Chapter 1

Introduction

1
This report named “SME Banking of Agrani Bank Limited” has been made as a part of my
internship at Agrani Bank Limited (ABL). The report includes my work experiences at Uttara
Branch of ABL as an intern.

1.1 Origin of the Study

In this day and age, training is the basic apparatus for understanding this present reality and
applying information for improvement of the general public and also in Business Sector. From
the training session the hypothetical learning is gotten from different courses all through the
projects, which is just the most of the way of the topic. Down to earth information has no option.
The ideal coordination amongst hypothesis and practice is of foremost significance with regards
to present day business graduates to get 10 to 12 weeks down to earth understanding, which is
known as "Entry level position Program". As an understudy of BBA, University of Information
Technology and Sciences, each understudy needs to lead a handy introduction, entry level
position on any association for satisfying the prerequisites of the BBA program. The primary
motivation behind the program is to know this present reality circumstance and to get a look at
the corporate culture. In such manner, I have the chance to present the report from my experience
while acting as a Trainee in Agrani Bank Ltd. Just hypothetical learning with no reasonable
experience makes a man sterile. Then again a man having functional experience however no
hypothetical presentation keeps him dazzle. The temporary position program is intended to
conquer such sterility. This program allows to satisfy the hypothetical information that is gained
from class addresses, books, diaries and so on in the pragmatic settings. Here, I got a chance to
understand the pertinence and value of the classroom learning and everyday operational
involvement in ABL Corporate Banking and SME Banking.

1.2 Background of the Report:

The entry level position program is itself an endeavor to give graduates an introduction to a
genuine circumstance in which they can watch and assess the utilization and relevance of
hypothetical ideas which were educated in the classroom. According to standard, this report is the
prerequisite of satisfaction of the temporary job program and in addition of BBA program. This
temporary job investigate AGRANI Bank Limited is set up to satisfy the incomplete prerequisite
of the entry level position program as full credit subject of the BBA program of The University.

AGRANI Bank give all conventional Banking business including the extensive variety of reserve
funds and credit conspire items, retail saving money and auxiliary administrations with the help
of present day innovation and expert Excellency.

The aim of this paper is to look at the part of banks especially the state possessed and
concentrated banks in advancing ladies business enterprise in Bangladesh. Ladies constitute half
of the aggregate populace in Bangladesh. Dominant part of them are either kept to the family
exercises or formed by expanding neediness that powers them to stay isolates from the pay
producing exercises. Without the cooperation of ladies in the improvement procedure practical
financial changes can't be seen as supportable. Consequently, acquiring ladies the standard of
monetary advancement has now turned into a noteworthy worry for the arrangement creators in
both created and creating nations.

2
In Bangladesh, AGRANI banks are assuming an essential part in giving cash-flow to fire up and
furthermore grow the current business of SME ladies enterprise in the nation. It uncovered from
the investigation that ladies could assume a key part in the financial Like many created and
creating nations

1.3 Objectives of the Study

This study has some desired objectives in order to make it fruitful and effective in terms of knowledge,
expertise and skills. Following are the objectives:

Broad Objectives:
 To be get adjusted with the professional environment.
 To be able to compare between theory and practice in reality would imply a translation of
theory to practical.
 To write and submit an internship report & complete the graduation successfully.

Specific Objectives:
 To sketch out the overview of Agrani Bank Limited to know SME loan lending activities.
 To find out basic appraisal of SME loan.
 To know the enterprise selection criteria to provide SME loan.
 To know the terms and conditions of SME loans.
 To know the disbursement and recovery procedures of SME loans.
 To examine the SME Banking policy guidelines of Bangladesh Bank.
 To know SME loan and its process of recovery.
 To describe the small credit loan for women entrepreneur under SME service process of
AGRANI Bank Limited.
 To make necessary recommendation for the internship organization to improve the
services.

1.4 Selection of the topic:

The topic selected for the study was assigned by me with the help of my supervisor. Then I
communicated with ABL’s officials about the topic and the way they can help me by providing the
related information. Finally I have selected this topic named “ A study on SME Banking of ABL, Uttara
branch.”

1.5 Methodology of the Study

Methodology is the vital part of a report design. It is the heart of any report. It includes data
collection methods, study area method of data analysis etc. This chapter presents the qualitative
methodology that was followed to conduct this report.
The following methodologies were followed for the study:

1.5.1 Sources of Data

For preparing this report all information has been gathered both from primary and secondary sources.
They are in order to make the report more meaningful, presentable, a complete one and to meet the
goal of this report different data and information are required. Those data and information were
collected from various sources, such as, primary and secondary which is showed below:

3
Primary Sources:
 Practical desk work.
 Face to face conversation with the officers and employees.
 Face-to-face conversation with the respective officers and staffs of the AGRANI Bank
Uttara Branch and clients.
 Facing some practical situation related with the day to day banking activities.
Secondary Sources:
 Different circulars issued by the Head Office and Bangladesh Bank.
 Bank. Various journals, bank records, manuals etc.
 Annual Report of AGRANI Bank Bangladesh Limited.
 File study.
 Different, Procedure Manual ‟published by AGRANI Bank Brochures.
 Bangladesh Bank Annual report.
 Newspapers.
Sampling method:
Random sampling method was used. Sample was collected from the customers who regularly or
frequently visit the branch office to take services provided by bank.

Sample size:
Sample size is 35. From these 35 customers 80% are male and 20% are female respondent.

1.6 Classification, analysis, interpretation and presentation of data: To classify,

analyse, interpret and presentation of data I have used statistical tools to get the actual result of my
research. I have tried my level best to present in a proper way. I have used some procedure to analyse the
information regarding to the topic properly.

1.7Findings of the study:

After scrutinizing the data, problems of the study are pointed out and they are shown
under concerned heads. Recommendations are suggested thereafter to overcome the
problems.
1.8 Final report preparation:
On the basis of the suggestions of our honourable course teacher some deductions and
additions are made and final report is prepared thereafter.
1.9 Scope of Report
As I was sent to AGRANI Bank Ltd. Uttara Branch, the scope of the study is only limited to this branch.
Still this is operating mostly in a traditionalThe report covers its overall department wise function,
structure and performance. The report also covers details about AGRANI Bank Ltd. Uttara Brach. This
4
study will give a clear idea about the SME,SME Loan loan for entrepreneur and also others non-sme
loan terms of ABL. Uttara branch as well as the different section of different products and
services of AGRANI Bank Uttara Branch Ltd.

1.10 Limitations of the study:

The present study was not out of limitations. But as an intern it was a great opportunity for me to
know the banking activities of Bangladesh specially AGRANI Bank ltd. Some limitations are
given bellow:
 Three months’ time is not enough for such an extensive study. It is very difficult to
collect all the required information in such a short period.
 Every organization has their own secrecy that is not revealed to others. While
collecting data i.e. interviewing the employees, they did not disclose much information
for the sake of the confidentiality of the organization.
 As a government organization,this also maintain privacy about their operations and
maintain security to use their computers.So that the interns can’t earn direct experience
about the banking operations.
 Since the bank personnel’s were very busy, they could provide me very little time.
 Another problem is that creates a lot of confusions regarding verification of data. In some
cases more than one person were interviewed to clarify each concept as many of the
bankers failed to provide clear-cut idea about the job they perform.
 The clients were too busy to provide me much time for interview.
 In case of performance analysis secondary data are used.
 This is my first experience on job, so there may arise some faults though I have tried my
level best.

5
 Chapter 2
Organizational Part

6
2.1 Bank Information:
AGRANI Bank Limited, a leading commercial bank with 910 outlets strategically located in
almost all the commercial areas throughout Bangladesh, overseas Exchange Houses and
hundreds of overseas Correspondents, came into being as a Public Limited Company on May
17, 2007 with a view to take over the business, assets, liabilities, rights and obligations of the
AGRANI Bank which emerged as a nationalized commercial bank in 1972 immediately after
the emergence of Bangladesh as an independent state. AGRANI Bank Limited started
functioning as a going concern basis through a Vendors Agreement signed between the
ministry of finance, Government of the People's Republic of Bangladesh on behalf of the
former AGRANI Bank and the Board of Directors of AGRANI Bank Limited on November
15, 2007 with retrospective effect from 01 July, 2007.

