, six in Chittagong and one each in
Narayanganj, Narsingdi, Rajshahi, Saidpur, Bogra, Khulna, Jessore, Sylhet, Moulvibazar,
Comilla, and Barisal.

Major features of these branches are:

• Fully computerized accounts maintenance.

• Well decorated air conditioned facilities.
• A fully operational computer network which is currently being implemented.
The work of Local Area Network (LAN) and Wide Area Network (WAN)
installation having reliable and secured communication between the branches
and the Head Office is in progress to facilitate any Branch Banking and ATM
Services.
• Money counting machine for making cash transactions easy and prompt.

Fifteen out of twenty six branches are authorized dealers of foreign exchange. This
facilitates speedy disposal of transaction of export and import trade.

B. Human resources

BASIC Bank Limited has a well diversified pool of human resources which is composed
of people with high academic background. Also, there is a positive demographic
characteristic - most employees are comparatively young in age yet mature in experience.
As of December 2003 the total employee strength is 523. The strength is 435 excluding
the menial staff. BASIC Bank Limited has been investing its resources with a view to
developing an efficient and professional work force. Two approaches are mainly used in
this regard.

Data Of Human Resources

Category Level Of Education Age
Employees
Support Post Under Below Above
. Management Graduate
Staff Graduate Graduate 40 40
Number 66 369 325 115 95 509 26
% 12.62 70.55 62.14 21.99 18.16 97.32 4.97

C. Training

Intensive training program, on a regular basis is being imparted to employees of both

management and non-management levels to meet the challenges in the banking industry
and to help employees adapt to changes and new working conditions. During the year
2003, a total of 164 employees of the Bank were provided with training in various fields.
Out of them 6 employees participated in training courses abroad.

11
D. Recruitment of New Officers

The Bank follows a strict recruitment policy in order to ensure that only the best people
are recruited. The Bank, so far, has recruited four batches of entry-level management
staff, all of whom have excellent academic background.

Monetary & Financial Resources

Like any other financial intermediaries, BASIC Bank Limited is no exception in

performing its core functions viz. Mobilization of fund and utilizing such mobilized fund
for profitable purposes.

A. Mobilization of fund

The main sources of fund for the Bank are:

1. Deposit, and
2. Borrowing

1. Deposit
Deposit is the mainstay of the Bank's sources of funds. Following usual
practices, it collects deposit through:

A. Current Deposit
B. Savings Deposit
C. Term Deposit

2. Borrowing
Apart from deposit, BASIC Bank Limited received funds from:

A. Bangladesh Bank
B. Asian Development Bank (ADB)
C. KfW (kreditanstalt fur Wieder-aufbau Credit Institution for
Reconstruction), a German development bank. All of these funding
sources are for relatively longer period. Receiving the credit lines from
ADB and KfW has been a recognizing of the Bank's highly satisfactory
performance.

12
B. Utilization of Fund

BASIC Bank Limited utilizes its funds in accordance with its organizational goals and
corporate strategy. Main use is for lending to industrial and trade sectors. Maintenance of
cash and statutory liquidity reserve with the Bangladesh Bank covers 20 percent of
demand and time liabilities. Placement of funds in Nostro Accounts to handle foreign
trade and investment in money market is also done as usual.

Credit Facilities- BASIC Bank Limited

Credit Facilities offered to various industries by BASIC Bank Limited

A. Working Capital

Secured Overdraft (SOD), Cash Credit (Hypothecation) [CC(H)]

13
 B. Term Loan

Term Loan (T/L), Short Term Loan (STL)

C. Trade Finance

Letter of Credit (L/C), Back-to-Back Letter of Credit (B/B L/C), Export

Cash Credit (ECC), Packing Credit (PC), Local Bill Purchase (LBP),
Foreign Bill Purchase (FBP), Payment against Documents (PAD), Loan
against Imported Merchandise (LIM), Loan against Trust Receipt (LTR)

Credit Facilities Interest rate Recovery rate

a) Working Capital :
Secured Overdraft (SOD) 9% - 12% p.a.
Cash Credit (Hypothecation) [CC(H)] 10% - 12% p.a.
b) Term Loan:
Term Loan (T/L) 9% - 11% p.a. 88%
Short Term Loan (STL) 9% - 12% p.a.
c) Trade Finance:
Export Cash Credit (ECC) 7% p.a.
Packing Credit (PC) 7% p.a.
Payment against Documents (PAD) 10 - 12% p.a.
Loan against Imported Merchandise (LIM) 10 - 12% p.a.
Loan against Trust Receipt (LTR) 10 - 12% p.a.

