15940 Nasar Hassan Khan

8/6/2019 15940 Nasar Hassan Khan

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Utilising a Cluster Based

Nasar Hassan KhanPresently: Head of Retail Credit Risk, HSBC BangladeshFormerly: Head of SME Banking, Dhaka Bank Ltd.


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Bangladesh Economy : At a glanceForeignReal GDP Contribution to GDP Annual ExchangePer Capita

grcu ure n usry

ervce

USD Billion % USD % % % % USD Billion BDT/USD USD BillionFY 05 61.00 6.49 463.00 6.00 22.30 28.30 49.40 7.80 61.40 3.85FY 06 65.00 7.16 476.00 6.60 21.80 29.00 49.20 8.40 67.10 4.80

RemittanceGrowth Budget RateGDP Inflation Inome

. . . . . . .FY 08 84.00 9.94 599.00 6.20 11.50 68.52 7.91FY 09 92.00 6.66 5.90 19.10 28.60 52.30 14.50 69.00 9.69

FY 10 proj 16.50

DSE MktCapitalization

DSE MktCap/GDP

Deposit inBankingIndustry

Deposit /GDP Import

FX Reservein Central

Bank

FXReserve /

Import Export RMG Export(Exp + Remit) /

IMP

USD Billion % USD Billion % USD Billion USD Billion Months USD Billion USD Billion Times

. . . . . .FY 06 4.70 7.20 25.00 38.00 3.50 10.50FY 07 10.92 14.80 5.10 12.20FY 08 15.34 18.30 36.00 43.00 21.63 6.20 3.40 14.10 10.70 1.02FY 09 19.00 20.90 43.00 47.00 22.50 7.50 4.00 15.50 12.36 1.12

FY 10 proj 12.50


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Market Evolutionoesae

Banking

e un- an e

majority

e a

Banking

Growth throughability to generate

Off-the-shelf

Growth throughability to address

increasingly

Resulting in

Wholesale Banking The Underserved Middle Retail Banking


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The Underserved Middle

Wholesale Banking The Underserved Middle Retail Banking

Came to be branded as the SME market.In reality,

Is actually a spectrum of small enterprise markets anges rom e very sma o e a r y arge

Each range having its own unique requirements


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Opportunity Recognitione an opene a ranc n a

district famous for textiles weaving. e weavers were prov e w

power looms through lease finance. e regu ar repayment ea to

greater involvement and inclusion of w rThe learning from this cluster finance

was a op e as a us ness mo e


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Clusters worked with

Madhabdi Grey Cloth

Joypara (Dohar) Inland water transportbuildingRongpur agroprocessing & preservationKonabari Cluster intervention tech upgrade

eran gon - re a ngCoxs Bazaar tourism, lobster hatchery,


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SMEs Require

Working capitalCa ital machiner

styleSim le

finance

Business expansion

standardized terms

& conditions

Short term & festival working

Flexible repaymentstructure - matched

cap a oans o cas ow


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SMEs are Unique s causes s ra eg es a me a s

segment to become complicated and

banking characteristic of wholesale and

the ortfolio mana ement structure of Retail, to cater to SME niches?


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The Challenge o eve op a non- ransac ona

relationship-based approach thatcan e app e across a arge enougsegment of the market.

sustainable


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One possible solution is the

Wholesale Retail

BenchmarkMAP

PING


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The Business ModelApplications

sourced from withinthe cluster

Head of SME

Branch or SME Centre Loan Factory

Complete Centralized Disbursement

Risk Management Operations Collections

Recovery

pp cat ons Processing Monitoring &Follow-up

MIS


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What is a Cluster?

that are similar in terms of their

Stage of productionTechnology andBusiness volumes

And are located within geographicconfines such that in many respects,they are like a single enterprise.


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A Cluster is Characterized by:arge num er o s m ar en erpr ses

Substitutable goods/servicesSelling to the same markets

Almost identical susceptibility tochanges in economic variables


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The Cluster Based Approach e c us er ase approac requ res:

A Cluster, preferably offering a mix of ,

Products that address all three targets

drive these product portfolios


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Secondary Targets e a e us nesses yp ca y engage

in e prov s on o suppor serv ces

The supply of inputs.

Generate about 80% of the trading

40% of the production.


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Tertiary Targets us nesses unre a e o e ma n

business line of the cluster, but

community in general.

total production/ traded volumes u r r ,

restaurants, bakery & food shops,

.


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The Business Model

sourced from withinthe cluster Head of SME


Complete Centralized Disbursement Recovery

Applications Processing on or ngFollow-up MIS


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Role of Branch / SME Centre

located within the geographic location

Keep tabs on the vital signs of thecluster

Periodic reporting of client specific & overallmarket data

source a lications from otential clientsEvaluate the standing of the individualclient and recommend for facilities with


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The Business Model






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The Loan Factory

which works towards

intelligence gathered

Providing guidelines and checklists onw a cons u es a comp e e app ca onProviding approvals and documenting

Collaborating with the Branch/Centre infacilitating collections.


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The Loan Factory e oan ac ory as e requ re

capabilities to process large numbers

specific requirements of each cluster.

wholesale and retail components.


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Head of SME a n y respons e or s ra egy:

Choosing a cluster va ua ng e c us er o ocumen s

potential

cluster

Determinin roduct a ro riatenessand making necessary changes to creditpolicies in order to accommodate any

spec a requ remen s.


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Product Requisites ro uc s a me a c us ers

Must apply across multiple clusters,

within accepted ranges.

within clusters


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Products e pro uc m x s ou a ow or

different repayment structures and

Periodic interest repayments with

Monthly Instalments

Partial / Bullet / Balloon repayments


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Pricing s ase pr c ng

ROI increased through collection of Upfront fees

ChargesMarginsAdvance payments

epos s


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The Business Model






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Assessing loans from a cluster o ec ve y, e c us er e aves

much like a single large entity. ssessmen ere ore requ res:

The clusters future viability enc mar ng o t e typ ca n v ua

within the cluster

,cluster, by comparing with theBenchmark


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The clusters future viability

Sources of inputs

inputs transportation cost, timing of

purchase, seasonality of availability or

Means of inbound transport and

alternatives (water, road and/or air)Inventory and management of inputs


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The clusters future viability pera ona ssues:

The level of technology and its future

Storage and handling issues

Availaility and cost of labour


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The clusters future viability ren s n uyer s e av our

Reliance on the clusters products/services

choice

Substitutability


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Creating Benchmarks mp e ver a e parame ers

Identification a ue se ng

And testing


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Present standing of the typical

individual within the cluster rov es npu s n o e

Operating cash cycle (instalments,

ROI, ROE, debt structure ,

conclude on overall financial viability of

individuals within the cluster


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Weaknesses / Disadvantages of

the model g re ance on e s eve

available at Branch e re a ons p e emen narrows

down to one or two Relationshipturnover

Documents

15940 Nasar Hassan Khan