AGRANI Bank Limited is governed by a Board of Directors consisting of 13 (thirteen)

members headed by a Chairman. The Bank is headed by the Managing Director & Chief
Executive Officer; Managing Director is assisted by Deputy Managing Directors and General
Managers. The bank has 11 Circle offices, 29 Divisions in head office, 62 zonal offices and
910 branches including 27 corporate and 40 AD (authorized dealer) branches.
2.2 Historical Background of AGRANI Bank:

AGRANI Bank (Bengali: অগ্রণী ব্যাংক) is a state-owned commercial bank of Bangladesh established
in 1972. Its headquarters is situated at Motijheel in Dhaka, the capital city of Bangladesh.
It started functioning as nationalized commercial bank taking over assets and liabilities of the
erstwhile Habib Bank ltd and commerce Bank ltd. are functioning in the East Pakistan. It has
been privatized on 15 November 2007 and emerged as AGRANI Bank Limited (ABL) taking
over assets, liability and goodwill of AGRANI Bank.The authorized capital of the Bank is Tk.
8 billion.
AGRANI Bank Limited provides commercial banking services. The company also offers lending
services to agriculture, fisheries, retail/wholesale trade, hotels and restaurants,
transport/communication, storage, insurance, real estate, and trade services markets. In addition,
it engages in remittance business. The company has subsidiaries in Singapore and Malaysia.
AGRANI Bank Limited was founded in 1972 and is based in Dhaka, Bangladesh.
2.2.1 Corporate Logo

2.2.3 Corporate Slogan

Committed to serve the nation

2.3 Corporate Profile of Agrani Bank Limited at a glance:

7
AGRANI Bank Limited (ABL) was incorporated as a State Owned Commercial Bank on 17
May 2007 under the Companies Act 1994.Agrani Bank emerged as a Nationalized Commercial
Bank following the Bangladesh Banks (Nationalization) Order 1972 vice-president’s Order No.
26 of 1972. On a going concern basis ABL took over the business, assets, liabilities, rights and
obligations of AGRANI Bank through a vendor’s agreement signed on 15 November 2007
between the Ministry of Finance of the People’s Republic of Bangladesh & the Board of
Directors of ABL with retrospective effect from 1 July 2007.

Legal Status Public Limited Company

100 percent share owned by
Shareholding Patern Government of the People’s
Republic of Bangladesh
Chairman KhondokerBazlulHoque, PhD
Managing Director &
Syed Abdul Hamid, PhD, FCA
CEO
Company Secretary Badal Chandra Dey
(1 crore is
9/D Dilkusha, Dhaka 1000,
Registered Office equal to 10
Bangladesh
million)
Tk.
Authorised Capital Total Deposits 34,867.52
Tk. 2,500.00 Crore Crore
Tk.
Loans &
Paid up Capital 20,296.54
Advances
Tk. 2,072.29 Crore Crore
Tk. 3,564
Operating Profit Total Equity
Tk. 1,063.93 Crore Crore
Vat Registration
Tax Identification No. 19011031730
22001223 No.
14,005 (officer 10,458, staff
Employee Branch 899
3,547)
Circle Office 11 Zonal Office 62
Authorised Dealer Corporate
27
Branch 40 Branch
Foreign
Number of Exchanges 396
56 Correspondent
By CRISL (Rating Date: 7
October 2013) Long Term Short Term
Entity Rating 2012 (as Govt.
Credit Rating Guaranteed Bank) AAA ST- 1
Surveillance Rating 2012 (Stand
Alone Basis) BBB ST- 3
Surveillance Rating 2013 (Stand A+ ST- 2
8
 Alone Basis)
Outlook Stable
Subsidiary Companies AGRANI Equity & Investment Limited
in Bangladesh AGRANI SME Financing Company Limited
AGRANI Exchange House Private Limited, Singapore (4 branches)
Subsidiary Companies AGRANI Remittance House Sdn. Bhd., Malaysia (4 branches)
in Overseas AGRANI Exchange Company (Australia) Pty. Limited
AGRANI Remittance House Canada Inc.
Phone +88-02-9566153-4, +88-02-9566160-9, +88-02-9566074-5
Fax +88-02-9562346, +88-02-9563662, +88-02-9563658
SWIFT Code AGBKBDDH
E-mail agrani@agranibank.org, info@agranibank.org
Website www.agranibank.org
MD’s E-mail mdagrani@agranibank.org

2.4 Number of Branches, Zone and Offices of AGRANI Bank Limited:

Total branch : 921

Urban branch : 457

Rural branch : 464

Corporate branch : 27

Zonal Office : 62

Online computerized branch : 309

LAN Based computerized branch : 610

Single Computerized branch : 02

Authorized Dealer : 40

Circle : 11

Head office divisions : 34

Subsidiary Company : 6

9
 ATM Booth : 1150

Islami windows : 5

Tabe 1: Number of Branches, Zone & Offices

2.5 Vision of AGRANI Bank:

To become the best leading state owned commercial bank of Bangladesh operating at
international level of efficiency, Quality, sound management, excellent customer service and
strong liquidity.

2.6 Mission of AGRANI Bank:

To operate ethically and fairly within the stringent framework Set by our regulators and to
assimilate ideas and lessons from best practices to improve our business policies and procedures
to the benefit of our customers and employees.

2.7 Sponsors
The sponsors of Agrani Bank Ltd are successful leading entrepreneurs of the country having stakes in
different segments of the national economy. They are eminent industrialist and businessman having
wide business reputation both at home and abroad. Moreover, Agrani Bank is sponsor of private TV
channels like Shomoy TV, Channel 71 etc.

2.8 Corporate Culture

Employees of ABL share certain common values, which helps to create a JBL Culture-
 The client comes first.
 Search for professional excellence.
 Openness to new ideas & new methods to encourage creativity.
 Quick decision- making.
 A sense of professional ethics.

2.9 Motto of AGRANI Bank:

To adopt and adapt modern approaches to stand supreme in the banking arena of Bangladesh
with global presence.

2.10 Values of AGRANI Bank:

We value in integrity, transparency, accountability, dignity, diversity, growth and
professionalism to provide high level of service to all our customers and stakeholders inside and
outside the country.

2.11 Ethical Standards of AGRANI Bank:

10
  Be Trustworthy: We believe in mutual trust and treat our customers in a way so that
they can trust us.
 Keep an Open Mind: For continuous improvement of our Bank. We keep our minds
open to new ideas. We seek opinions and feedback from both customers and team
members through which our Bank will continue to grow.
 Meet Obligations: Regardless of the circumstances, we do everything to gain the trust
and confidence of customers and clients by honouring our commitments and obligations.
 Be Transparent: We are transparent in our dealings with customers and all stakeholders.
We ensure transparency by furnishing information through print and electronic media as
well as in Bank’s website, journals and reports.

2.12 Strategic Objectives of AGRANI Bank:

 Winning at least 7.00 percent share of deposits and 6.00 percent share of loans and
advances of Bangladeshi market.
 Gaining competitive advantages by lowering overall cost compared to that of competitors.
 Overtaking competitors by providing quality customer service.
 Achieving technological leadership among the peer group.
 Strengthening the Bank’s brand recognition.
 Contributing towards the economic well-being of the country by focusing particularly on
remittance, SME and agricultural sectors.
 Strengthening research capability for innovative products.

2.13 Objectives of AGRANI Bank Limited:

 AGRANI Bank Ltd is ready to improve the highest quality customer service through new
IT products & services such as ATM. Online banking & transaction.
 The Major objective of AGRANI Bank Ltd. is to maximize profit through customer’s
satisfaction.
 The bank plays a vital role in socio-economic development of Bangladesh by developing
worldwide network in domestic & international operations.
 The main objective of the bank is to provide all types of banking facilities and services at
the all customer satisfaction.
 Develop a customer oriented service culture with special emphasis on customer care and
convenience.
 Increase market share by following a disciplined growth strategy.

11
  Develop innovative products and services that attract targeted customer and market
segments.
 To explore new avenues for growth and profitability, particularly by diversifying loan
portfolio through structured finance and expansion of retail and SME financing.
 To establish relationship banking and improve services quality through
development of strategies marketing plans.
 To ensure optimum utilization of all available resources.
 To ensure an adequate rate of return on investment.
 To maintain a healthy growth of business with desired image.

2.14 Contribute to National Economy:

The Bank plays an important role in the development of rural economy. The Bank has branches
across the country. The Bank operates some branches in the remote areas to provide the banking
services to the rural people, though operations of those branches are not financially viable to the
Bank. The Bank also plays an important role in reducing unemployment generation activities. At
the end of 2012, the Bank itself employed people, out of which were officers and were staff
members, since beginning, the Bank has been highly active in remittance operations to facilitate
disbursement of remittance received from Bangladeshi wage earners working abroad. The
remitted money can be deposited to the beneficiaries account within maximum hours.
2.15 Hierarchy of Agrani Bank

12
2.16 Board of Directors
Name Designation
Dr. Zaid Bakht Chairman
Ms. Mahmuda Begum Director
Ms. Sangita Ahmed Director
Mr. Shammem Ahsan Director
Mrs Hasina Nawaz Director
Dr. Nitai Chandra Nag Director
Md. Ahikul Haque Chawdhury Director
Mr. Kashem Humayun Director
Md. Ansar Ali Khan Director
Mr. Md. Altaf Hossain Molla Director
Mr. Md. Shams-Ul Islam Managing Director & CEO

An Overview of AGRANI Bank Uttara Branch

I have joined at AGRANI Bank Uttara branch for my internship requirement. It took places at
Jalil Market (2ndfloor). It was located just opposite side of North Tower. This branch established
on 1965.

