Chapter-1

Introduction

1
1.1 Introduction

Banking Industry is one of the most promising industries of our country. Generally by
the word ‘Bank’ we can easily understand that the financial institution deals with
money. There are different types of banks such as; commercial Bank, Agricultural
Bank, Industrial Bank, Savings Bank & Exchange Bank. But when we use the term
‘Bank’ without any prefix, or qualification, it refers to the ‘Commercial Bank’.
Commercial banks are the primary contributors to the economy of a country. It helps
to flow funds from surplus unit to deficit unit and through this it facilitated the
efficient allocation of the resources as well as accelerated economic growth. This
sector is moving towards new dimension as it is changing fast due to competition,
deregulation and financial reforms.

As the pace of globalization competition in banking sector is increasing very fast,

Banks are becoming more customers oriented and offer High tech customized
products to its target market to hold the market. Banking Industry is moving towards
rapid changes though technological innovation and diversified needs of its customers.
Our central bank always keeps monitoring banks performances. Individual banks also
need to assess their own performance to satisfy the parties those are related to its
growth-

For Shareholders.
For depositor.
For Bangladesh Bank.
For its own Assessment to view the future growth and profit trend.
As a result, it has become essential for every person to have some idea on the bank &
banking procedure.

1.2 Origin of the Report:

As a mandatory part of the MBA program, the students of University of Science and
2
Technology, Chittagong have to submit an internship report, which reflects their
activities during the program, So that I prepare my report on “An Analysis of SME
Banking Practices: A study on EBL (Mirpur Branch)”, which was assigned by my
internal supervisor Dr. A.R.Khan, Co-ordinator of University of Science and
Technology, Chittagong.

Broad Objective

The broad objective of the report is to analyze the SME Banking Practices: A
study on EBL (Mirpur Branch).
To know details of SME loan in Eastern Bank Ltd.
The functions of SME conducted by Eastern Bank in the rural and remote areas
of Bangladesh

Specific Objectives

To know the SME loan activities in Eastern Bank.

To find out importance of SME loan.
To know the requirements to get SME Loan.
To know the enterprise selection criteria to provide SME loan.
To analyze the Marketing Procedure of SME loans of Eastern Bank.
To know the loan sanction, disbursement and recovery procedures of SME
loans.
To know the expectations of customers of Eastern Bank.
To make some recommendations and conclusion to further the development of
SME loan products of Eastern Bank Ltd.

Data requirements:
In fact, my aim was to collect as much information as it can be possible for me to
make an overview of the bank, its mission and vision, its departments and its
functions. Of course I had to collect enough information so that I can make an

3
analysis of SME loan and the specific behavior of its borrowers. The data collected
allowed me to make an analysis regarding SME loan, its process starting from
sanction of loan to closing of loan and especially regarding SME loan borrowers
behaviors that is whether they are paying dully or lately or they have any default
tendency.

Sources of data:

For collecting the required data, I have used different sources or methods like the
following:

Primary Sources are as follows:

Personal observation
Discussion with bank’s officers, managers
Focus group meeting
Secondary Sources are as follows:
Different statements of bank
Annual report of banks
Official website
Files, manuals, handouts balance sheet and various documents of Eastern Bank
Limited

4
1.3 Methodology:
Quantitative and qualitative data were collected and analyzed according to acceptable
standards of practice. Different tables and graphs were used to make the data
meaningful and comparable. Qualitative data were analyzed rationally and in
comparison with current market condition. Necessary percentages and averages were
calculated and the analyzed results were described step by step.

1.4 Scope:

Scope of the study is quite clear. Since Asset Operations Department is dealing with
all types of loan activities in the bank, studying these core themes, Opportunities are
there to learn other aspects of SME matters.
Concept of SME and its impact in overall economy of Bangladesh
Entrepreneurship development situation through SME banking
Importance of SME banking in context of Bangladesh
Pioneer’s strategy regarding SME banking.
Small entrepreneurs of rural–urban spectrum are enjoying the Eastern Bank loan
facility without the presence of bank at rural area.
Virtual banking concept through SME banking

1. 5 Limitations:
The study has suffered from a number of barriers:
Data from Eastern Bank is highly confidential for the outside people. No banks in
Bangladesh disclose the party’s name in the transaction.
It was difficult to communicate with the customers, as many of them were unable
to give me much time for interview.
The information of Eastern Bank Ltd was not found in a structured way.
As I have taken a sample of small size of observations, there may be some
sampling error.

