Chapter-1

Introduction

1
1.1 Introduction
Banking sector of the world contributed in the present global economy. To establish a strong
banking sector it is required to have good study in banking operations. Today‟s Economic
policy is concerned to obtain the optimum economic condition in a country‟s economy.
Banking sector and banking activity are playing a vital and important role to achieve that
optimum goal of the economy. The successful running of banking business depends upon
effective banks. As a commercial bank NBL has a huge responsibility to ensure efficient and
effective banking operation all over the Bangladesh in a sound manner with the other banks
as a competitor. Banking sector is indispensable in a modern age and modern society. It
always plays a vital role to the economic development of the country. In modern age of
science and technology the banking sector all over the world has been undergoing a lot of
change due to deregulation, technological invention and globalization. But Bangladesh
banking sector is lagging to keep pace with the other countries it adapts the changes.
Basically banks take deposit from the customers against some interest payment and lend the
money to the borrowers with a different interest rate and time period. To ensure safety of the
depositors fund there are various types of credit facility. Also bank must hold adequate fund
to meet the daily needs of the clients.
1.2 Background of the Report
The internship program is an integral part of Bachelor of Business Administration
(BBA).This program creates a unique opportunity for the student to apply their theoretical
knowledge into practice and gain valuable real world business experience. During the
program, student can also realize existing business condition apart from having opportunities
to solve the problem using various analytical tools. It has become essential for every person
to have some idea on the bank and banking procedure. As our educational system
predominantly text based, inclusion of practical orientation program is an exception to the
norm. From practical knowledge, we will be able to know real life situations and start a
career with some practical experience. After the completion of BBA program I was placed in
National Bank Bangladesh Limited for the internship program under the guidance of my
faculty supervisor. The duration of my organizational attachment was 2 months, starting from
18th November 2019 to 19th January 2020 For successful completion of BBA program; it
requires to submit a report, which would illustrate a basic reflection of the learning.

2
1.3 Scope of the Report
Scope means an area of operations or field of the study. In my report, I have highlighted SME
Loan And It‟s Risk Management of National Bank Limited. I have also discussed about the
corporate information & structure, background, basic functions & performance of the bank.
With a view to completing the whole report, it was required to concentrate on the overall
banking process. However, in this report, the presentation of SME Loan and Its Risks
Management and tries to find out dissatisfaction and the requirements of the clients of the
National Bank Limited. This report has been prepared on the basis of experience gathered
during the period of internship.
1.4 Origin of the Report
Internship Program of BGC Trust University Bangladesh is a Graduation requirement for the
BBA students, which is also a partial requirement of the Internship program of BBA
curriculum. The main purpose of internship is to get the student exposed to the job world.
Being an intern the main challenge was to translate the theoretical concepts into real life
experience. The internship program and the study have following purposes:
 To get and organize detail knowledge on the job responsibility.
 To experience the real business world.
 To compare the real scenario with the lessons learned in the University.
 To fulfill the requirement of BBA Program.
To accomplish the internship, I was placed at National Bank limited, Patiya Branch,
Chittagong. The report on Cash management of National Bank Ltd: A Study on Patiya
Branch was approved by the faculty supervisor to satisfy the organizational requirements and
fulfillment of the internship program. As a requirement of the completion of the internship
program, I had to submit this report, which includes an overview of the organization and a
research and analysis part.
1.5 Objectives OF the Study
The main objective of the report is to identify Cash management process of NBL which
includes the following specific objectives.
 To understand SME the current condition of the SME . Division and advance of the
bank.
 To examine the SME loan performance of NBLbank.

3
  To find out the major challenges SME finance national bank ltd. And
recommendation some strategies for improve.

1.6 Methodology

The report is descriptive in nature. Mainly two types of data are used to prepare this report,
such as primary and secondary data.
16.1 Data Collection
To prepare this report the data has been collected from two sources, such as primary source
and secondary source.
16.2 Primary sources
The sources are as follows Face-to-face conversation with the Executives and officers of
Bank.
(i) Practical work exposures from the different desks.
(ii) Face to face conversation with the client.
(iii) Personal observations.
(iv) Relevant file study as provided by the officers concerned.
(v) Discussion with my bank‟s advisor.
1.6.3 Secondary Sources
The secondary sources data and information are:
(i) Annual Report of Bangladesh Commerce Bank Limited
(ii) Publications of Bangladesh Bank.
(iii) Newspapers.
(iv) Website information
16.4 Data Collection Techniques
 Personal interview and conversation with employees of the organization.
 Face to face conversation with the respective officers.
 Practical deskwork.
 Software: MS Word, Microsoft Excel.
16.5 Data Analysis Process:
Collected data analyzed by using Ms-word, Ms-Excel and chronologically plot by pie chart
bar diagram and finally report presented in the form of formal document.

4
1.7 Limitation of the Study
Objective of the practical orientation program is to have practical exposure for the students.
My permanent status was for only two months, which was somehow not sufficient enough to
gather adequate experience of such vast banking business. After working whole day in the
office it was very much difficult and also impossible to study again the theoretical aspects of
banking. Finally as the banks renovation activities was going on so the physical working
condition was not
healthy enough that we thought it would be.
Others limitation-
 Time is not enough for the study.
 Official secrecy.
 Ava inability of relevant papers and documents.
 Inadequate information.
 Lack of primary data.
 Inadequate data.
 Lack of Record.
 Lack of Experience.

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 Chapter-2
Company Overview of NBL

6
2.1 History of NBL
National Bank Limited has its prosperous past, glorious present, prospective future and under
processing projects and activities. Established as the first private sector bank fully owned by
Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with
the passage of time after facing many stress and strain. The members of the board of directors
are creative businessmen and leading industrialists of the country. To keep pace with time
and in harmony with national and international economic activities and for rendering all
modern services, NBL, as a financial institution, automated all its branches with computer
networks in accordance with the competitive commercial demand of time. Moreover,
considering its fourth-coming future, the infrastructure of the Bank has been rearranging. The
expectation of all class businessmen, entrepreneurs and general public is much more to NBL.
At present we have 145 branches under our branch network. In addition, our effective and
diversified approach to seize the market opportunities is going on as continuous process to
accommodate new customers by developing and expanding rural, SME financing and
offshore banking facilities. The emergence of National Bank Limited in the private sector
was an important event in the Banking arena of Bangladesh. When the nation was in the grip
of severe recession, the government took the farsighted decision to allow the private sector to
revive the economy of the country. Several dynamic entrepreneurs came forward for
establishing a bank with a motto to revitalize the economy of the country. National Bank
Limited was born as the first hundred percent Bangladeshi owned Bank in the private sector.
From the very inception, it was the firm determination of National
Bank Limited to play a vital role in the national economy. We are determined to bring back
the long forgotten taste of banking services and flavors. We want to serve each one promptly
and with a sense of dedication and dignity. The then President of the People's Republic of
Bangladesh Justice Ahsanuddin Chowdhury inaugurated the bank formally on March 28,
1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka started commercial
operation on March 23, 1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj,
Chittagong. At present, NBL has been carrying on business through its total 167 service
locations (branches and Agri branches) spread all over the country. Since the very beginning,
the bank has exerted much emphasis on overseas operations and handled a sizable quantum
of home bound foreign remittance. It has drawing arrangements with 415 correspondents in
75 countries of the world, as well as with 37 overseas Exchange Companies located in 13