2.17 Management of ABL Uttara branch:

AGRANI bank limited Uttara branch has already achieved tremendous progress within now this
time. This branch has already ranked as one of the quality services providers and is known for its
reputation. This branch management is very strong than other branches of AGRANI Bank
Limited. Many VIP customers and business people come to open various account to make
transactions according to their needs. Effective management system helped to achieve huge
customer's response.

2.18 Employees of AGRANI Bank Ltd, Uttara branch.

AGRANI BANK Uttara branch manager name is Me. Sekh Monirul Islam and his designation is
AGM, and in the bank my supervisor was Mrs. Asma Zahan and his designation is second officer
.in his supervision I have mainly worked in accounts section.

2.19 Asset, Liabilities and Profit/loss Account’s Summary of Uttara

branch:
A brief Summary of financial Information’s of Uttara branch is given bellow:
AGRANI Bank Ltd.
Uttara
Summary of the statement of Affairs as on 30 December, 2016

Liabilities and Equity Assets

Account Head Amount Account Head Amount

13
Total Deposit A/c 1,255,009,881.36 Cash in Hand & Cash
equipment 13,67,472.55
Interest suspense & Fixed Asset 4869074.50
penalty Interest 165,800.20
Other liabilities 29,624,937.90 Other Assets 136,36,830.24
Accumulated Branch Account(M/0) 368,8631,961.59
Depreciation 2,375,111
Branch Account 253,6759,830.43
- -

Total Liabilities 382,8307747

- -

Equity 113,263,349.94

Expense/Loss for
current year 111,593,630

Grand Total 394,1571,097 Grand Total 394,1571,097

Table-1: ABL Uttara branch financial summary

14
 AGRANI Bank Ltd.
Uttara
Summary of the statement of Profit & Loss as on 30 December, 2016
Income Expenditure
Account Head Amount Total Account Head Total Total
Amount Amount
Interest on 8553781.29 Interest on Deposit 93,874,733.95
Loan & Borrowing Etc.
advance
Interest on 102,895,845 Salaries/Allowance Etc 11,216,730.50
Branch A/C
Income on 111,449,626.29 Rent/Taxes/Insurance Etc 3,386,585
Interest
Commission 1,813,723.65 Law Charges 8941
Exchange &
Brokerage
Etc
Postage/Tlgm & Stamp 31,269

Depreciation on Bank
Property 560,752

Repairing & maintenance of 1,944,226

Bank property
Stationary/Advertisement Etc 193,369.14
Other Expenditure 377,023.56
Total Income 113,263,349.94 Total Expense 111,593,630.1

15
 Chapter 03
Actual Task Part

16
3.1 What I have done through my 3 months internship:
I have completed my three months internship programme at AGRANI bank Uttara branch.
During these three months I have learned organization cultural behaviour. I have also learned
how to treat the customer and VIP (Very Important Person), in which way they will be satisfy to
the bank and also I have learned to behave with normal customers. In this time I have also seen
that many top managers and employee also come to Uttara branch. I have also learned how to
behave with seniors. I have seen from Bangladesh Bank many employees also come for auditing
purpose. I have seen that bank’s employee behave with the very politely.

3.2 Description / Nature of the work:

At AGRANI Bank, Uttara Branch, I was doing my internship for only three months. For that
reason, they did not want to give me so much authority to do any kind of work. But as an intern,
they gave me some task which I had to do for my learning and also for banking purpose. The
nature of my job is describing in below-
 To learn about General Banking Services.
 To learn about Investment Banking of AGRANI Bank.
 To establish references.
 To learn how they manage their banking problems with customers.
 To assist the authority officer under whom I had to work.

3.3 Types of Responsibilities I performed:

As an intern, I had some specific tasks which I had to do under the specific departments.
Basically I have worked in Account Opening Department, and in Investment Department. These
departments are close to customer. Involvement with customers is high, that’s why I have
worked there, during my internee I had some duties to perform in those departments. These are:
 Give information about different account types.
 Account opening.
 Verifying the signature of introducer for account opening.
 Collecting cheques from customers and put proper clearing seals for endorse.
 Arrange the documents related with Foreign exchange
 Open the account for those who want to take loan.

17
 Chapter-4
THEORITICAL FRAMEWORK

18
Introduction
The term little scale industry is utilized all over, both in created and creating nations, to signify
the qualities of a specific size of industry. Be that as it may, its suggestions differ from nation to
nation on the premise of this segment significance in the economy, the nature of the economy or
its phase of financial improvement, the kind of industry, period being referred to, nature of the
examination protest or the specialist's target and numerous different contemplations. Indeed,
even in a solitary nation the definition differs every now and then, because of changes in the
above variables. This makes it hard to make a global examination of little scale businesses.
Obviously, as of late there have been endeavors to give a brought together all inclusive meaning
of little scale industry. In any case, this can be conceivable just with sensible likeness of phase of
financial improvement.
There is no denying the way that the Small and Medium Enterprises (SMEs) can contribute much to the
advancement of our country. Sound judgment reveals to us that a country with restricted capital ought to
put resources into numerous little ventures in assorted businesses as opposed to a couple of vast
undertakings, disappointment of one of which can hose the economy. In addition, given our deficient
individual riches per capita, people can just bring restricted measures of advantages for new pursuits.
Obviously, the country will have the capacity to draw in more business visionaries to the little and medium
ventures than to vast ones. There are additionally certainties to help the significance of SMEs. As per the
Government, SMEs give more than 87% of the aggregate mechanical business. However, SMEs are
burdened with a variety of limitations: absence of access to money related assets, mediocre and untalented
labor, bring down level of innovation, trouble in getting quality crude materials, poor promoting and
administration, solid rivalry from unlawful imports and different infrastructural issues. Numerous SME
items have restricted residential request, as our purchasers can't manage the cost of them. Business
visionaries who attempt to enter outside business sectors confront solid rivalry.

The part of Small and Medium Enterprises (SMEs) is crucial for general financial advancement of a nation
especially to develop nations like Bangladesh. Since this segment is work escalated with short growth
period, it is equipped for expanding national salary and in addition fast business age; accomplishing
Millennium Development Goals (MDGs) particularly annihilation of extraordinary destitution and
yearning, sexual orientation uniformity and strengthening. SME area has assumed an imperative part in
financial improvement of some prosperous nations of Asia. Our neighboring nations have likewise given
due significance on SME. Naming SME as 'business creating machine' they worried on SME improvement
for higher financial development, narrowing the hole of salary imbalance and neediness easing. The
present government has additionally put much accentuation on the improvement of SME division thinking
about it as 'the main thrust for industrialization'.

4.2 Literature Review

Small and Medium Enterprises (SMEs) contribute to a great extent to any economy by making
plenteous openings for work, developing exchange and venture areas, expanded yield. SME parts
have tremendous prospects in contributing emphatically toward GDP development of an
economy and in this way getting notwithstanding expanding considerations now than at any other
time. Indeed, even the created economies are very ahead in situating SME business
notwithstanding loosening monetary development (The Economist, 2012). The manageable
advancement of SMEs in Bangladesh additionally depends to a great extent upon the expert
exercises of SME Foundation (Abdin, 2009).

SMEs make up the biggest segment of the work base in many creating nations and, without a
doubt, are frequently the establishment of the nearby private segment. The business visionaries
behind them could and should assume a considerably bigger part being developed, yet again and
19
again are kept down by an absence of prepared access to financing from neighborhood formal
division money related establishments (Rosen, 2003).SME financing has as of late been
recognized by specialists as one of the significant issues looked by SMEs in Bangladesh (The
Daily Star, sixteenth July, 2006). SMEs have exceptionally constrained bank back, which is just
around 10 percent, while self-fund remains the significant wellspring of their back contributing
76.5 percent of settled capital and 51.8 percent of working capital (Mahmud, 2006).