5
 Chapter-2
Literature Review

6
Literature Review

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;
equity/corporate bond issues; venture capital or private equity; and asset-based finance such as
factoring and invoice discounting.

https://en.wikipedia.org/wiki/SME_finance

However, not all business finance is external/commercially supplied through the market.
Much finance is internally generated by businesses out of their own earnings and/or supplied
informally as trade credit, that is, delays in paying for purchases of goods and services.

Although there have been numerous schemes and programmes in different economic
environments, there are a number of distinctive recurring approaches to SME finance.[5]

 Collateral based lending offered by traditional banks and finance companies is usually
made up of a combination of asset-based finance, contribution based finance, and
factoring based finance, using reliable debtors or contracts.
 Information based lending usually incorporates financial statement lending, credit
scoring, and relationship lending.
 Viability based financing is especially associated with venture capital.
 Reliable for all the small ticket loan.

Bank Negara Malaysia has issued a Circular on the New Definition of Small Medium
Enterprises (SMEs) on 6 November 2013.

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.

https://en.wikipedia.org/wiki/SME_finance

7
The Circular on New Definition of SMEs (the Circular) is to inform financial institutions to
use the revised definition for SMEs effective 1 January 2014 for statistical purposes, eligibility
criteria of SMEs for Government assistance and exclusions.

Circular on New Definition of Small and Medium Enterprises (SMEs) by Bank Negara
Malaysia.

The economic and banking importance of the small and medium enterprise (SME) sector is
well recognized in academic and policy literature.[2][3] It is also acknowledged that these actors
in the economy may be under-served, especially in terms of finance. [4] This has led to
significant debate on the best methods to serve this sector.

https://en.wikipedia.org/wiki/SME_finance

Small and Medium Enterprises include three categories:

1. Manufacturing Business including industrial production, mining, agriculture production
particularly agricultural processing
2. Trading Businesses: wholesale, retail, import, and export

http://www.smebank.co.th/en/definitions.php

The central bank has come up with a new definition for small and medium enterprises in line
with the government's industrial policy of 2010.
Also, the move also defines the country's growing women entrepreneurs for the first time.
The new definition replaced the previous ones formulated in May 2008, incorporating
microenterprise and cottage industries.
Under the new definition, the Bangladesh Bank will deem a woman as an entrepreneur if the
person is an owner or proprietor of a privately-run organisation, or owns at least 51 percent of
share in case of a joint venture or company listed with the Office of the Registrar of Joint
Stock Companies and Firms.
The central bank also included microenterprise and cottage industries in all of its SME loan
policies and programmes, it said in a circular last week.
The new definition will be effective soon, said the circular.
An official of Bangladesh Bank SME and Special Programme Division said the new definition
would help strengthen the government efforts to develop the sector.

8
The official said the definition of 'women entrepreneurs' aims to acknowledge their
contribution to the economy. “It's actually an effort for gender mainstreaming in business. It
will help remove confusion among financial institutions about who is a woman entrepreneur
and who is not.”
“As a result, the government will be able to hand out incentives to women entrepreneurs
effectively and promote them,” the central bank official told The Daily Star yesterday.
He said the definition would help banks and other financial institutions take their loan
products to cottage and microenterprises. “In the past, the financial institutions did not feel
encouraged to finance cottage and microenterprises in absence of a guideline from the central
bank. Now they will feel encouraged.”
In Bangladesh, the SMEs account for about 45 percent of manufacturing value addition, 80
percent of industrial employment, 90 percent of total industrial units and about 25 percent of
total labour force.
Their total contribution to export earnings ranges from 75 percent to 80 percent, according to a
recent economic census. The SMEs make up 75 percent of the domestic economy. There are
about 60 lakh SMEs and microenterprises in Bangladesh, according to Asian Development
Bank.
According to the new definition, in case of manufacturing, a medium-size industry/enterprise
will be those with assets worth Tk 10 crore to Tk 30 crore (excluding land and factory
building, but including replacement value) or 100 to 250 workers.
In both services industry and businesses, the medium enterprises will be those which employ
50 to 100 workers and have assets worth Tk 1 crore to Tk 15 crore (excluding land and factory
building).
The circular said if a business fits into one of the criteria of a large industry, it will be
considered as a large industry, even if its other yardstick features are of a medium one.
In the manufacturing sector, small industries/enterprises will be those with assets worth Tk 50
lakh to Tk 10 crore (excluding land and factory building, but including replacement value)
and/or 25 to 99 workers.
In both services industry and business, small enterprises should employ 10 to 25 workers and
have assets worth Tk 5 lakh to Tk 1 crore.
The central bank circular said if the features of a business match one of the criteria of a
medium industry, it will fall into the medium enterprise category, even if its other yardsticks
represent those of a small one.
In manufacturing, micro industry/enterprise will be those with assets worth Tk 5 lakh to Tk 50
9
lakh (excluding land and factory building, but including replacement value) and/or with
workers between 10 and 24 or less.
In services industry and business, micro-enterprises will be those which employ 10 or less
workers and have assets (excluding land and factory building, but including replacement
value) worth Tk 5 lakh or less.
The BB said if a business fits into one of the criteria of a small industry, it will be considered
as a small enterprise, even if its other features match those of a micro-enterprise.
Cottage industries/enterprises will be those family-controlled ventures having assets worth Tk
5 lakh to Tk 50 lakh (excluding land and factory building, but including replacement value)
and/or 10 to 24 workers or less.
If a business falls into one of the criteria of a micro industry, it will be called a micro one,
even if its other yardsticks are similar to those of a cottage industry.