7
countries. NBL was the first domestic bank to establish agency arrangements with the world
famous Western Union in order to facilitate quick and safe remittance of the valuable foreign
exchanges earned by the expatriate Bangladeshi nationals. This has meant that the expatriates
can remit their hard-earned money to the country with much ease, confidence, safety and
speed. NBL was also the first among domestic banks to introduce international Master Card
in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card.
The Bank has in its use the latest information technology services of SWIFT and REUTERS.
NBL has been continuing its small credit programmers for disbursement of collateral free
agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving
their livelihood. NBL focused on all key areas covering capital adequacy, maintaining good
asset quality, sound management, satisfactory earning and liquidity. As a consequence, it was
possible to a record growth of 175.51 percent with Tk. 8,809.40 million pretax profits in the
year under review over the preceding year.

2.2 NBL At a Glance

National Bank is the dynamic first generation bank established in 1983 focusing on
technology and service. The then President of the People's Republic of Bangladesh Justice
Ahsan uddin Chowdhury inaugurated the bank formally on March 28, 1983 but the first
branch at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23,
1983. At present, NBL has been carrying on business through its 155 branches and 20 SME
spread all over the country. Since the very beginning, the bank has exerted much emphasis on
overseas operations and handled a sizable quantum of home bound foreign remittance. It has
drawing arrangements with 415 correspondents in 75 countries of the world, as well as with
37 overseas Exchange Companies located in 13 countries. NBL was the first domestic bank
to establish agency arrangements with the world famous.

NBL was also the first among domestic banks to introduce international Master Card in
Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The
Bank has in its use the latest information technology services of SWIFT and REUTERS.
NBL has been continuing its small credit programmers for disbursement of collateral free
agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving
their livelihood. National Bank, has now acquired strength and expertise to support the
banking needs of the foreign investors. NBL stepped into a new arena of business and opened

8
its Off Shore Banking Unit at Mohakhali to serve the wage earners and the foreign investors
better than before.

Since its inception, the bank was aware of complying with Corporate Social Responsibility.
In this direction, we have remained associated with the development of education, healthcare
and have sponsored sporting and cultural activities. During times of natural disasters like
floods, cyclones, landslides, we have extended our hand to mitigate the sufferings of victims.
It established the National Bank Foundation in 1989 to remain involved with social welfare
activities. The foundation runs the NBL Public School & College at Moghbazar where
present enrolment is 1140. Besides awarding scholarship to the meritorious children of the
employees, the bank has also extended financial support for their education. It also provided
financial assistance to the Asiatic Society of Bangladesh at the time of their publication of
Banglapedia and observance of 400 years of Dhaka City.

NBL focused on all key areas covering capital adequacy, maintaining good asset quality,
sound management, satisfactory earning and liquidity. As a consequence, it was possible to a
record growth of 175.51 percent with Tk. 8,809.40 million pretax profits in the year under
review over the preceding year. The net profit after tax and provision stood at Tk. 6,860.34
million which was Tk. 2,070.47 million in the previous year registering a 231.34 percent rise.
The total deposits increased to Tk. 102,471.83 million being 33.37 percent increase over the
preceding year. Loans and advances stood at Tk.92,003.56 million in the year under report
which was Tk. 65,129.289 million representing 41.26 percent rise over the preceding year.
Foreign trade stood at Tk. 144,255.00 million in 2010 compared to Tk. 115,939.00 million,
increased by 24.42 percent compared to that of the previous year. During 2010, the bank
handled inward remittance of Tk. 49,145.30 million, 10.73 percent higher than that of the
previous year. Return on Equity (ROE) registered a 77.84 percent rise over the preceding
year. The bank has a strong team of highly qualified and experienced professionals, together
with an efficient Board of Directors who play a vital role in formulating and implementing
policies.

9
2.3 Values- CRYSTAL
C stands for being Creative, Be a person of innovative ideas in solving issues, thinking
different ideas to reach one destination; do new associations between existing ideas or
concepts for the organization‟s overall growth.
R stands for being Reliable, Be worthy of reliance or trust at work so everyone could depend
on you.
Y stands for remaining Youthful, Be a person of freshness and vibrant characteristic at work.
Feel young at HEART and project enthusiasm during performing duties.
S stands for being Strong; be a person of willing to move forward and apply conscious
choice, willpower, discipline and passion at work.
T stands for being Transparent, Be transparent at work at all level both internally and
externally. Show openness and honesty through communication to bring transparency.
A stands for being Accountable, Be accountable for own actions and take responsibilities for
the outcome of the actions; be responsible and answerable towards customers, organization,
regulatory bodies as well as the society.
L stands for being Loyal, Be loyal to the organization by being compliant at work, taking
ownership and create belongingness which will carry your brand as your pride.
2.4 Vision statement of the bank:
Ensuring highest standard of clientele services through best application of latest information
technology, making due contribution to the national economy and establishing ourselves
firmly at home and abroad as a front ranking bank of the country are our cherished vision.
2.5 Mission statement of the bank:
Efforts for expansion of our activities at home and abroad by adding new dimensions to our
banking services are being continued unabated. Alongside, we are also putting highest
priority in ensuring transparency, account ability, improved clientele service as well as to our
commitment to serve the society through which we want to get closer and closer to the people
of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in
uplifting the national economic standard through continuous up gradation and diversification
of our clientele services in line with national and international requirements is the desired
goal we want to reach.

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2.6 Goal of NBL
National Bank Limited has an exclusive goal from the other private banks such as “To act as
a caring companion in uplifting the national economic standard through continuous gradation
and diversification of its clientele services in line with national and international
requirement”
2.7 Objectives of NBL
The objectives of National Bank are mentioned below:
1. Offering quick and improved clientele services through application of modern
information technology.
2. Playing an important role in the national progress by including improved banker
customer relations.
3. To Ensure highest possible dividend to the respected shareholders by making best use
of their equity.
4. Pushing the policy of nurturing balanced growth of the bank in all sectors.
5. Consolidate our position in the competitive market by introducing innovate banking
products.
2.8 Products and Services of NBL
National Bank Ltd. has been continuing their banking business with their excellent product
line including supreme quality products. They have 3 major products in their product line and
a bunch of services. There products and services are available all of their branches according
to the consumer demand. With their excellent performance and series of innovative services,
NBL has sustaining their best-selling position in the competitive market and reached a very
highly respective position in their consumer mind.
 Deposit Products
 Savings Deposit
 Current Deposit
 Term Deposit
 FC Deposit
 NBL Monthly Savings Scheme (NMS)
 Monthly Earning Scheme
 Double Benefit Account
 Millionaire Deposit Scheme (MDS)