Monetary downturns generally influenced little SMEs with few working capital, talented
workforce, and so forth., particularly those included with exchanging and providing items or
administrations to different organizations (Muhammad et al., 2012).Lack of infrastructural
bolster, political turmoil, deficiency and in addition value climb of crude materials, high
financing cost and insufficient utility office are a portion of the key variables for the moderate
advancement of fabricate based SMEs (Ahmed, Rahman and Haque, 2013). Bangladesh faces
some lawful, administrative and regulatory imperatives while working in the predominant
approach condition (Hossain, 1998). Issues looked by SMEs like absence of preparing for
laborers, provocation of government authorities and poor supplementary utility offices and
looked for coordinated strides from government (Khan et al., 2012). Money related foundations
in Bangladesh are well underneath serving the capital needs of potential clients in light of
complex administrative limits and henceforth blocking the possibility of SMEs (Meagher, 1998).

As cures the respondents prompted money related motivations for sound marketable strategy and
open private organization in giving successful preparing (Chowdhury et al.,2013). For expanding
the volume of loaning to the SME division, supply-side arrangement isn't sufficient
(Bhattacharya and Chowdhury, 2003). Therefore adequate working capital alongside specialized
help ought to be stretched out to existing SMEs. The extension of capital as well as the planning
of money related items is critical for SME advancement (Akterujjaman, 2012). Business banks
being the biggest wellspring of financing for SMEs, more cooperation in loaning can bring about
astounding open doors by demonstrating a wide market to serve and make SME loaning a
productive keeping money operation (Nagaraju and Vani, 2013). Bangladesh SME financing
would be fortunate with finish appropriation of e-fund by diminishing related expenses. The
commitment of SMEs toward GDP can be upgraded by executing viable utilization of ICT in
SME focuses. Uddin (2008) has expressed that the monetary proficiency and general execution
of the SMEs particularly in the creating nations are extensively needy upon macroeconomic
strategy condition and particular advancement strategies sought after for their advantage.
Chowdhury (2007) featured that in setting of Bangladesh SME is described by Low
capitalization and constrained resources, geological decent variety and high mortality, poor
credit learning, extremely restricted access to formal
wellspring of credit, trade force out exchanges, exceptionally restricted record keeping
propensity, poor monetary exposure because of duty issues, high hazard recognition has
prompted high getting costs.
(Uddin and Riyadh, 2008).
Ahmed (2004) indicates out that due the absence of national quality strategy and sufficient
emotionally supportive network, and furthermore the absence of believability of the quality
confirmation expert, SMEs of Bangladesh have neglected to guarantee the nature of items and
administrations both in local and global markets. He additionally contends that entrance to back
wins as a standout amongst the most critical issues for the SMEs in Bangladesh. Absence of
contributing or working assets stays as a standout amongst the most noticeable gripes of all the
SMEs in Bangladesh. Chowdhury (2007) features that with regards to Bangladesh SMEs are
described by Low capitalization and constrained resources, geological assorted variety and high
mortality, poor credit learning, exceptionally restricted access to formal wellspring of credit,
20
trade power out exchanges, extremely constrained record keeping propensity, poor money
related exposure by virtue of expense issues. High hazard discernment has prompted high
acquiring costs.
Bangladesh Bank Report (2008) says, the key purposes for the SMEs are not going into
assembling but rather are monetary obliges, horrid condition of utilities, innovation and approach
segregations. Then again, Bank and others money related foundations for the most part lean
toward huge endeavor customers due to bring down change costs, and more prominent
accessibility of guarantee. The SMEs additionally fall outside the range of small scale back
plans, and hence are constrained to rely upon formal wellsprings of assets at substantially higher
loan fees, the Bangladesh Bank report said. The BB report, in any case, said that other
interrelated issues like deficiency of short and long haul back, absence of current innovation and
absence of limited time bolster administrations are real obstructions in the method for
improvement of the SMEs segment. Higher development of the Small and Medium Enterprises
(SMEs) can help slice destitution to an attractive level by disposing of different biases against
work escalated and making employments for the gifted labor in the SME area.
Faruq (2009) has called attention to a few downsides of SME advances. SMEs are high hazard
borrowers as a result of their powerlessness to meet with the guarantee prerequisites of the
banks. Brokers' issue credits in light of the responsibility for property as guarantee chance. So if
the SMEs can't reimburse the obligation, quite possibly the bank will take responsibility for
resource. For organizations that are not performing great, inferable from the reimbursement
plans, SME credits make a weight for them instead of helping them to develop. Financing costs
of SME credits are high in contrast with general advance
Iftikhar Hussain, Zeeshan Farooq and Waheed Akhtar opined that Across the South Asia, the
commitment of SMEs to the general monetary development and the GDP is high. It is assessed
that SMEs contribute half of Bangladesh's modern GDP and give work to 82% of the aggregate
mechanical part business. In Nepal, SMEs constitute over 98% of all foundations and contribute
63% of the esteem included section. In India, SMEs' commitment to GDP is 30 %.( 2012).

Bangladesh Miah (2007) expressed that the real imperatives for SMEs are absence of satisfactory
speculation, absence of present day innovation, high rate of enthusiasm on bank credits,
sporadic/lacking supply of energy, poor physical framework and high transportation cost, poor
data about advertise openings and prerequisites, deficient accessibility of crude materials,
absence of gifted specialists and laborers, absence of research and improvement offices, savage
rivalry, nonappearance of
successful and straightforward legitimate framework, troubles in getting to innovation, credit
requirements, low access to business administrations, requirement of nature of HR, low
mindfulness, low campaigning limit, quick changes in strategy condition. Ahmed (2006)
watched that accessibility of fund is a noteworthy requirement to arrangement and development
of SMEs in Bangladesh. Banks are hesitant to extend their SME credit portfolio since they don't
consider SME loaning an appealing and gainful undertaking. This is so on the grounds that
SMEs are viewed as high hazard borrowers due to their low capitalization, deficient resources
and their powerlessness to conform to insurance prerequisites of the banks. Authoritative
expenses are likewise higher in light of the fact that nearby checking and supervision the SME
operation winds up plainly vital.
In the FSS 2020 work on SME improvement it was displayed that the Least Developed Countries
(LDCs) in the east have begun refocusing their consideration on SMEs to upgrade their part in
realizing auxiliary changes in their economies. (2006) . Dr. Sharif Bhuiyan discovered like
numerous different nations, casual part in Bangladesh does not exist in a vacuum. There are clear
21
interconnectedness, association and coherence with the formal part – keeping up a two path
stream of work, products, accounts and so forth between the two areas. In Bangladesh quick
change of the casual area may not be conceivable, attainable as well as reasonable. Strategy
activities to formalize the casual area ought to along these lines embrace a gradualist
approach(2007). Dr Khondaker Golam Moazzem demonstrated that in the Sixth Five Year Plan
(sixth FYP) quickening of GDP development (from 6.1 percent in FY 2010 to 8.0 for every
penny in FY2015) has been focused through exceeding expectations the execution of modern
segment, especially of the assembling area. The development of the assembling part should be
achieved through change of existing ventures and furthermore by making new ones. Be that as it
may, a staggering number of these undertakings are smaller scale (having under 10 laborers),
little (10-49 specialists) and medium (50-99 specialists) endeavors, for the most part called
MSMEs/SMEs (2008). S. M. Akterujjaman came into a decision that SMEs are a principal part
of the monetary texture in creating nations, and they assume a pivotal part in advancing
development, advancement and success. Sadly, they are emphatically confined in getting to the
capital that they require to develop and grow, with about portion of SMEs in creating nations
rating access to back as a noteworthy limitation (2010). S. M. Nasrul quadir and DR.
Mohammad Saleh Jahur contended that SMEs of Bangladesh have been helpless against visit
approach changes of Government every once in a while. Also, they are confronting serious
rivalry in and outside the nation. Subsequently, the benefit of SMEs has crushed and a large
number of them have monetarily bothered. Besides,Entrepreneurs of SMEs (2011).

4.3 SME Banking

The growth and development of SME is largely dependent upon cheap and quick access to financial
resources. More than ever before, nowadays SME contribute enormously to the economic development of
a country; emerging economies top the list. In Bangladesh, 80% of the industrial employment comes
through SME and hence much effort is being given toward flourishing it further. However, growth has
been affected a lot with contracting funds in the hands of the owners making them vulnerable to slowing
down. The major source of finance- the commercial banks face increasing risks from inexperience of the
SME owners, lack of well prepared financial statements, in-depth knowledge about the actual need and
government bureaucracies. It has been found that in Bangladesh the segment is underserved by the
financial institutions (FI) with less focus on providing customer-tailored products, no specialized credit
risk assessment system and huge time required for credit clearance information are some of the bigger
challenges. Bangladesh, being a developing country in terms of manpower and natural resources, posits
ample opportunities for SME development. SMEs use locally available inputs and technologies, create
large-scale employment opportunities, mobilize small private savings and develop entrepreneurial
characteristics. However, this highly potential sector has not been able to reach the desired growth level.
Several studies examined the reasons behind and came up with problems in financing, infrastructure
facilities, government regulations, and inexperience. Access to financing continues to be one of the most
significant challenges for the growth and survival of SMEs which stems mainly from the role played by
the commercial banks.