Loans Categories:

01. Term Loan

02. CC (Hypothecation)
03. CC (Pledge)
04. Loan General
05. LIM
06. LTR
07. L/C
08. Bank Guarantee

Deposits Offerings:

01. Saving Accounts

02. Short Term Deposit
03. Term Deposit

14
Revised Interest rates on Deposit

Category Interest Rate

Savings 06.00%
STD 04.00%

Fixed Deposit
3 Months 07.00%
6 Months 07.25%
1 Year 07.75%
2 Year and above 08.00%

1. Agriculture :

a. Primary Products 10.00%

2. Industrial Term Lending :

a. Agro based industries 11.50%

b. Micro industries with project cost up to Tk 50.00 lac 11.50%
c. Other small Scale Industries 12.50%
d. Medium Scale Industries 13.00%
e. Large scale industries 13.50%
f. Credit to NBFI for small and medium scale industries 14.00%

3. Working capital (Industrial) :

a. Agro based industries 12.00%

b. Micro industries with project cost upto Tk 50.00 lac 13.00%
c. Other small Scale Industries 13.50%
d. Medium Scale Industries 14.00%
e. Large Scale industries 14.50%
f. Credit to NBFI for small and medium scale industries 14.50%

4. Export :

15
a. Export (Direct)
(i) PC 07.00%
(ii) ECC 07.00%
b. Advance against inland documentary bills accepted by banks
(i) Payment in foreign currency 12.00%
(ii) Payment in local currency 14.00%

5. Commercial lending

(a) Small Enterprise 15.00%

(b) Medium Enterprise 15.00%
(c) Large Enterprise 15.00%
(d) Trade financing(import financing)/other short term and demand 15.00%
loan

6. OD against

6(a). Bank's own fixed deposit 2.00% above FDR rate

6(b) Other Bank's fixed deposit receipt 15.00%
6(c) Govt Bonds and securities 13.00%
6(d) Unit Certificate/Share 14.00%

7. Consumer Finance

(a). House Loan 15.00%

(b) Transport loan 15.00%
(d) Others 15.00%

8. Wholesale finance to NGOs/NBFI etc for Micro credit and 11.50%

other special programs

16
 Chapter 3

Report Ending
Conclusion

BASIC Bank was established as the policy makers of the country felt the urgency for a
bank in the private sector for financing small scale Industries (SSIs). BASIC Bank
Limited is unique in its objectives. It is a blend of development and commercial banks.
The Memorandum and Articles of Association of the Bank stipulate that 50 percent
of loan able funds shall be invested in small and cottage industries sector.

BASIC Bank's services are directed towards the entrepreneurs in the small industries
sector. A small industry, as per Industrial policy 1999 approved by the Cabinet, has been
defined as an industrial undertaking whose total fixed investment is less than Tk.100
million.
The Bank also supports development of trade, business and other commercial activities in
the country. It covers the full range of services to the exporters and importers extending
various facilities such as cash credit, export cash credit, packing credit, short term loans,
local and foreign bills purchase facilities.

BASIC Bank launched a Micro Credit Scheme in 1994. Micro Credit Scheme provides
for the poor for generation of employment and income on a sustainable basis particularly
in urban and suburban areas.

The bank also provides funds to investment and leasing companies. The Bank has
recently created a venture capital fund for equity support to innovative but risky projects.

18

 
 Appendix 
 
 
 
 
 

   

 
Bibliography

1. Commercial Bank Management

- Peter S. Rose
2. Business of Banking
- Dr. R. M. Debnath

20

 
Reference

Md Anwar Hossain Rubel

Deputy Manager
International Division
Basic Bank Limited
Head Office
Sena Kalyan Bhaban (7th Floor)
195, Motijheel Commercial Area
Dhaka- 1000
Mob- 01714-048530
E-mail- rubeliba@yahoo.com

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