Passers-by walk past the head office of SME Foundation in Dhaka. The state-run agency is
responsible for promoting SME activities in the country. Photo: Amran Hossain

10
 Chapter-3
Organizational Part

11
3.1 Corporate information of Eastern Bank Ltd.
The bank has scheduled commercial Bank under private sector established within the ambit of
Bank Company Act, 1991 and was incorporated as a Public Limited Company on August 08,
1992. Eastern Bank Limited started commercial banking operations from August 19, 1992. A
huge public response has enabled the Bank to keep up the plan of expanding its network.
Within a span of Twenty years the bank has been able to deliver services to its customers
through sixty-seven branches. In terms of profitability the bank has outperformed its peer
banks. Corporate Banking Division came into existence because of the restructuring of EBLs
business processes. Previously all the loan disbursement and monitoring activities were
carried out by the officers of individual branches, which resulted in poor management and
control of the process. To improve the poor management and control of the process, Eastern
Bank decided to centralize its loan disbursement and monitoring activities. A separate
Corporate Division was created which started operation on 10th January 2002. This division is
responsible for bringing in profitable new corporate clients and retaining present clients by
meeting their various needs. Corporate Banking provides various banking service such as
products, credit facilities and financial solutions which addresses the diverse financial needs
of corporate customers, public and private limited companies, NGOs and sole proprietorship
concerns. It is also responsible for resolving credit issue problems and developing relationship
between the customer and the bank.

The whole corporate division is divided into two areas. Area one comprises of Dhaka and
Outstation Branches whereas Area two comprises Chittagong branches. Area one consists of
six relationship units. Five units in Area one are responsible for looking after the bank’s
assets and one unit is responsible for liabilities, while Area two has three asset units and one
liabilities unit. Every asset unit has a unit head, which is in charge of that unit. Generally one
Relationship Manager (RM) and one Associate Relationship Manager (ARM) work under the
Unit Head. All Units head work under the Head of Corporate and they report directly to him.

12
3.1.1 BANGLADESH-AN OVERVIEW

Bangladesh is a densely populated small country, located in the south region of greater
Asia. The country has got its independence on December 16, 1971. Its total area is 1,47,570
sq. kilometers, surrounded by India on the west, the north and the north east, Myanmar on
the east south and the Bay of Bengal on the south. The cultivable land amounts to
approximately 63% Of the total land area, of which 17.5% is single cropped, 54.7% double
cropped, 20.4% triple cropped and remaining 7.4% is fallow land. The cropping intensity is
approximately 180%.
Bangladesh is a least developed country. Agriculture is the main occupation of the people of
the country. Therefore, the economy is predominantly agro-based and rural in nature. So,
agriculture has a major share in the Gross Domestic Product (GDP). But the share of
agriculture sector in GDP is declining and share of industrial (i.e., SMEs) sector as well as
service sector is increasing. In testimony of this fact, share of Agriculture, Manufacturing
industry & Service Sector in GDP over the period from 2004-05 to 2010-11 is shown in the
following table:
Figure in million Tk.
Industrial
Origin Year
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Agriculture 501,617 558,003 632,479 726,966 804,355 915,579 1,033,872
Fishing 154564 163168 177827 197901 218138 242229 269928
Manufacturing 387952 489227 511780 572008 658902 753081 884296
Medium &
Service 338763 382832 435676 502002 578778 684655 750607
GDP 3707070 4157279 4724769 5458224 6149432 6943243 7874950
Source: Bangladesh Economic Review, 2012
Table 1: GDP Agriculture, fishing, manufacturing & service sector in Bangladesh