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  Apon Thikana Shanchoy Prakalpa (ATSP)
 Luxury Savings Deposit Scheme (LSDS)
 Shadhinota Product
 Century Deposit Scheme


 Credit Products
 Overdraft
 Lease Financing
 House Building
 Small Medium Enterprise
 Consumer Credit Scheme
 Trade Finance
 Agriculture Finance
 Services
 Internet Banking
 Service Location
 Cards
 Credit Card
 Debit Card
 List of NBL ATM's
 Contact Information
 Schedule Of Charges
 General Banking
 Foreign Trade
 Interest Rates
 Deposit Rate
 Lending Rate

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2.9 Division of NBL
1. Audit & Inspection Division.
2. ATM Card Division
3. Board Secretariat
4. Budget & Monitoring Division.
5. Credit Division-1.
6. Credit Division.-2.
7. Credit Card Division.
8. Classified Loan Recovery Division.
9. Financial Administration Division.
10. General Banking Division.
11. Human Resources Division.
12. International Division.
13. Information System & Technology Division.
14. Law & Recovery Division.
15. Marketing Division.
16. Merchant Banking Division.
17. Protocol Division.
18. Reconciliation Division.
19. System & Operations Division

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2.10 Organizational Strategy

As the financial services industry is a very competitive industry, the main strategy of NBL is
the organic growth – to build branches and strengthen their distribution network. They will
continue to invest and expand in Bangladesh as fast as local regulations allow.
The principal strategies are:
Strategy

People Attract, retain and reward top performers

Profitable growth Growing sales and increase the revenues

Execution Performing with skill and speed

Credit quality Maintaining credit quality and understand the role

in managing losses.

Customer Centered Always providing exceptional customer service

Ownership The performance and result should be owned

Efficiency Lowering the cost and wise use of resource

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2.11 Management Hierarchy of National Bank Limited

15
2.12 Financial Highlights of NBL

Particulars 2017 2018

Paid-up Capital 8603.66 4412.13

Total Capital Fund 24905.03 19190.79

Capital Surplus/deficit 5223.79 5137.42

Total Assets 169037.38 134732.31

Total Deposits 128215.97 102471.83

Total Loans and Advance 115388.89 92003.56

Total Contingent Liabilities and Commitments 44392.67 45045.10

Credit Deposit Ratio (in %) 90.00% 89.78%

Percentage of Classified Loans against Total Loans and Advances (in

2.83% 3.89%
%)

Profit after Tax and Provision 6085.70 6860.34

Amount of Classified Loans during the year 3264.95 3642.57

Provision kept against classified Loans 1166.79 1086.08

Provision Surplus 325.41 268.79

Cost of Fund (in %) 10.35% 9.12%

Interest Earning Assets 140198.97 110401.84

Non-interest Earning Assets 28838.42 24330.47

Return on Investment (ROI) (in %) 12.00% 32.78%

Return on Assets (ROA) (in %) 4.01% 6.05%

Income from Investment 3320.22 6115.41

Earnings Per Share (Tk.) 7.07 7.97

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Net Income Per Share (Tk.) 7.07 7.97

Price Earning Ratio (approximate) 9.45 24.03

Net Assets Value per shares (Tk.) 25.02 43.30

Net operating cash flow per share (Tk.) 8.88 7.90

17
 Chapter- 03

“Theoretical of Study SME ”

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3.1 SME outside Bangladesh

It is not surprising that at least 93% of consumer products came from ideas from SMEs. In
Europe, sometimes an SME is built up just on a single idea. For the innovation and the edge
of ideas, it has gained much popularity. Big organizations, like Google, Ali Baba, buys their
idea (actually the whole SME) and create products based on the idea. The YouTube is a
perfect example of this.

3.2 SME in Bangladesh

Despite its tremendous success, SME still does not have gained recognition in Bangladesh.
The word „SME‟ is one of the buzz words. There is no such existence of SMEs in the
Bangladesh economic review prepared and published by the Ministry of Finance during the
announcement of national budget every year. The moment we hear about SME, we picture an
organization filled with illiterate people from villages work as farmers and or something
related to agriculture. We have yet to discover its potential. The contribution of large and
medium industry is shown together whereas the contribution of small industries is mentioned
separately. The situation demands SMEs to be built in near future. We actually need SMEs
since there are only a few companies that are dominating the market right now. We do not
have any ideas. We use the products which are used outside Bangladesh. We do not give a
chance to an uprising idea unless the idea is already accepted outside.

Contribution of the large and medium industries to GDP is 13.37% while that of small
industries alone was 5.23% in 2011-2012 (As per Economic review 2014). The figure was
11.29% and 4.67% percent respectively in 2002 to 2003. This reflects that the contribution of
small industries has increased by only 0.55% in the last seven years which is actually
negligible. The contribution of large and medium industries has increased by 2.44%.

Some people started to recognize its potential. As a result we have seen an increase in
numbers of SMEs. To keep it healthy, the government has taken some initiatives like SME
financing or banking.

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3.3 SME Banking and Financing in Bangladesh:

Banks under Bangladesh bank work for financing the SME businesses. They help the
entrepreneurs to finance their business through giving short term loans, credit loans, bank
overdrafts, counseling and many more. The banking programs that are performed by the
bank to support SME business are known as SME banking.

3.4 Role played by the Bangladesh Bank:

Bangladesh Bank has already taken some important programs and schemes to develop SME
sectors. BB has taken many steps like opening of „Dedicated Desk „for SME and „SME
Service Centre „in the banks and special facilities for the women entrepreneurs to ensure
institutional financial facilities under easy conditions. It has opened a new department named
„SME and Special Programs Department‟ to support SME.

The guidelines formulated by the newly created department for compliance of the banks and
financial institutions for the development of SME sector are enumerated below:

• For the first time in Bangladesh, an indicative target for SME loan disbursement has
been set for 2010 by the banks and financial institutions considering SME
development as one of the most important development agenda of the country.
According to the target, SME loan shall be disbursed to the small, medium and
women entrepreneurs.
• Following the 'Area Approach Method' banks/financial institutions will try to attain
their indicative targets separately by dividing it as branch wise, region wise & sector
wise.
• Each bank/financial institution shall follow a separate business strategy in financing
SME loan with least formalities in executing documentation to ensure easy and
speedy loan sanction and disbursement process.
• Priority shall be given to small entrepreneurs.
• For small entrepreneurs credit limit will be ranged from Tk. 50,000 (Fifty thousand)
to Tk. 50, 00,000 (Fifty lac).
• For more participation of women entrepreneurs in industrial development of the
country and for conducting business activities by women entrepreneurs in large

