i

Letter of Transmittal

December 29, 2013

The Director,

Centre for Post Graduate Studies,

BIBM

Subject: Submission of Dissertation Paper.

Dear Sir,

With due respect, I am submitting herewith my dissertation paper on the above-mentioned title

for the partial fulfillment of the requirement of 6th Term of MBM Program.

I have striven hard in preparing this dissertation and tried to make the paper comprehensive

within the constraints. I sincerely believe that it will serve the required purposes. I shall always

 be obliged to furnish any clarification regarding this dissertation, if required.

Your assignment was an eye-opener for me. I had little knowledge on this issue before writing

this paper. I thank you for giving me the scope of developing a humble insight on the subject. I

enjoyed writing this paper.

Sincerely yours,

Md.Masud khan

MBM 16th

 Batch

ID: 161234

BIBM

 

ii

Acknowledgement

At first, I would like to express my gratitude to Almighty Allah for giving me the strength to

complete the report within the stipulated time.

A single individual can achieve no noble object. In any creation, the list of expressing thanks- no

matter how extensive- is always incomplete and inadequate. This acknowledgment is not an

exception.

I am thankful to BIBM for giving me such exposure to the practical banking world. My warmest

thanks go to Dr. Toufic Ahmad Choudhury, Director General, BIBM & Md. Mohiuddin

Siddique, and Director (CPGS) for their indefatigable guidance, careful supervision and

unwavering encouragement to guide me throughout the paper.

I express my heartiest gratitude to my Dissertation Supervisor Professor dr.shah mohammad

ahsan habib , Assist Professor, BIBM for giving me effective suggestions, precious comments,

valuable guidance and enormous inspiration without which the effort of pursuing this report

would have proved futile.

I am very much grateful to all other teachers for their scholarly suggestions and assistance.

I would like to give my deep appreciation to all my friends and classmates for providing me all

the necessary helps and supports to complete this report. Once again very special thanks go to

seniors, and all those persons who have helped me in the correction of this study.

However, the responsibilities of errors and omissions in the report, if any, lie with me.

 

iii

Executive Summery

SMEs all over the world have been playing a crucial role in promoting economic development as

well as industrial production. SME financing has been identified as a major obstacle to SME

growth. Unfortunately, the issue seems to be as unresolved as it always has been. Though the

majority of the issues are with the SME themselves, the banks also have major issues in

designing financial products for the SMEs. Country like Bangladesh which is considered as The

Least Developed Countries (LDCs) in the east have started refocusing their attention on SMEs to

enhance their role in bringing about structural changes in their economies. Hence, the future of

Bangladesh industrial development depends largely on the development of SMEs. In the context

of Bangladesh, the development of Small and Medium Enterprises (SMEs) can be considered as

a vital instrument for poverty alleviation and ensure the rapid industrialization.

This study tries to find out the underlying problems from the bank’s  perspective. The major

findings are related to the high interest and loan duration rates, reasons for SMEs relatively

informal way of doing business in contrast to bank’s formal procedures and prerequisites, bank’s

relative inexperience in this field. They are also related to the bank’s lack of perspective, the 

viability and benefits of cluster unity, approach to informal loan takers and non-usage of modern

technology and accounting procedures. The recommendations were provided based on the

analysis and findings.

Key words: Small and Medium Enterprises (SMEs), Financing, Loan, Technology,

Cluster.

 

iv

List of Acronym

Swift- Society For Worldwide Interbank financial telecommunication.

BIC stands for Bank Identifier Codes

RMA  –  Relationship Management

Application 

LDC-Least Developed Country

B.B-Bangladesh Bank

ADB-Asian Development Bank

IDB-Islamic Development Bank

DBBL-Dutch-Bangla Bank Limited

IFIC- International Finance Investment and Commerce Bank Limited

SCB-Standard Chartered Bank

A/C- Account

FDR- Fixed Deposit Receipt

SOD- Secured Overdraft 

ECC - Export Cash Credit 

SHBL-Staff house Building Loan 

CCS- Consumer Credit Scheme 

LIM -Advance (Loan) Against Imported Merchandise

LRA- Lending Risk Analysis

CC-Cash Credit