4.4 Definition of SME Enterprise

Ministry of Industry and Bangladesh Bank accepted the definition of small and medium enterprises
recommended by Better Business Forum (BBF) as a uniform one. According to the definition, SME refers
to the firm/business which is not a public limited company and complies with the following criteria:

22
“INDUSTRIAL POLICY -2012” of Ministry of Industries (MoI) and Bangladesh Bank, SME &
Special Programs Department issued circular nO:01 in 19-06-2013, defining SME as follows:

Small Enterprise (SE):

Small enterprise refers to the firm/business which is ideally not a public limited company and
complies the following criteria.

Serial no. Sector Fixed asset excluding land Employed manpower

and building (Tk) ( not above)

1 Service 5,00,000-1,00,00,000 10-25

2 Business 5,00,000-1,00,00,000 10-25
3 Industrial 50,00,000-10,00,00,000 25-99

Medium Enterprise (ME):

Medium enterprise refers to the firm/business which is ideally not a public limited company and
complies the following criteria.

Serial no. Sector Fixed asset excluding land Employed manpower

and building (Tk) ( not above)
1 Service 1,00,00,000-15,00,00,000 50-100

2 Business 1,00,00,000-15,00,00,000 50-100

3 Industrial 10,00,00,000-30,00,00,000 100-250

4.5 SME Financing

SME finance is the funding of small and medium sized enterprises, and represents a major
function of the general business finance market – in which capital for different types of firms are
supplied, acquired, and costed or priced. Capital is supplied through the business finance market
in the form of bank loans and overdrafts; leasing and hire-purchase arrangements.

Objective of SME Financing:

The main objectives of SME Financing are as follows:

 To develop/establish SMEs,
 To generate Income,
 To generate employment,
 To reduce poverty,
 To disperse industry and reduce income inequality,
 To increase productivity with local goods and technologies,
23
  To empower the by bringing them into the mainstream development activities,
 To reduce social crime,
 To achieve MDGs (Millennium Development Goals),
 To overall development of the country.

Importance:
There is no doubt that SME credit play an important role in the socio-economic development of the
country. There are a lot of manpower engaged in SME sector. The importances of SME sector in the socio
economic development of the country are given below:

1. Effective use of natural resources

2. Use of local experiences and technical know-how
3. Contribution to GDP growth
4. Create employment opportunity
5. Controlling factor of large industry
6. Basic of large industry
7. Effective use of capital
8. Ensure effective competition
9. Proper disbribution to goods and income
10. Earning foreign currency
11. Leadership development
12. Decentralization of industry
13. Easy goods supply
14. Increase standard of living

Initiation of SME Financing:

In the year 2004, after sending a book of Prudential Guidelines and Regulations, the Bangladesh
Bank instructs the commercial banks and financial institutions to initiate SME Financing on the
basis of the Guidelines and Regulations. To comply with the Bangladesh Bank’s instructions, all
banks and financial institutions start SME Financing formally.

Sectors of SME :
Service sectors: Hotel, restaurant, tailoring, laundry, hospital, clinic, Kindergarten, block and
printing, tractor, power tiller, irrigation equipment etc.

Business sectors: Grocery shop, cloths shop, medicinal shop, plastic and synthetic shop, shop of
spare parts, rods and cement, furniture, agro-business and other income generating and socially
acceptable business.

Industrial sectors: Cloth industry, jute industry, garments, rice mill, plastic industry, saw mill,
light engineering, agro processing, feed mill, plastic industry, furniture industry and other
socially acceptable and eco-friendly business.

Wide Areas of SME Banking

1. Agro-based and agro-processing 2. Agro-based activities such as fishing,
24
industry;
3. Agro-tools making and marketing;
5. Nakshi Katha and handloom;
7. Bakery;
9. Dry fish processing;
11. Computer software and ICT goods;
13. Entertainment such as, documentary
film, cinema and DVD production;
15. Horticulture, floriculture & flower
marketing;
17. Construction business such as,
construction industry and housing;
19. Hotel, restaurant and tourism;
21. Mobile phone accessories;
23. Renewable energy such as, solar
power, windmill;
25. Plastic industry;
27. Handicrafts;
29 Jute goods and jute mixed goods;
31. Frozen food;
33. Electronics;
35. Optical frame manufacturing;
37. Stuffed toys;
39 Iodized salt production;
41. Rice mill/Auto rice mill;
43. Drug house/Pharmacy;
45. Local transport;
47. Chatal business;
48. Trading;
51. Electronics business;
53. Agro machinery/tools business;
55. Jute trading;
57. Rod and cement trading;
59. Crockery business;
61. LP gas businesses;
63. Commercial plantation;
65. Transport and communication;
67. Jewellery;
69. Knowledge society with high quality
merit and efficiency;
71. Saloon and beauty parlor, gymnasium;
73. Call centre;
75. Digital color lab;
77. Electricity distribution produced by
generator;
79. Bamboo and cane goods production;
81. Mushroom;
preservation and marketing;
4. Fishing boat building;
6. Food seed preservation and marketing;
8. Hatchery; by machine;
10. IT-based activities;
12. Cyber cafe;
14. Forestry and furniture;
16. Cold storage;
18. Hospital and clinic;
20. Telecommunication;
22. Printing and packaging;
24. Light engineering industry;
26. Cosmetics and toiletries;
28. Herbal medicine industry;
30. Stationery goods industry;
32. Leather and leather products;
34. Artificial flower making;
36. Silkworm and silk industry;
38. Ice mill;
40. Flattened and fried rice production;
42. Wholesale and retail shop;
44. Phone-Fax;
46. Cinema hall;
49. Old Iron goods;
50. Mobile set and accessories business;
52. Various small business;
54. Fertilizer business;
56. Clothing and shoe business;
58. Hardware business;
60. Grocery and chaff goods business;
62. Warehouse and container service;
64. Photography;
66. Laboratory;
68. Ginning and baling;
70. Tailoring;
72. Community centre;
74. Diagnostic centre;
76. Cable operators;
78. Small amusement park;
80. Boutiques;
82. Computer training school;
25
83. Interior and exterior decoration;
85. IPS production;
87. Saw mill;
89. Environment friendly transport (battery 90. Dairy and fish feed production;
operated) such as, easy bike (Jessore);
91. Brick field;
93. Agor and candle light production;
95. Spice grinding;
97. Exportable soiled tali production;
99. Bus/Trauck body building;
101. Pipe producing industry;
103. Mini sugar mill;
105. Catechu production;
107. Welding industry;
109. Partex industry;
111. Production of juvelile fish (Reno
pona);
113. Sand & stone business;
115. Marketing of khadi goods;
117. Cane matt (Shital pati);
119. Sweetmeat production;
121. Battery manufacturing;
123. Sanitary goods manufacturing;
125. Pottery;
127. Fruit processing industry;
129. Storage for potato seeds;
131. Potato tissue culture;
84. Light engineering workshop;
86. Tribal handloom and specialized
handloom(Komor tant);
88. Boat industry such as, passenger
carrying small boat building;
92. Khadi industry;
94. Mango juice, lichi, lotcon etc;
96. Biscuit factory;
98. Food processing;
100. Oil and pulse mill;
102. Manufacturing of cement pillar;
104. Molasses production;
106. Hosiery;
108. Bronze & brass industry;
110. Biogas plant;
112. Seed production through tissue
culture;
114. Paddy-rice business;
116. Nakshi Kanta and handloom;
118. Nursery;
120. Fish cultivation (shrimp, telapia,
pangas);
122. Railway slipper manufacturing;
124. Production of lime from oyster;
126. Tea industry;
128. Charcoal production;
130. Semai, lachha & chanachur
production;
132. Solar electricity plant.;

4.6 SME in Bangladesh: The Prospect

 Since SME area is especially work serious with short development period, it is equipped
for expanding national wage and additionally quick business age. Our neighboring
nations have additionally given due significance on SME naming SME as 'business
producing machine'.
 The startup finance for SME is low. So SME can suit our new, youthful and little
business people who have insufficient assets to influence their fantasy business to
genuine. Along these lines Bangladesh can support her business visionaries by SME.
 Again SME can go about as the play ground for the new business people. In our nation
there are such huge numbers of new business visionaries who are aiming to begin an
expansive industry yet they have sufficiently neither experience to begin a substantial
venture nor enough store to work it. So they can take SME as the play ground then
subsequent to having enough understanding and reserve they can go for extensive scale
undertakings.