20
 number, priority shall have to be given to potential women entrepreneurs in respect of
SME credit disbursement.
• Banks & Financial Institutions shall put highest priority in receiving loan application
from small and medium women entrepreneurs and settle the loan disbursement
process within very reasonable time from the date of acceptance of the application.
• Each bank and financial institution shall establish a separate „Women Entrepreneurs‟
Dedicated Desk with necessary and suitable manpower, provide them training on
SME financing and suitably appoint a lady officer as chief of dedicated desk. Branch
wise list of „Women Entrepreneurs Dedicated Desk „should be sent to SME and
Special ProgramsDepartment of Bangladesh Bank within two months from the date of
declaration of this policy and programs.
• Banks and financial institutions may sanction up to Tk. 25,00,000 to women
entrepreneurs against personal guarantee. In that case, group security/social security
maybe considered.
• The success in SME loan disbursement will be considered as yardstick for further
approval of new branches of the concerned bank. License for New Branches will be
issued for financing the priority sectors like SME and agriculture from 2010 in the
name of „SME/Agriculture Branch „instead of „SME Service Centre; in order to
involve banks in financing priority sector like SME and Agriculture‟
• Each bank/financial institution shall fix the interest rate on SME loan
sector/subsector wise. However, bank/financial institution will inform Bangladesh
Bank sector/sub-sector wise rate of interest immediately and ensure disbursement of
refinanced fund to the clients (women entrepreneurs) at Bank rate +5% interests.
• Training programs shall be arranged for the entrepreneurs.

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3.5 Present scenario of SME in Bangladersh

3.5 .1 Bank wise Transaction Distribution Small & Medium Enterprises:

According to the survey report of Bangladesh Bank, among the SMEs having transactions
with financial institutions, most of the SME entrepreneurs (about 77.4%) had banking
transactions with private commercial banks.

Bankwise Transction Distribution of SME

Government 12.42%

Private 77.38%
Banks

Foreign 2.22%

Specialized 5.10%

NBFIs 2.88%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
Percentage

Source: Survey report, research department, Bangladesh bank, April 2016.

And almost 45% of those enterprises reside within Dhaka Division.

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3.5.2 Sector-wise Distribution of Small and Medium Enterprises:

Sectorwise Distribution of SME

Hotel and
Consrtuction
Restaurant
2%
1%

Industry Real Estate,

30% Rent and other
businesses
S Whole and 1% and
Heath
o Retail Sale Social
59% Works
Transport and
Communicatio 1%
Community,
Agriculture n Social and
and Forest1% Personal
3% Service
2%
Sourceurce :IRBD-CPD,FY-14/15

23
3.5.3 Credit Related Information of Small and Medium Enterprises:

Nature of Credit:

According to statistics of 2010, natures of major number of credits taken by SMEs were
Overdraft/CC/Working Capital. It is to be mentioned that both the entrepreneurs and the
bankers prefer dealing with these kinds of credit.

Nature of Credits Taken By SMEs in 2010

90
80 84.50
70
60
Percentage

50
40
30
20
10 14.80 0.70
0
Overdraft & CC Project Loan Work Order Loan
Nature of Credit

Source: Bangladesh bank Survey Report, Research Department-BB, April, 2016

Bankers prefer these loans as they have higher interest charges in comparison to other loans
which yield higher profit. Also, from the point of view of the entrepreneurs, these type of
credits are less cumbersome; they use the facility only when necessary and do not have to pay
interest when the funds stay unutilized.

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3.6 Contribution of SME in the Economy

Small and Medium Enterprise plays a pivotal role in industrialization and economic growth
as well as in creating employment opportunities. It promotes cross-sectorial linkages raising
exports and developing entrepreneurial skills. In reducing regional imbalances SME has and
important advantage. SME occupies a unique position in the economy of Bangladesh and
mainly private sectors developments depend on them.

 The share of SME‟s production values ranges between 28 and 30 percent of our gross
domestic product (GDP). It has significant contribution in national export as well.
 SME accounts for over 95% of enterprise and 60 to 70 percent of employment. The
International Monetary Fund has indicated that SMEs Bangladesh accounts for more
than 99% of private sector industrial establishments and 70-80 percent of job
opportunities of the nonagricultural labor force.
 During the Fourth Five year plan, a total of 0.35 million jobs were created against the
target of 0.4 million
 SME sector requires lower energy supply, lower infrastructure facilities and this
sector imposes less environmental risk.
 Increasing the income level of rural people and promote agro-industrial linkage, SME
sector helps in alleviating poverty in Bangladesh.
 SME contribute towards better utilization of local resources and skills that might
otherwise remain unutilized.
 SME financings are necessary to maintain and retain traditional skills and handicrafts.
 This is essential for small industries. Because Small Industries are labor oriented and
capable of generating more employment.
 SME contribute a lot for the diversification of rural economy and for peaceful and
concurrent socio-economic development of all classes of people.

SMEs provide a huge range of goods and services to the people of Bangladesh, especially in
rural areas, alongside providing vital support in the production chain to large industries..
They are the heart of the industrial sector of the country and employ the bulk of the working
population and they, indeed, are playing the vital role in our economy in multiple ways.

25
3.7 Role of SME Credit in Profit making of Banks:

SME credit is playing a significant role in total credit and profitability for the branches of
banks and NBFIs. The interest rate on such SME loans ranged 10% to 20% during last couple
of years making those loans profitable for banks and NBFIs. Through analyzing the
percentage of profit earned from SME credit it was found that increase in the SME credit
contributed significantly to the growing profit to the bank branches.

Contribution of SME loan in the total profit(%)

of Bank Branches
80
70 72

60
50 50.7 Contribution of SME
44.5 loan in the total
40
profit(%)
30
24.6
20
10
7.5
0
Less than 20% to less 40% to less 60% to less 80% to less
20% than 40% than 60% than 80% than 100%

Source: Bangladesh bank Survey Report, April 2016

The average profit from SME credit was 7.5% of the total profit of the branches where SME
credit was 20% of the total loan portfolio. On the other hand, average profit earned from
SME credit was 72% of the total profit on those branches, where SME credit was 80 to 100
percent of total loan portfolio. It is evident that gradual increase in SME credit increases
profitability and strengthens the financial base of the branches of banks and NBFIs

26
3.8 Banks’Current Status of SME Financing in Bangladesh:

Banks are disbursing significant amount of credit under various programs like Small &
Medium Enterprise, Self-help credit Program, Special Investment Program and Agro-based
Supervisory Industrial Credit etc. for the of SME‟s promotion and development. Private
sector‟s investment in financing, SMEs remains insignificant in Bangladesh. Banks like
Pubali Bank, Standard Charted Bank, Agrani Bank, BRAC Bank, Eastern Bank Ltd. (EBL),
Prime Bank Ltd, Dhaka Bank Ltd, Mercantile Bank Ltd, Dutch-Bangla Bank Ltd, Islami
Bank Bangladesh Ltd, IFIC Bank Ltd., all private banks have the leading role in SME
financing. Bank of Small Industries and Commerce Bangladesh Ltd. (BASIC) and other
government and private banks have the responsibility of providing medium and long-term
loans for promotion and development of small-scale industries.

