Security documentation against SME loan and its loan process of BRAC Bank Limited

Abstract

BRAC Bank Limited is a scheduled Commercial Bank in Bangladesh. It established in Bangladesh under the Banking Companies Act, 1991 and incorporated as Private Limited Company on May 20, 1999 under the Companies Act, 1994. Its operation started on July 4, 2001 with a vision to be the market leader through providing all sorts of support to people in term of promoting corporate and small entrepreneurs and individuals all over the Bangladesh. SME loan is a way of providing help to developing country like Bangladesh. The Small and Medium Enterprises worldwide are recognized as engines of economic growth. BRAC Bank‟s SME Banking cuts across small, medium and emerging business segments with customized solutions. Today it has been considered as the engine of country‟s economy. SME Loan is provided to Microenterprises, Small enterprises and medium enterprises. For getting SME loan, proper documents are needed. Basic charge documents are, sanction Letter, demand Promissory Note (DP Note), letter of Continuity, letter of Arrangement, general Loan Agreement, letter of Disbursement, letter of Undertaking, letter of Hypothecation of Goods & Stocks and Book Debt and Receivable. When all the documents are properly been checked then disbursement of loan takes place. Disbursement procedure requires 2 steps, pre-disbursement procedure and post disbursement procedure. In short, this is the SME loan process, first the documents are checked then loan is disbursed after all the legal formalities. After gathering all the information of SME loan, I tried to find out some steps could be initiated by BRAC Bank in order to overcome existing weakness. Lowering interest rate, more effective loan approval system, strong monitoring activities, and entrepreneurs meeting arrangement could improve BRAC bank‟s performance. It is a great pleasure for me to have practical exposure in BRAC Bank Limited because without practical exposure it couldn‟t be possible for me to compare the theory with practice and it is well establish that theory without practice is blind.