Research into small and medium sized enterprises (SMEs) has grown during the last
decade. A huge majority of firms worldwide are SMEs, and they play a significant role in
the economy. Consequently, the performance of the SME sector is closely associated with
the performance of the nation. In Bangladesh, SMEs account for a large proportion of the
total establishments in various sectors.

13
3.1.2 Corporate Mission
“Delivery of service excellence to all the customers, both internal and external.
Ensure to maximize shareholder’s value. Constantly challenges the systems, procedures and
training to maintain a cohesive and professional team in order to achieve service excellence.
Create an enabling environment and embrace a team based culture where people will excel.”
3.1.3 Corporate Vision
“To become the bank of choice by transforming the way we do business and developing a truly
unique financial institution that delivers superior growth and financial performance and are the
most recognizable brand in the financial services in Bangladesh”
3.2 Values
SERVICE We passionately drive customer delight.
EXCELLENCE We use customer satisfaction to accelerate growth.
We believe in change to bring in timely solution.
OPENNESS We share the business plan.
We encourage two way communications.
We recognize achievements, celebrate results.
TRUST We care for each other.
We share learning/ knowledge.
We empower our people.
COMMITMENT We know our roadmap.
We believe in 'continuous improvement'.
We do not wait to be told.
INTEGRITY We say what we believe in.
We respect every relationship.
We do not abuse information power.
RESPONSIBLE We are tax-abiding citizen.
CORPORATE We promote protection of the environment for our children.
CITIZEN We conform to all laws, rules, norms, sentiments and values of
land.

3.3 Strategic Priorities of the Bank

14
 Put all out emphasis on deposit growth.
 Maintain asset quality with strengthened risk management facing above average growth
projections.
 Focus on creating sustainable enterprise value not just making profits.
 Lower cost of deposits by strategizing mix and offering innovative products.
 Cost Championship.
 Pursue inorganic growth through M&A.
 Increase non-funded business to further improve return on investment.
 Careful penetration in the capital market.
 Increase intrinsic value of the company by strengthening internal controls through
installation of clearly laid down policies, procedures and processes.
 Diversify corporate business by leading participation in PPPs.
 Increased focus on Corporate Social Responsibility (CSR).
 Improve quality of human capital by strengthening their competencies.

15
3.4 Management Structure

Board of Directors Chairman

Executive Audit Managing Director

Committe Committ
e ee
Deputy Managing
Add. Managing Director
Director
Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior Asst. Vice President

Asst. Vice President

Senior Principle Officer

Principle Officer

Senior Officer

Officer

Supporting Officer

16
3.5 Achievement
EBL believes in relationship building and focuses on sustainable and long term growth – both for
the bank, its clients and the community it operates in. Despite the constant threat of the global
economic recession and its subsequent effect on the Bangladesh market in 2012, EBL's Profit
after Tax decreased by 6.26% from last year. The Non Performing Loan Ratio dropped to 3.17%
from 1.91%. The same year, Earning per Share (EPS) had decreased by around 5.53.

EBL knows its target customers and as such offers new products and services to cater to their
contemporary taste and need. In the past couple of years the Bank came up with several exciting
products and service propositions: Some of them are a first in Bangladesh. Priority Banking,
Travel related products, life insurance covered DPS, Platinum Credit Card, SME Debit Card to
name a few.
Eastern Bank Limited (EBL), a
leading private sector bank in
Bangladesh has won the Global
Award for Brand Excellence in
Banking & Financial Services
(BFS) category. The Award was
announced on November 25, during
World Brand Congress held in Mumbai, India. EBL is the first Bangladeshi bank to receive the
honour. A. Q. I. Chowdhury OBE, Director of EBL received the award from Dr. Alok
Bharadwaj, Chairman of World Brand Congress at a gala award presentation ceremony at Taj
Lands End hotel, Mumbai. Ali Reza Iftekhar, Managing Director & CEO of Bank was also
present on the occasion. Global Award for Brand Excellence is in its 20th year. It seeks to
recognize those individuals and those practices which have made a difference to the marketing
and branding fraternity. This year over six hundred individuals and organizations from seventy
countries were considered in selecting awardees in various categories.