Percentage of SME loans to total loans

200

180

160 Standard
Chartered
140 Jamuna

120 Basic

100 Pubali

80 Janata

60 Sonali
47.47
50.36 53.03
40

20 30.46
22.57 19.02
0

From this graphical presentation, Basic Bank has been spending more money in SME sector
from their loan mix, almost 62% to 74 %. This is the situation of government bank.

Private bank also provide a great portion of loan in SME sector from their total loan amount.
All these have been made on the basis of percentage of SME to total loans from different
banks during 2016-2018
27
 Chapter- 04

SME Banking Banking Activities of National

Bank limited.

28
4.1 Small and Medium Enterprise (SME):
Existing definition of SME is recommended by Better Business Forum and accepted as a
uniform one by Ministry of Industry and Bangladesh Bank. Criteria of the definition of SME
are given below:
 Small Enterprise:
Small Enterprise refers to the firm/business which is not a public limited company and
complies the following criteria:
Serial Fixed Asset other than Employed
No. Sector Land and Building Manpower
(Tk.) (not above)
01. Manufacturing 75 lcs- 15 crore tk 31-120
02. Service 10 lcs- 2 crore tk 16-50
03. Business 10 lcs- 2 crore tk 16-50

Table 02: Small Enterprise

 Medium Enterprise:
Medium Enterprise refers to the establishment/firm which is not a public limited company
and complies the following criteria are:
Serial No. Sector Fixed Asset other than Employed
Land and Building (Tk.) Manpower
(not above)
01. Manufacturing 15 lcs- 50 crore tk 121-300

02. Service 2 crore – 30 crore tk 51-120

Table 03: Medium Enterprise

29
4.2 Reason for taking SME Loan:
SME means Small and Medium Enterprises. Small & Medium Enterprise (SME) plays a
pivotal role in the economic growth and development of a country. Actually, SME works as
the platform for job creation, income generation, and development of forward and backward
industrial linkages and fulfillment of local social needs .Small and medium enterprises (SME)
occupy the space between micro-enterprises and large corporations. An often ill-defined
space, definitions of what constitutes an SME vary greatly across industries, governments and
financial institutions. The most commonly accepted definitions focus on the number of
people a company employs or the company‟s annual revenue (turnover). The Bank has
disbursing SME loans since 2011 at both personal and institutional level to achieve national
sustainable economic growth and also to eradicate unemployment. It is creating SME
entrepreneurs and on the other hand, it is also creating permanent employment opportunities.
Besides, there remains a prevailing SME facility for women entrepreneurs. National Bank is
playing a significant role in the country‟s economy and employment through disbursing loan
in SME portfolio.

4.3 Objective of the SME Loan Operation of National Bank Ltd.:

The main focus of National Bank is to develop a human and economic function of the
country. Its function is not limited only to providing and recovering of the loan, but also, try
to develop the economy of a country.
 Support Small Enterprise: The small enterprise which requires 1 to 30 lacks taka loan,
has no easy access to the bank or financial institutions. To facilitate their financing,
SME loan program has been introduced.

 Economic Development: Economic development of a country largely depends on the

small and medium seal enterprises. Bank has an important role in our economic
development. NBL bank provides SME loan development of our economy.
 Profit Making: SME program is a new dimensional banking system in the banking
world. Most of the CRO‟s are providing door to door services to the entrepreneurs.
The entrepreneurs are satisfied with the service of this bank and the bank also makes
more profit.

30
  Encourage Manufacturing: A focus of National Bank is to encourage manufacturing
by the entrepreneurs who are producing by purchasing various types of materials.
NBL provide big amount SME loan manufacturing sector.
4.4 SME Loan Procedure of NBL:
 Select potential enterprise: For SME loan, in this step the CRO conduct a
 survey and identify potential enterprise. Then they communicate with entrepreneurs
and discuss the SME program.
 Loan Presentation: The function of CRO is to prepare loan presentation based on the
information collected and provided by the entrepreneur about their Business, land
property (Where a mortgage is necessary).
 Collect confidential information: Another important function of a CRO is to collect
confidential information about the client from various sources.
 Open clients‟ accounts in the respective bank: When the CRO decided to provide loan
to the client then he/she help the client to open a bank account. NBL bank will
disburse the loan through this account. On the other hand the client will repay by this
account. Although there is some exception occur by the special permission of the
authority to repay by a different bank account.
 Fill up CIB form: CRO give a CIB (Credit Information Burue) form to the client and
the client fill and sign in it. In some case if the client is illiterate then the CRO fill the
form on behalf of the client. Then CRO send the filled and signed form to the SME,
head office.
 Sending CIB to Bangladesh Bank: The SME, head office collects all information and
sends the CIB form to Bangladesh Bank for clearance. Bangladesh Bank return this
CIB form within 10-12 days with reference no.
 CIB report from Bangladesh Bank: if the client has no loan facility in any bank or any
financial institution then BB (Bangladesh Bank) use „NIL‟ in the report.

31
4.5 Eligibility of SME Loan Borrower:
National Bank Limited emphasizes highest priority on SME financing for eliminating
poverty by increasing SME loan flow at economically underdeveloped area and peoples.
Setting up priority base SME credit Policy for Women and underprivileged entrepreneurs,
National bank working for the improvement of their socio-economic condition.
 SME Loan Lending Policy:
4.5.1 Loan Limit:
BDT 50,000 (Fifty thousand) to BDT 500, 000, 00 (Five crore).
4.5.2 Criteria of Borrower:
 Bangladeshi Citizen minimum 18 (eighteen) years old;
 Loan defaulter, Bank-rupt, mentally wreaked person cannot apply for loan;
 Women Entrepreneurs highly encourage to apply.

4.5.3 Nature of Project/ Enterprise:

 Proprietorship Enterprise;
 Registered Partnership Enterprise;
 Private Limited Company;
 Joint Venture Company excerpt Public Limited Company.
4.5.4 Security:
 The collateral security free loan limit for male entrepreneurs is up to Tk. 5 lac.
 The collateral security free loan limit for women entrepreneurs is up to k. 10
lac.
4.5.5 Interest Rate:
 Long term project loan- 9%
 Current Capital/ Trading Loan- 9%
 For Women entrepreneur project loan & Current Capital Loan- 9%
(Bank authority reserved the right of changing the Interest rate)
4.5.6 Period:
 Project/ Team Loan: Maximum 5 years (project period may flexible according
t Project nature)
 Working capital/ Trading Loan: 1 year, renewable at the end of period.