26
 We ought not expel our fixation from horticulture, since industrialization can't be the
substitute for agribusiness in this nation. Be that as it may, industrialization can
supplement our horticulture. On the off chance that we imagine that industrialization can
supplement our agribusiness then SME can do a considerable measure to supplement our
substantial enterprises.
 SME can guarantee greatest social consideration as it lessens the salary disparity.
Destitute individuals who have insufficient cash they can begin a little endeavor, they can
gain their business through this SME. So we see that SME underpins master poor
development and it works for destitution easing.
 About portion of the aggregate populace of Bangladesh is lady. In the event that they stay
immature then it isn't conceivable to accomplish improvement. can begin independent
ventures to help their families. They can create in which they are experts like creator
merchandise, handloom products, painstaking work, and so on. Along these lines they
can likewise add to the nation improvement and subsequently strengthening can likewise
be accomplished.

27
 Chapter -5
SME BANKING PRACTICE IN ABL

28
AGRANI Bank Ltd. has officially launched SMS banking service from December 17, 2007. Economic
development is closely related to the empowerment of . In Bangladesh the number of –owned
companies / firms continues to grow. To ensure smooth credit flow for Small enterprise
AGRANI Bnak Limited is decided to help the genuine entrepreneur having sincerity, honesty
and strong deliberation to improve the banking habit of self employed entrepreneurs to run any
legitimate business smoothly with the help of bank finance by offering a special business loan
product named ‘NariAgrani& Small Credit Program for .

5.1 Reason of Small Credit from the view point of AGRANI Bank:
The main focus of AGRANI Bank is to develop human and economic position of a country. Its
function is not limited only to providing and recovering of loan. But also try to develop economy
of a country. So reason for this program from the viewpoint of AGRANI Bank is:
 Support Small Enterprise: The small enterprise which requires 2 to 30 lacks taka loan, has
no easy access to the banks/financial institutions. For example: 3 to 8 lacks amount of loans
is provided without any kind of mortgage.
 Economic Development: Economic development of a country largely depends on the
participation of the in financial activities.
 Employment Generation: To create employment opportunities in the market. The bank
gearing employment opportunities by two ways: Firstly, by providing loan to the small
enterprises. Expanding, these businesses require more workers. Secondly, small and medium
enterprise (SME) program requires educated and energetic to provide support to
entrepreneurs.
 Profit Making: SCPW and NARI AGRANI programmes are new dimensional banking
system in the banking world. Entrepreneurs are satisfied by the service of the bank and
making profit with guidance of the bank.
 Encourage Manufacturing: The focus of AGRANI Bank Ltd. is to encourage
manufacturing by the entrepreneurs who produce by purchasing various types of materials.

5.2 SME Products/Programs of Agrani Bank Limited :

Small and medium enterprise of the country is one of the deserving sectors for financial support.
Agrani Bank justifiably provide credit to them under different schemes. ABL launched a joint
venture program named Small Enterprise Development Program (SEDP) with NORAD, a
Norwegian agency in 1995. This program was implemented in greater Mymensingh and Faridpur
districts. The target fields were rice mill, oil mill, nursery, repairing shops, fishery, weaving and
many more.

The bank is presenting micro credit and other supports to land less day labor for alleviation of
poverty by generating employment. Agrani Bank had designed some programs in collaboration
with other agencies. One such program is Employment Generation Project for Rural Poor
(EGPRP). This program was launched in 1995.

29
Schemes for Entrepreneurs:
5.3 NariAgrani:
NariAgrani is a special credit program for the . It is a recent and popular credit program of
AGRANI Bank Limited. It is introduced in 2012 under SME financing with a view to bring the
in the mainstream development activities. Under this program, an eligible woman can avail the
SME credit with only 10% interest per annum and 75:25 debt equity participations. No collateral
is required up to Tk.1.00 million (10.00 lacks) and one can get the maximum loan amount of
Tk.10.00 million (1.00 core) with necessary collaterals. The activities of the program are
extended in all the branches of AGRANI Bank Limited.

5.4 Small Credit Program for the (SCPW):

Small Credit Program for the (SCPW) is a small credit program for the . It is introduced to uplift
the socio economic condition of the . A large number of income generating activities such as
tailoring, printing and dying, ready-made garments, laundry, poultry, mini dairy, goat rearing
,beef fattening, nursery etc. are involved in the program activities. Maximum loan limit is Tk.1,
00,000. Up to the loan amount of Tk.50, 000, no collateral is required. The rate of interest is only
11% per annum under the credit program. All the branches of AGRANI Bank Limited can
disburse the credit to the eligible under this program.

5.5 SCPW or NARI AGRANI Loan Disbursement Procedure:

For SCPW or NARI AGRANI loan operation, AGRANI Bank Ltd has in total 879 unit offices,
62 zonal office, 14 territory and 1800 Customer Relationship Officers. These CROs work for the
Bank to converge clients for getting the SCPW or NARI AGRANI loan. SCPW or NARI
AGRANI Loan process flow is shown below-

Figure 1: Small Credit Loan Disbursement Procedure

5.6 Disbursement Amount & Client Base of loan disbursement for

entrepreneur:
AGRANI Bank’s entrepreneur loan is continuing its journey of serving the SMEs, as can be
observed from the tremendous growth in client base and from the disbursement amount.

Disbursement Amount of loan in Number of loan disbursement

30
 million BDT (Cumulative) (Cumulative)

Year Amount Year No of loan

2012 5566.43 2012 14482
2013 10671.18 2013 30130
2014 21829.33 2014 59998
2015 42981.05 2015 113009
2016 79729.4 2016 192752
Table 2: Disbursement Amount & Client Base of loan disbursement for entrepreneur

5.7 Selection Criteria of enterprise

The success of SME largely depends on the selection of a business and man behind
it. In terms of the business (Enterprise), the following attributes should be sought:
 The business must be in operation for at least one year

 The business should be environmental friendly (Ex: No narcotics or

Tobacco business) -The business should be legally registered, i.e.,
valid trade license, income tax or VAT registration, wherever
applicable.

 The business should be in legal trade, i.e. smuggling will not be

allowed or socially unacceptable business will not be entertained

 The business must have a defined market with a clear potential growth

 The business must be located ideally close to the market and the source of its raw
materials/ suppliers. It should have access to all the utilities, skilled manpower's
that are required. .

 Any risk assessed by the management in turn will become a credit risk for the
bank. So ' effort should be made to understand the risk faced by the business.

5.8 Entrepreneur Selection Criteria

In order to understand the capability of the management behind the business, the following
should be assessed:

 The entrepreneur should be physically able and in good health, preferably between age
of: 20 to

 If the proprietor is an elderly person closer to 60, it should be seen what is the succession
process will be and whether it is clearly defined or not.

31
  The entrepreneur must have the necessary technical skill to run the business, i.e academic
background or vocational training, relevant work experience in another institution or
years of experience in this line of business.

 The entrepreneur must possess a high level of enthusiasm and should demonstrate that he
is in control of his business and has the ability to take up new and fresh challenges to take
the business forward.

 Clear-cut indication of source of income and reasonable ability to save.

Guarantor Selection Criteria

Proper selection of guarantor is also equally important. The following attributes are
important while selecting the guarantor:

 The guarantor must have the ability to repay the loan and is economically solvent
(check his/ her net worth)

 The guarantor should be aware of all the aspect of the loan and the
responsibilities - The guarantor should be well known to the entrepreneur

5.9 Processing and Screening of Loan Proposal

As of now all the branches of ABL has devoted SME officers for promoting the SME Loan.
These officers help in SME Loan and Deposit item showcasing, proposition readiness, credit
documentation, advance dispensing, advance checking and recuperation. Each credit proposition
is produced at the grass root level through the advertising officers. These officers fundamentally
produce the proposition and process the positive proposition under supervision of "Region Group
Leader" and place it to their individual "Local SME Center". The Head of Regional SME Center
Business Development Manager (BDM) may decrease the unviable advance proposition at their
level. In feasible cases, he may lead physical examination (if fundamental) and send the positive
proposition to SME-CRM Unit. The CRM unit at Head Office dissects each professional and
cons of the proposition and prescribes to the administration for endorse of the advance on the off
chance that they think practical. After authorize of the proposition, the SME-CRM unit sends the
credit document to the concerned SME Center for dispensing. In the wake of finishing all
documentation conventions according to endorse, the middle will dispense the advance through
their individual branches subsequent to getting payment specialist from Credit Administration
Division (CAD) and report it to "SME Banking Division" at Head Office.The Work flow
diagrammatically is as below:

32
 SME – CRM Unit

Regional SME
SME Centre / Centre

Branches

Area group

leader

Figure 2: SME Centralization System of ABL

33
 Chapter 6
SWOT & Data Analysis

34
6.1 Occupation
From the people of my sample size 25% people are service holder 30% are business man, rest
of are from others occupation..

