1. Financial Services to Enable SME Growth Syed Mahbubur Rahman Managing Director & CEO perspective

2. BRAC Bank – Beginning of the Journey Small and Medium size Enterprises (SMEs) in Bangladesh did not have access to banks and financial institutions like the big multinational & local corporates. But SMEs have a significant role in employment generation, poverty alleviation and overall economic growth, especially for a developing economy like that of Bangladesh’s. Not Served by Banks & beyond Limit of MFIs Multinational & Local Corporates Micro Business Small & Medium Enterprises Served by all Public & Private Commercial Banks Served by MFIs Missing Middle To serve the “Missing Middle” and to work as a catalyst for the vibrant yet unbanked SME sector of Bangladesh, our Chairperson, Sir Fazle Hasn Abed founded BRAC Bank in 2001 with institutional shareholding of BRAC, ShoreBank & IFC.

3. BRAC Bank – Philosophy in SME Banking Differentiating factors – Triple Bottom Line – People, Planet & Profit Fund Flow Strategy - Raise deposits through Corporate & Consumer Banking business in urban area and lend the fund to SMEs across the country Focus on Financial Inclusiveness – Bring more population under formal financial umbrella by expanding the reach of formal financial services in semi- urban & rural area Empower Women Entrepreneurs - Special assistance/training & preferential rates are provided for women entrepreneurs. Dedicated Women Entrepreneur Cell to serve the women entrepreneurs. Focus on serving SMEs - Maintain 50% of total Bank’s portfolio in SME Banking to ensure the focus & commitment towards SMEs Serve SMEs -The SMEs do not maintain financial record properly. Our loan officers helps them to prepare their financials and also train them on proper financial record keeping.

4. Country’s Largest Collateral free Small Business Portfolio Source:Bangladesh Bank and Regulatory Reporting, BRAC Bank Without Collateral SME Loan Portfolio as of March ‘15 Financial Sector USD 1,131m Banking Industry USD 981m BRAC Bank USD 385m BRAC Bank Share Financial Sector34.04% Banking Industry39.24%

5. BRAC Bank’s unique Small Business Model Sourcing of Customers Initial Evaluation (Screening) Credit Risk Analysis Document Check & Disburse Servicing (Collection) The Loan Officer is responsible for collections up to 180DPD Special Asset Management (SAM) team takes over from 180DPD Checks all documents Informs doc deficiencies (if any) to SME Business. Disburse the loan if found OK. Area Credit Managers visit the customer & do a full analysis of all credit credentials & Gives credit decision based on the same day. SME Business completes loan file preparation & all documentations Customers selected by Loan Officer/CRO’s Gathers business data with the help of the customer. Provides basic due diligence data to Area Credit Manager Area Credit Manager does an initial review based on due diligence data & plans visit if positive. Area Managers visit the new customers. SME Business ACM OPS Loan Officer/CRO Decentralized Credit Approval Model enables to provide faster credit decisions & Reduce TAT (Turn Around Time) maintaining proper segregation of duties. Approver physically visits each and every proposal which ensures quality selection. Equal priority is given on Business Growth & Collection AM & ACM SME Business Special Asset Mgmt SME Business

6. Poverty Reduction through “Creation of Jobs” Till date BRAC Bank as created around 1.5 million new employments through it’s Small Business lending in various sectors (Trading, Manufacturing, Agriculture, Service, etc.) BRAC bank commenced 1st Impact Measurement Study with an objective to validate indicators and track performance of their SME loan where Employment Creation of both Male & Female employees were measured. The result is – Economic Sub- indicator Specific measurement indicators First Study Treated (N=286) Control (N=134) t- test % of change over control Employment creation Number of full time male employees 2.261.623.2771.68 Number of full time female employees 0.310.290.2393.55 Male employment increased by 72% Female employment increased by 93% It was also found that - Manufacturing sector employs three times more employees than trading & agricultural sector. Highest number of women are employed by manufacturing sector & trading sector employs the least number of women

7. BRAC Bank - 14 years of unshakable trust on potential SMEs… Evolved as Country’s largest SME Bank (for unsecured SME loans) We lead the way – First SME Bank of the Country who took formal financial services to the doorstep of SMEs First commercial bank to provide collateral free loans to SMEs Proven the financial industry that lending in the SME Segment can be profitable 472 SME Unit Offices 165 Branches & SME Service Centers 422 ATMs Customer Touch Points Total SME Staff2,500 CRO/Loan Officers1,500 SME portfolio: US$ 600m Customers: 124,000 Disbursed : US$ 4,100m Customer served : 501,000 Unsecured:91% Since Inception Number of Staff Portfolio

8. Realizing Dreams of Small Business Entrepreneurs… ONE TRUSTED PARTNER

9. Key Priorities – Small Business

10. Thank You