32
 4.5.7 Loan: Equity Ratio:
 Project/ Team Loan: 70: 30
 Working capital/ Trading Loan: 75: 25

4.5.8 Repayment Procedure:

 Project/ Team Loan: monthly/ quarterly basis repayable within loan period
 Working capital/ Trading Loan: Daly bass or fully repayment within loan
period.
4.5.9 Loan Distributing Branch:
 Current Capital/Trading Loan is distributing in all branches.
 Long term project loan is distributing in listed 168 branches.
 LC Limit is distributing from all the Authorized Deale
4.6 Risk Management Process of SME Loan in NBL:
Risk is defined as a possibility of loss due to uncertainty. In simple, risk is uncertainty about
the outcome or expected return. Again risk is the probability that an actual return on an
investment will be lower than the expected return. It can't be mitigated entirely but it can be
mitigated partially through diversification. Taking on various types of risk is integral to the
banking business. Sound risk management is important to a bank's success. Business and
revenue growth have therefore to be weighted in the context of the risks implicit in the bank's
business strategy.
National Bank Ltd. also uses some methods to reduce its risk on credit. NBL have two
different ways to analyze the risk of credit. Those are:
1. CIB Query Form.
2. Credit Risk Grading Sheet.
4.6.1. CIB Query Form:
CIB Query Form is a specific form which is provided by the Bangladesh bank. By the use of
that form bank can identify the background of the client. In that form NBL bank provide
some information about the client like:

 Name of the client.

 Valid and updated Trade License.
 National ID.
 Photograph of the proprietor and the guarantors.
33
  Company TIN photo copy.
 Client TIN photo copy.

4.6.2 Credit Risk Grading Sheet:

It is a specific sheet by which the bank gives some points by analyzing the financial condition
of the client and the business situation of the client. National Bank LTD gives the point
according to some attribute. The items are given below:
 Financial risk: In the financial risk NBL did some analysis. Those are: Leverage,
Liquidity, Profitability, and Coverage.
 Business/ Industry risk: In industry risk NBL bank analyze: Size of the business, Age
of the business, Business outlook, Industry growth, Market competition, and Entry /
exit briars.
 Management risk: In managing risk NBL bank analyze: Experience, Second line, and
Team work.
 Security risk: security risk is an arsenical part of risk management. The elements of
security risk are given: Security coverage, Collateral coverage, and Support
(guaranty).
NBL bank gives some points according to the points. The format of the Credit Risk Grading
Sheet is given below:
Credit Risk Grading Sheet

(National Bank Limited)

Criteria Parameter Score Actual parameter Score

A. Financial risk 0.06 15
Leverage (15%) Less than 0.25% 15
Debt to equity ratio- 0.26×to 0.35× 14
times 0.36×to 0.50× 13
0.51×to 0.75× 12
0.76×to 1.25× 11
1.26×to 2.00× 10
2.01× to 2.50× 8

34
 2.51×to 2.75× 7
More than 2.75× 0
Liquidity (15%) Less than 0.25× 15 10.67 15
Current ratio- times 0.26×to 0.35× 14
0.36×to 0.50× 13
0.51×to 0.75× 12
0.76×to 1.25× 11
1.26×to 2.00× 10
2.01× to 2.50× 8
2.51×to 2.75× 7
More than 2.75× 0
Profitability (15%) 50% 15
Operating profit margin Grater then 25% 15
(%) 20% to 24% 14
15% to 24% 13
10% to 14% 12
7% to 9% 11
4% to 6% 10
1% to 3% 7
Less than 1% 0
Coverage (5%) 4.5 5
More than 2.00× 5
EBIT 1.51×2.00× 4
1.25×1.50× 3
1.00×1.24× 2
1.00× 0
Total score 50 50
Industry risk (18%) 1.06 0

1. Size of the business >60.00 5 4

30.00-59.99 4
10.00-29.99 3

35
 5.00-9.99 2
2.50-4.99 1
<2.50 0
2. Age of the business >10 year 3 8 2
5-10 year 2
2-5 year 1
<2 year 0
3. Business outlook Favorable 3 Favorable 3
Stable 2
Slightly uncertain 1
Cause of concern 0
4. Industry growth Strong (+10%) 3 Strong (10%+) 3
Good (>5%-10%) 2
Moderate (1%-5%) 1
No growth (<1%) 0
Market competition Dominant player 2 Moderator 1
Moderate competitive 1 Competition
Highly competitive 0
5. Entry/ exit briars Difficult 2 Difficult 2
Average 1
Easy 0
Total score 18 15
Management risk
(12%)
1. Experience. More than 10 year 5 More than 10 year 3
5-10 year 3
1-5 year 2
No experience 0
2. Second line. Ready succession 4 0
Succession within 1-2 3 Succession in
year. question.

36
 Succession within 2-3 2
year.
Succession in question. 0

3. Team Work Very Good 3

Very Good 3
Moderate 2
Poor 1
Regular Conflict 0
Total risk 12 6
Security risk (10%)
1.Security coverage Reg. mortg. For NBL 4 3
Registered 3
hypothecation
2nd charge 2
Negative line asset 1
No security 0
2.Collateral coverage Prime aria property 4 4
Semi urban aria 3
property
Plant machinery 2
Negative line collateral 1
No collateral 0
3.Support (guaranty) Strong corporate 2 2
guarantee
average corporate 1
guarantee
No guarantee 0
Total risk 10 9
Grand total 100 80
Table 04: Credit Risk Grading Sheet
Interpretation:

37
By the calculating the risk rating of the client the bank can easily understand the current
situation of the client the risk score of the client have to be at least 80 or above. If it is 80 or
more then that the client is entitled to get the loan. If it is not more then that the client does
not get the loan from the bank.

Features:
• Credit max up to 35%-40% of net work order value
• Single facility limit max up to Tk. 50.00 Lac for small enterprise and Tk.
100.00Lacfor medium enterprise
• Repayment through deduction up to 40%-45% from each running bill Interest
charged only on the utilized amount
• Competitive interest rates
• Low Processing fee
• Validity max up to work completion date + 3 months for one off limit and
max up to 1 year for revolving limit Charges:
• Interest rate: Small-(Men-13%-17%; Women-10%); Medium-13%
• Overdue interest: 3%
• Processing fee: 0.50% to 1.00%
• VAT: 15% of the processing fee
3. Overdraft Pay Order NBL OD
PO is also a revolving and renewable line of credit against lien/mortgage of collateral. It
is for contractors/suppliers as well and can be availed at a pre-determined margin to meet
the obligation of pledging pay order(s) with the work order awarding
authority as earnest money/security deposit.
Features:
• Credit max up to 90% of the amount of pay order
• Single facility limit max up to Tk. 50.00 Lac for small enterprise and Tk.
100.00 for medium enterprise
• Interest charged only on the utilized amount
• Competitive interest rates
• Low Processing fee

38
 • Validity max up to 1 year Charges:

4.7 SME Loan Product

a) Continuous Loan

In order to ensure continuous cash flow for procurement of additional or incremental

requirement of consumer goods, as and when needed, continuous loan facility proves to be
quite crucial factor for business sustainability. Accordingly, in order to assist to continue
regular business activities, National Bank SME is equipped with “Overdraft Loan” facility
(OD Loan), renewable on a yearly basis. OD Loan is extended to SME Customers keeping
their respective business nature, purpose of requirement, viability as well as feasibility under
consideration.

b) Demand Loan

Businesses that basically revolves and depends on specific time period of a year, having
seasonal impact, require such credit facility, where, the customer is allowed a loan facility for
a specific term, to be utilized for smooth operation of his respective business to flourish and
at the end of the season, the customer is to pay off in full after due tenor. National Bank
SME offers such, “Demand Loan” in form of “one-off” or ”revolving” facilities.

c) Term Loan

In order to facilitate business community belonging to small and medium segment, to assist
increasing their respective business portfolio and financial asset, a specific loan facility, for a
tenor ranging from 1 (One) year to 7 (Seven) years, is available in form of “Term Loan”
facility, to be adjusted on installment basis. National Bank offers Term Loans for Small
Enterprises for a tenor of 2 years and Medium Enterprises for 7 years respectively.

d) 1st Time Borrower(SUCHONA LOAN)

39
New SME Entrepreneurs, find it quite difficult to avail formal loan facilities. To address the
issue, National Bank SME Division offers “Shuchona Loan” to facilitate such 1st time
borrowers to attain sustainability of their smooth business function and prosperity. The only
pre-condition for eligibility in this category is that the customer is required not to have
availed any loan facilities in company‟s favor prior to availing “Shuchona Loan.”

e) Women Enterprise Loan(ODITIYA LOAN)

Business women are encouraged and motivated for their contribution in our overall economy.
As such inclusion of more number of women with various business activities would only
bring in betterment of our overall economy. In tune with this spirit, “Oditiya Loan” facility is
formulated with the aim to aid business women in their business activities to gain profitability
and sustainability.

f) Supply Chain Finance (Bills To Cash)

This financial product is formulated to aid relatively larger business houses/enterprises that
depend on multiple suppliers for various raw material/ingredients to process and finish
consumable goods/items and finally assists for distribution of the finished goods through
many numbers of distributors throughout the country. National Bank SME has indulged in
such SCF module of business for SME customers by targeting large business entities for
easement of their respective business activities.

g) Dairy Loan

National Bank Dairy Loan is to facilitate people dealing with live stocks, like, cattle, sheep,
cow, goats etc however, not be used for cultivation, to increase numbers and resultantly
ensuring better financial benefit. As such, livestock business owners, either require to invest
in fattening live stocks, to be sold out at profitable price at various occasions/festivals or, in
keeping them healthy and increase their milk productivity, impacting their business
profitability.

h) Commercial House Building finance

40
SME loan is business loan by nature and in line with this, National Bank has house building
financing facility for building, renovating or procuring commercial buildings.

i) Loan By Deposition Of Title Deed (Easy Loan)

SME Business financing is almost always security based lending, however, not all intersed
SME customers are capable to offer collateral or land security in order to obtain credit
facilities for running thier business activities, resulting in unsuccessful business endeavor.
Keeping it under consideration, National Bank offers Term Loan facilities to assist
customers, who cannot afford to offer any collateral as security, in the name of “NBL Easy
Loan”.

j) LOAN FOR WORK ORDER FINANCE

In order to address business fund crisis or insufficient fund/cash for procuring Work Order
for obtaining total Project financing, National Bank has financing mechanism, namely, Work
Order Finance. The respective liability is adjusted out of the payments (PO) received by the
customer from the parent organization after completion of work.

k) NON-FUNDED LOAN

LC (Letter of Credit) is a mode of non-funded financing by which customers procure raw

material for manufacturing or supply of goods, not available locally, get financial assistance
by making partial payment as LC Margin, depending on mutual understanding and
relationship. Additionally, National bank also provides

services to customers‟ dealing with Export LCs and Bank guarantees, another two non-
funded financing, available for SME customers.

41
l) SECURED LOAN

SME customer, may he be involved in trading, service, manufacturing or agricultural

business, is entitled for a credit facility out of his deposited amount from FDR/DPS etc.
National Bank extends up to 90% of such credit facilitiy, based upon his/her retained with
the bank. National Bank offers lease financing facility mainly on mid-term or long-term
basis depending on the requirement and nature of future outcome of the procured entity. In
line with this, on the basis of monthly payments, National Bank undertakes various ventures
like procuring business plants, machinery, vehicles etc. on company‟s behalf keeping the
Title Deed in Bank‟s name.

4.8 SME Deposit Products

a) Shukti Account

Shukti Account (SME Customers) is a form of Current Account, having all related major
features of CD Accounts, with additional provision of interest income facility. Respective
conditional interest rates will vary as per Account deposit/balance, starting from minimum
Account balance of BDT 25,000.00. This sort of accounts encourages customers to explore
their earning options, resultantly, having positive impacts on Bank‟s overall deposit portfolio.

b) Current Deposit Account-SME

Current Deposit Account-SME is just another form of Current Account, aimed to facilitate
only entrepreneurs belonging to SME segment. The respective Account follows and adheres
to the same sets of rules, terms and conditions as in Bank‟s regular generic Current Accounts.
The particular Account has been incorporated with our many other deposit products mainly to
determine the segmentation of origin of fund, if it is SME fund or Corporate fund.

c) FD (Plus) SME

Fixed Deposit accounts inherently promotes deposit mobilization at a relatively higher

interest rate. However, in times of deposit crisis, this instrument plays a substantial and vital
role in accumulating additional base deposit for the organization. Apart from having facility
for issuing regular FDRs for Company accounts and individuals, National Bank SME has

42
launched a FDR of special kind to increase base deposit of SME segment, promoting
procurement of SME based fund for sustainable future financing.

d) Mudaraba FD Plus (SME)

Fixed Deposit accounts inherently promotes acquisition of deposit at a relatively higher

interest rate. However, in times of deposit crisis, FDs play a substantial and vital role in
accumulating additional base deposit. Apart from issuing regular FDRs for Company
accounts and individuals, National Bank SME has incorporated a special kind of Fixed
Deposit Scheme based on Islamic norms and regulations, aiming a special client segment, to
increase global base.

4.9 Non-Financial Service

a) i-khata
“i-khata”, a digital CMSME business solution, is a internet based book-keeping accounting
register, initiated by National Bank MSME team. This platform assist the Customers to
maintain structured and comprehensive financial records and business activities, replacing
maintenance of multiple kaacha khatas, making it much easier for generating necessary
Business statements, i.e. Income Statement, Profit & Loss Statement, Balance Sheet,
Purchase Order, Challan Copy, Invoice etc. i-Khata is a dependable financial tool to have
better control for record keeping and monitoring of various business activities and increase
efficiency having accurate updated business information. Customers utilizing “i-khata”
platform are required to record (initiate inputs) their daily Sales, Purchases, Payables,
Receivables, Inventories etc.
i-SAMADHAN
“i-Samadhan” is a platform for MSME Entrepreneurs, interested to avail credit facility for
better management of their respective business portfolio. It is made available on Dhaka Bank
official webpage, under MSME & AGRI. segment where an entrepreneur may obtain
notional/tentative by submitting his/her basic business information within 24 business hours.