Occupation

Service holder
Business man
Others

Figure 3: Occupation of clients

6.2 Income level

From my survey 21 peoples income range is 10-24 k ,7 people is 25-39k, 5 people is 40-54k and
only 2 people is above 55k.

Income level
25
20
15
10
5 Income level
0

Figure 4: Income level of clients

35
6.3 Agrani Bank Advantage than other bank
In this survey, it was found that 40% of client think low interest rate is most advantage in case of
loan , 35% people goes to SME loan . Rest of people think that ABL has advantage in easy loan
disbursement and other privilege.

ABL vs others bank

45%
40%
35%
30%
25%
20%
ABL vs others bank
15%
10%
5%
0%
Low interest SME loan Easy loan & other
rate disbursemen privilege

Figure 5: ABL advantage than other bank

6.4 Service Charge of SME loan

In the survey its found that about 50% clients think that service charge of SME loan is medium
and 29% of clients take it as low rest of are taking as high service charge.

Service Charge

High
Medium
Low

Figure 6: Service Charge of SME loan

36
6.5 Loan processing time
Survey shows 20 people of the sample agree that the loan processing time is lengthy, 8 people
are disagree with the statement, 5 of them are fully agree and rest of are fully disagree with the
statement.

Lengthy

20
18
16
14
12
10 Lengthy
8
6
4
2
0
Agree Disagree Fully Agree Fully Disagree

Figure 7: Loan processing time

6.6 Interest Rate of SME loan

Survey shows 49% people ar satisfied with interest rate, 29% are unsatisfied, 14% clients are
very satisfied with interest rate of SME loan and rest of are extremely unsatisfied.

Interest

Satisfactory
Unsatisfactory
Very satisfactory
Extremly Unsatisfactory

Figure 8: Interest rate of SME loan

37
6.7 Required Documents for SME Loan
Survey shows most of people says its easy to collect data and some people say that its very easy
but there is also few people who think colleting document fir loan is difficult.

Documents for loan

20

10

0 Documents for loan

Very easy
Easy
Difficult
Very Difficult

Figure 9: Document collecting for loan

6.8 ABL need improvement

According to the survey 49% people think loan processing time should reduce, 30% people are
concern about interest rate. 20% of client complain about installment period rest of people think
service charge should reduce.

Improvement Needed

Interest Rate
Installment Period
Service charge
Loan processing time

Figure10: Improvement needed for ABL

38
6.9 Service quality of ABL
According to survey 33% people rated good for service quality of ABL, 30% people take it as
moderate , 20%, 13%, and 2% people respectively take it as excellent poor and very poor.

Service quality

Excellent
Good
Moderate
Poor
Very Poor

Figure 11: Service quality of ABL

6.10 SME loan policy of ABL

40% people think SME policy of ABL is moderate 30% take it as satisfactory and 20% people
are very satisfied with the policy rest of are dissatisfied.

SME Loan Policy

40%
30%
20%
SME Loan Policy
10%
0%
Very Satisfied Moderate Dissatisfied
Satisfied

Figure 12: SME loan policy of ABL

39
6.11 SME Department Service of ABL
According to survey 40% of client think that quality of SME department service is moderate , 30% of
client are satisfied with the service , 20% and 10% are respectively rated it excellent and dissatisfactory.

Quality of SME Department

40%
35%
30%
25%
20%
15%
Quality of SME Department
10%
5%
0%

Figure 13: SME Department Service of ABL

6.12 SWOT Analysis of ABL

SWOT investigation, is additionally a vital arranging device to assess these Strengths,
Weaknesses, Opportunities and Threats associated with an undertaking or in a business wander.
It includes indicating the target of the task or business wander and recognizing the interior and
outside components that are ideal and negative to accomplish the goals. The point of the SWOT
examination is to distinguish the key interior elements (Strengths, Weaknesses) which are
controllable and outer elements (Opportunities, Threats) which are wild.
I get the accompanying Strengths, Weaknesses, Opportunities, and Threats (SWOT) from my
viable perception in three months entry level position program, of Agrani Bank Ltd. as takes
after:

Strength of ABL
 Experienced top administration for working the business easily. The expert has utilized
some accomplished financiers who have awesome experienced in this calling.
 To rival the contender the bank has attractive capital base for maintaining the business.
 Due to its cautious choice low contamination in advance presentation.
 Prospective IT framework which help to keep up the web based managing an account
administrations.
 Agrani Bank Limited is constantly occupied with an assortment of corporate social
exercises in the nation.
 For guaranteeing the greatest level of consumer loyalty and procuring enormous benefit
ABL is extending the quantity of branches in new area.

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ABL has reporter association with driving worldwide banks in 117 nations to cover exceptionally
critical monetary focuses of the globe

Weakness of ABL
 Market is immersed on the grounds that numerous contenders as of now exist in the
market so they need to confront loads of rivalry from the current contender bank.
 Already many bank set up their position in the market so as a later contestant they require
time to build up its position in the market. Accordingly they have restricted piece of the
overall industry.
 For making benefit some of the time they introduction to vast advance which is extremely
unsafe for their business in light of the fact that their wellspring of capital is the general
population store.
 The specialist has over the top reliance on term store which diminishes their benefit level.
 Weak support administration.
 They give high loan fee for picking up support thus it builds the cost of reserve and
abatement the productivity level.
 Islamic Branch stores are not ring fenced.

Opportunities of ABL
 Development of a country depends on both private and public sector. For this reason government
give emphasis on the development of private sector. As a result regulatory environment favouring
private sector.
 Although Credit card is not a new concept in our country but there is a huge potentiality for
capturing this market. So ABL can take this opportunity.
 Small and medium enterprise is one of the big opportunities for ABL, because day by day the
numbers of small and medium are increasing and they are one of the great sources of profit.
 Since ABL is not an old bank and has limited number of branches all over the country, so it has
the opportunity to increase the number of branch all over the country.
 Now a day’s number of banks engaged in merchant banking so ABL has the opportunity to
expand their business in this line.

Threats of ABL
 Due to global economic crisis Bangladesh Bank have decided that all the will keep their loan rate
within 13% as a result it will increase their profitable level.
 ABL has to revise its interest rate for deposit purpose as a result they have to face competition in
case of collecting deposit.
 Some other banks offer great benefit for collecting the deposit which is a great threat for ABL.
 Banking is one of the profitable businesses as a result the numbers of banks are increasing
gradually. As a result it increased competition in the market for quality assets.
 Sometimes they face supply gap of foreign currency.
 Overall liquidity crisis in market.

From the analysis we can easily find out the strength and weakness of the bank which will help to compete
with others bank. It also helps to find out the opportunity and threats of the bank which is an external
factor. Without considering this factor bank can’t compete in the market.

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42
 Chapter 7
Findings and Recommendations

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7.1 Findings
Agrani Bank Ltd. assumes a key part in the SME division of Bangladesh. ABL is the pioneer in
the SME credit division. They have taken distinctive systems for the advancement of this
segment, since it is the fundamental beneficial result of ABL. In the current years they propelled
diverse kinds of SME credit item for moderate the distinctive target clients needs. All through
the review examination and 3 months entry level position period this reports discovered a few
Facts of SME segment of ABL. The discoveries of this report are given underneath:

 Most of the clients think the quality SME exercises performed by ABL in contrast with
other bank make it extraordinary and one of a kind.
 Most of the clients need to lessen the loan cost and increment residency.
 Some clients are not happy with the disposition/conduct of SME personnel's.
 Huge number of reports in the helpdesk causes delay in the payment procedure.
 Zonal office can favor up to 5 lacs, yet at show the level of rehash client's expansion
quickly and a large portion of the cases they apply for more than 5 lacs.
 Lack of showcasing exercises in the urban zone, though different contenders are giving
all the more promotion at various spot.
 The compensation bundle for the section and the mid level administration is significantly
low. The remuneration bundle for ABL passage level position even lower than the
contemporary banks.
 Some of the borrowers don't introduce a billboard in an obvious place of business or
assembling unit said that financed by "Agrani Bank Ltd."
 They discover the intrigue tension record through their PC yet physically they look at
those. Sometimes extremely straightforward work is finished by the head office which
requires some serious energy and make troublesome.
 Sometimes confirmation is finished by another officer which risky both for the bank and
the branch office.