17
3.6 Product Innovation
EBL is known for its product innovation in the market. During the past five years, EBL
introduced 12 new-to-Bangladesh financial products and services. EBL Matribhumi – the bundle
product for expatriate Bangladeshis, insurance covered monthly savings scheme, VISA corporate

18
cards, remittance card and mobile–based remittance solution are just a few of them. On the SME
banking window EBL offered customer–friendly and groundbreaking products like EBL Uddom
and EBL Mukti. At present, EBL Consumer, SME and Corporate Banking units are capable of
handling every kind of customer financial needs.

Brand Value
Eastern Bank’s claim, ‘Simple Math’ has always been much more than just a marketing slogan
or an advertising strap line, it defines the way that the Bank does business. Through the
consistent delivery of the promise EBL aims to live its brand promise of excellence, relevant
client solutions and responsibility to all stakeholders.

Simple Math – as the strap line goes, EBL offers simplicity in all its banking services and
products. From products and services to processes, EBL tries to uphold the essence of the
message, simplicity. EBL strongly believes in investing in human capital and as such people is
regarded as the most valuable asset of the company.

All in all, EBL has established itself as a valuable brand in Bangladesh symbolizing innovation,
quality and trust.

3.7 EBL Management

The EBL Management Team or Management Committee (ManCom) comprises of a group of
fourteen people and each of them comes with an international working background and is
committed in leveraging their experiences to take EBL to greater heights by ensuring top line
revenues with dynamic capabilities. EBL ManCom is unique in being able to envision the need
of the business by bringing in a mixture of advanced technology solutions know-how and
revamping the organizational make- up for maximum profitability.

Other than the MD & CEO, the remaining ManCom Members each head a function.
 Consumer & SME Banking
 Corporate Banking
 Credit
 Finance
19
  Human Resources
 Information Technology
This mix of people is persistent to provide unparallel service to its customers, come up with
timely and innovative products and services and to enhance the capabilities of its people while
emphasizing on the latest technology. This they believe will take the Bank to a leadership
position in the country. The objective of EBL ManCom is to drive the business to maximize the
operational excellence and efficiency through acquisition of talent, developing systems,
processes and people and through blending in of these to let customers revel in with fulfillment
and permanency.

Ali Reza Iftekhar Managing Director and CEO

Muklesur Rahman Deputy Managing Director (Consumer Banking)
Md. Fakhrul Alam Deputy Managing Director(Corporate Banking & Treasury)
Akhtar Kamal Talukder Head of ICCD
Syed Rafiqul Haq Area Head-Dhaka, Corporate Banking
Muhammad Maniruzzaman Head of Finance
Monjurul Alam Head of Human Resources
Safiar Rahman SEVP & Company Secretary
Abul Moqsud Head of Credit Risk Management
A M M Moyen Uddin Head of Information Technology
S. M. Akhtaruzzaman Chowdhury SEVP & Head of Operations
Sami Karim SEVP & Head of SAMD
Omar F. Khandaker IT Consultant

20
 Chapter: 4
ANALYSIS OF THE
REPORT

21
4.0 SME Banking:

The most valuable resource of Bangladesh is its people. As a nation we struggled for our
independence and now the attainment of economic uplift is the main goal. Micro lenders are
working here in the financial field, providing very small amount and on the other hand regular
commercial banks have been providing bigger amount of loans to larger industries and trading
organizations. But the small and medium entrepreneurs were overlooked. This missing middle
group is the small but striving entrepreneurs, who because of lack of fund cannot pursue their
financial uplift, as they have no property to provide as equity to the commercial banks. With this
end in view-Eastern Bank was opened to serve these small but hard working entrepreneurs with
triple bottom line vision. As a socially responsible bank, Eastern Bank wants to see the
emancipation of grass-roots level to their economic height and also to make profit by serving the
interest of missing middle groups. 50% of its total portfolio usually collected from urban areas,
are channeled to support these entrepreneurs who in future will become the potential strength of
our economy. Eastern Bank is the market leader in giving loans to Small and Medium
Entrepreneurs. They have been doing it for the last 12 years.