43
4.10 Ance/Re-Prefinance Scheme

a) Bangladesh Bank Refinace Scheme

This program initiated by Bangladesh Bank prioritizes focusing on Women Entrepreneurs.
Women constitute about half our population, hence, must be encouraged to be involved with
various socio-economical and financial activities, adding up to our overall economic
prosperity. In order to prioritize women business financing, Bangladesh Bank extends
funding assistance at a rate of 5.00% to Banks and NBFIs for further lending to Women
business Entrepreneurs at 9.00% intt. rate in order to reduce their financial burden and to
flourish their business activities.

B) SMEPD
Asian Development Bank has allotted a fund of USD 200 Million, extended by another USD
40 Million (BB), for utilization in business enterprises belonging to Cottage, Micro, Small &
Medium Enterprises. The fund is to be facilitated by commercial banks and other NBFIs at
11.00% intt. rate. Financial Inclusion Department (FID) of Bangladesh Bank is administering
the fund management on GoB‟s behalf.
C) Loan to BDT 10 Ac. Holder
The facility includes opening of regular bank accounts with initial balance of BDT. 10.00
only, made available for relatively poorer segment of the society. Bangladesh Bank has an
allocation of BDT 20.00 Million for lending purpose to facilitate this segment. BDT 10.00
AC. holders enjoy 9.50% intt. rate while availing small ticket credit facility under the
scheme.
D) Agri. 4.00% Loan

Agriculture is the prime sector for lending, where, as per Bangladesh Bank directives,
relatively lower interest rate is applied. Under refinance criteria, Commercial Banks and /or
NBFIs are entitled to claim disbursed amounts at an intt. rate of 9.00% from Bangladesh
Bank for onward further lending to agricultural farmers at 4.00& interest rate.
e) Green Banking
Green banking is acclimatized with the core idea for minimizing environmental risks and
hazards. Businesses that pose threats to polluting air we breathe, water we drink or locality,
where population concentration is higher, should pursue methodology in their business

44
activities that embrace pollution free techniques and methods in running their respective
businesses, causing no harm or threat to our environment in general. Dhaka Bank promotes
such financing, even if it involves large scale financing, if viable.
F) SME Foundation Arrangement (Shoe manufacturing cluster, Rajshahi)
Dhaka Bank, aided and guided by SME Foundation has invested at Kaluhati locality in
Rajshahi, at a cluster of collective shoe makers, for development of Shoe manufacturing
attributes. Having real financial requirement, the respective individuals/enterprises belonging
to the respective cluster, upon valid proposition, avails credit facility, to boost up their
business activities ending up with better profitability.

4.11 Findings
 SME loan interest rate is not satisfactory to the customer; it is higher interest rate to the
customer.
 SME loan mortgage is higher to the customers of NBL.
 NBL should carefully choose the proprietors while disbursing the SME loan.
 Inexperience proprietors are not encouraged to gain the SME loans.
 SME loan processing system is lengthy process for the customers.
 SME loan disbursement policy is flexible for the SME entrepreneur of NBL.
 The problems or risks regarding SME loans for the bankers are like flexible repayment
options for borrowers, confusion with borrowing terms and conditions, wrong
information, risks with guarantee, documentation risk, moral hazard problems with
unsecured loans, monitoring activity etc.
 Compared to other banks (public and private)National Bank Limited has not been
successful in increasing their SME Portfolio over the years, but the growth they are
showing is good.
 SME market is highly competitive and NBL might lose a big portion of its future client
portion to the other banks, but NBL has a strong human resource and experienced
SME team which can help the bank achieve the future targets successfully.

45
 Chapter- 05
Recommendation & Conclusion

46
5.2 Recommendation
National Bank Limited has focused on enhancing the long term sustainability of the bank,
building value for the shareholders, employees and the wider community. Its activities are
driven by ethical business practices and sense of responsibilities to all stakeholders. During
this study I have found some lacking of NBL which they can improve so that more
entrepreneurs feel interest to take SME loan. NBL can fix the problem of long process of
taking SME loan. NBL can reduce the mortgage so that small entrepreneur can take loan.
They should choose the proprietor carefully while giving the SME loan.
For achieving the best possible targets, the bank should take following some steps. These can
be-

 Regular checking of the SME portfolio should be made more successful

 Interest rate of SME should be made more competitive in order to expand the SME
portfolio

 Loan documentation process needs to be more effective in order to reduce guarantee

risk and loan default

 NBL authority should provide adequate training to their SME officers so for that
they can get new SME clients and also credit analysts should be recruited to reduce
pressure on existing employees

 The banking industry is extremely competitive and continuously changing.

Competitor banks are introducing new products and services and taking new actions
to manage SME risk. So, NBL should put more time and money in developing new
SME products

 All possible information should be preserved at head office about the borrowers.

47
5.2 Conclusion
National Bank limited is the largest bank as well as the largest employers in both public and
private sectors in Bangladesh. The Banks play a vital role in the socioeconomic development
through the development of industrial sectors by providing all the conventional banking
services as well as some specialized financing activities to the economy. The popularity of
banks is increasing day by day which leads to increase competition as well. All the public
banks are offering almost the same products and services and almost same their operation
system.
To conclude this report it can be said that it was a great opportunity to study the SME loan
activities of National Bank limited . I have learned the full process of SME banking activities
during my internship period. I fell luck that I have passed three months in National Bank
limited , Patiya branch, Chattogram. I have learned many activities during my internship
period which practiced in the bank.
All the banks are always trying to maximize their SME collection. That is why, to keep up
with other banks in Bangladesh, National Bank limited (NBL) need to know the problems of
the future SME clients and try to find the best possible way which will make good connection
with their new clients and achieve their goals

48
References
Books& Reports:
 Annual Report of National Bank Limited. (2012)
 Banking journal.
 Internet
Bibliography:
National Bank Limited web site http://www.nblbd.com
http://omnibd.blogspot.com/2013/04/internship-report-at-national-bank.html
http://www.studymode.com/essays/496136.html
Several Booklets from National Bank Limited.
Several News letters from National Bank Limited.
Rabbani, Mehnaz, Solaiman, Munshi. (2005), Financing SMEs and Effects on
Employment Generation, Brac Research Evaluation Division.
William G. Zikmund, Barry J. Babin (2013), Business Research Methods,
Small medium enterprise (SME) Credit Policy a& Programs (2010), published by
Mostaa, Dr.Md. Golum, General Manager, Head office of Bangladesh Bank. Page
no., 6-7, 10-11, 14. Retrieved from: http://www.bangladeshbank.org .bd
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