7.2 Discussion
The investigation is totally in view of my temporary job program in Agrani Bank Limited. I have
effectively finished my temporary job program from Agrani Bank Ltd. at Uttara Branch in
Dhaka. It was three months in length entry level position program which I began from April 06,
2014 to July 05, 2014.I did this temporary job program with delight and poise. In my temporary
job period, I took a shot at "A Study on SME Banking in Agrani Bank Ltd."It was an
extraordinary ordeal to me that I accomplished much information about the diverse sorts of
managing an account reports. All representatives of this bank were extremely useful and they
acknowledge me unconditionally and lean toward me as a piece of their colleague.
For my examination the sum total of what data has been accumulated both from essential and
auxiliary sources. From essential sources information are gathered through survey, from casual
discussion and furthermore from various essential records. My report comprise the basic part and
the outline of the association at first. The following part incorporates the hypothetical system of
the investigation. I gather enough data about SME managing an account rehearses in
Bangladesh, and furthermore in ABL.
My most critical bit of the investigation is the examination part, which is done in three stages:

44
  SME credit examination ABL;
 Questionnaire review examination;
 SWOT examination.
At first the money related execution of SME financing is broke down. This is done on the
premise of past information gathered from ABLs' Annual Report and other money related
records. Next the poll review is broke down; from the overview led on 25 customers of credit
division of the bank. Finally the SWOT investigation of the associations Strength, Weakness,
Opportunities and Threats is finished. The last proposals and conclusion is given on the light of
general investigation.

7.3 Recommendations
Truth be told, Agrani bank advances expansive based investment in the Bangladesh economy
through the arrangement of high caliber and present day keeping money administrations. SME
credit is one of such quality item through which they offer the little and average business people
a quality managing an account administrations and bolster them to gain the most extreme benefit
also. The recuperation rate of this advance is 97% which is greatly great in the correlation with
some other bank's recuperation rate. Agrani Bank has made it conceivable as the advance is
given to experienced, little and average business people the vast majority of whom are
moderately aged, marginally instructed and having moderate pay and this class of individuals is
exceptionally faithful. Be that as it may, they can serve this class of clients with greater
responsibility and steadfastness and they can turn the recuperation rate to 100%. For this they
can make the accompanying approach suggestions:

 Redefine mission/vision towards accomplishment of most astounding income.

 Allocate assets particularly for development of SME business.
 Implement strict and persistent checking arrangement of the entire recuperation process.
 Train the Customer Relationship officers all the more exhaustively and sensibly with the
goal that clients may not confront any inconvenience while getting and reimbursing the
credit.
 Bring up more intelligent CROs to serve clients.
 Analyze clients' conduct that what sort of client makes default and quit giving them SME
credit.
 Risk Management division's review report ought to be more strict and dependable so
conceivable defaulter may not get the advance.
 Whether the borrowers are using the credit on the correct reason ought to be guaranteed.
 Reducing the SME loan cost inside significant level.
 Reducing the handling time length.

7.4 Conclusion
ABL is a path ahead regarding its business, quality, vision, administration, administrations. It
works in the most propel path conceivable in every one of their exercises that make it simple for
them to accomplish their coveted objective with a less exertion. It is a strong, forward-looking,
present day neighborhood manage an account with a record of sound execution. It is another age

45
bank. It is resolved to give astounding money related administrations/items to add to the
development of GDP of the industrialization, boosting up trade, making work open door for the
informed youth, rising way of life of constrained salary gathering and general supportable
financial improvement of the nation. The bank has the vision to be the best Private Commercial
Bank in Bangladesh regarding productivity, capital sufficiency, resource quality, sound
administration and so forth it is presently one of the best most beneficial private part business
banks. ABL advances wide based investment in the Bangladesh economy through the
arrangement of high caliber and present day managing an account administrations. SME advance
is one of such quality item through which they offer the little and unremarkable business people
a quality keeping money benefits and gain the greatest benefit too. SME business of ABL has
extending drastically which makes a huge work open door for our nation. So ABL is assuming
an extraordinary part in the creating efficient state of our nation.
As closing comment the bank can accomplish a main part with the 13 years example of
overcoming adversity however to stay unrivaled among new age banks, the bank must face new
difficulties. The bank must make a positive endeavor to be all the more outward looking in their
objectives and mindful of what is going on. They should likewise stress on the local situation all
the more intently and investigate a specific patterns and systems of their rivals. The bank must
acknowledge any disappointments and consider them a target to seek after future objectives as
opposed to faulting such disappointments for different components and thusly the Bank will have
the capacity to continue assuming its critical parts in our economy.

46
A. References
Books & Journal Publications
 Bhattacharya, D. and T.Chowdhury. (2003), “Financial Sector Reforms in Bangladesh:
The Next Round (Paper 22).” Centre for Policy Dialogue, Dhaka, p. 06.
 Hoassain, N. (1998),“Contribution to SME Development in Bangladesh.” Job
Opportunities and Business Support (JOBS), Banani, Dhaka, p. 27.
 Khan, Atiqur Rahman (2010), “Development of Small and Medium Scale Enterprise in
Bangladesh: Prospects and Constraints.” Bangladesh Institute of Bank Management
(BIBM).
 Mahmud, W. (2006), “Local Business Dynamics: Ground Realities and Policy
Challenges.” Institutional Reform and the Informal Sector (IRIS), Dhaka, p. 13.

 FSS 2020 International Conference “SME Issues, Challenges and Prospects” Peter
Mousley, Finance and Private Sector Department, Africa Region, World Bank

 Sharif Bhuiyan, Legal machanism Empower Informal Business-Bangladesh, The

National Consultation Conference organized by Dr. Shahdeen Malik and BRAC
University, 21 January 2007

 Dr Khondaker Golam Moazzem, Micro, Small and Medium Enterprises in Bangladesh:

Are They Scaling Up?

 S. M. Akterujjaman, “Problems and Prospects of SMEs Loan Management”: A Study on

Mercantile Bank Limited, Khulna Branch Volume– V, Issue– 02, July-December, 2010.

 Iftikhar Hussain, Zeeshan Farooq and Waheed Akhtar, SMEs development and failure
avoidance in developing countries through public private partnership. 1 February, 2012
African Journal of Business Management Vol. 6 (4), pp. 1581-1589,
www.academicjournals.org/AJBM,ISSN 1993-8233 ©2012 Academic Journals

 S. M. Nasrul Quadir and Dr. Mohammad Saleh Jahur, Determinants of Success and
Failure of Entrepreneurs of SMEs in Bangladesh- An Explorative Study , European
Journal of Business and Management, ISSN 2222-1905 (Paper) ISSN 2222-2839
(Online) .

 Md Fazlur Rahman (2011), “SME takes centre stage.” The Daily Star, Monday, January
17.
 Mintoo, Abdul Awal (2006), “SMEs in Bangladesh”, CACCI Journal 1: p. 1-19.

Website
 https://www.agranibank.org/

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B. Appendices
Questionnaire
For Clients

Dear Respondent,
I am a student of UITS, conducting a survey on “a Study on SME Banking of Agrani Bank
Limited”. Kindly noted that this is an academic study and the findings will remain confined
within academic interests. No part of this study will be disclosed. Your kind cooperation will be
highly appreciated.

Please read the questions carefully and just put a tick (√) in the respective box and kindly give your
judgments where necessary.

Name:.....................................................................................

1. What is your occupation?

a) Service Holder b) Business Person c) Others
2. What is your income level?
a) 10,000-24,999 b) 25000-39,999 c) 40,000-54,999 d) 55,000+

3. How Agrani Bank is different from other banks?

a) Low interest rate b) SME loan
c) Easy loan & disbursement d) other privilege

4. What do you think about service charge Of SME Loan?

a) High b) Medium c) Low

5. Is the loan processing time lengthy?

a) Agree b) Fully agree
c) Disagree d) Fully disagree

6. What is your opinion regarding interest rate of SME Loan?

a) Very Satisfactory b) Satisfactory
c) Unsatisfactory d) Extremely unsatisfactory
7. What about your opinion regarding required documentation?
a) Very easy b) Easy
c) Difficult d) Very difficult

8. In which area(s) do you think that they should take care of?
a) Interest rate b) Installment Period
c) Service charge d) Loan processing time

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9. How do you rate the quality of services of ABL?

a) Excellent b) Good c) Moderate d) Poor

e) Very Poor

10. How satisfied you are by the SME Loan Policy of ABL?

a) Very Satisfied b) Satisfied c) Moderate

d) Dissatisfied e) Very Dissatisfied
11. How would you rate the quality of the SME Department service of ABL?

a) Excellent b) Satisfactory c) Moderate

d) Dissatisfactory

Thank you for your co-operation.

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