4.01.1 Definition of SME

SME is defined as, “A firm is managed in a personalized way by its owners or partners, who has
only a small share of its market and is not sufficiently large to have access to the stock exchange
for raising capital”
But SME definition has been given as per Bangladesh Bank
An organization is not a public limited company and meets the following criteria:

Criteria Trading/ Service Manufacturing

Small Number of Staff (not 25 50
Enterprise more than)
Fixed Asset (Except BDT 50 Thousand – BDT 50 Thousand – BDT
Land & building) BDT 50 Lac 1.5 Crore
Medium Number of Staff (not 50 150
Enterprise more than)
Fixed Asset (Except BDT 50 Lac – BDT 10 BDT 1.5 Crore – BDT 20
Land & building) Crore Crore

22
 4.2 Importance of SME Loan in Bangladesh

The main focus of Eastern 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 the
economy of a country.
So reasons for this program from the viewpoint of EBL:

Support Small Enterprise:

The small enterprise, which requires BDT 2 to 30 lacks loan, but they have no easy access to the
banks/financial institutions. For example: In case of Anonno loan, an amount of 3 to 8 lacks is
provided without any kind of mortgage.

Economic Development

Economic development of a country largely depends on the small and medium seal enterprises.
Such as, if we analyze the development history of Japan, the development of small & medium
scale enterprises accelerate the development of that country.

Employment Generation

The bank gearing employment opportunities by two ways: Firstly, by providing loan to the small
enterprises expanding, these businesses require more workers. Secondly, Small & Medium
Enterprise (SME) program requires educated and energetic people to provide support to
entrepreneurs.

Profit Making

SME program is a new dimensional banking system in the banking world. Most of the CROs are
providing door-to-door services to the entrepreneurs. Entrepreneurs are satisfied by the service of
the bank and make profit.

Encourage Manufacturing

Eastern Bank is highly encouraging manufacturing entrepreneurs who produce by purchasing

various types of materials. CRO try to encourage them to produce material if possible because if
they can produce instead of purchasing their profits will be high.

23
 Another reason of Eastern Bank is to spread the knowledge of importance of SME banking
regarding various businesses. The customer service officers share their knowledge from various
businesses and try to help the entrepreneurs who have luck of knowledge. CRO’s who are the
driving force of SME division of Eastern Bank also gather knowledge about various businesses
and make stronger knowledge base clients who can be able to expand business.

4.3 SME products

Small Segment Loan Products

EBL Asha EBL Uddog

To be repaid within maximum 24 Any legal business purpose, loan
months (Next loan is repayable minimum BDT 6,00,000,
within 60 months) maximum BDT 50,00,000

EBL Agrim EBL Mukti

Any legal business purpose, loan Credit facility up to BDT 300,000
facility minimum BDT 200,000 (three lac) in any legitimate
maximum BDT 950,000 business

EBL Uddom EBL Unnoti

Any successful enterprise "Unnoti" is a bundle loan product
minimum 2 years in same or for SME customer having finance
relevant business can apply for loan against fixed asset ...

EBL Nobodoy EBL Udoy

24
Loan for agro based industry, loan
amount minimum BDT 2,00000 -
maximum BDT 70,00000.
EBL Krishi Rin
In order to ensure loan in
agricultural sector EBL is
introducing 'EBL Krishi Rin'
facilities for the farmers without
any collateral & zero processing
fee.
EBL Utpadon
Flexibility in loan usage, interest
would be charged on utilization
amount only
EBL E-Cash/Loan
Any sole proprietorship,
partnership or limited companies
having minimum 2 years of
successful business operation
25
"EBL UDOY" SME loan facility
for developing leather cluster of
Dhaka area with single digit
interest, 100% Pre-financed by
SME Foundation
EBL Utkorsho
There are huge numbers of
potential Small and Medium
Enterprises (SMEs) are working in
Bangladesh, who has strong
footage in business.
EBL Projukti
Loan will be extended to the
owners up to 15 bighas cultivable
land /7.5 bighas for potato &
sugarcane cultivation
Medium Segment Loan Products

EBL Invoice Factoring EBL Bannijyo

Accepted invoice from list of Any legitimate business with three
buyers/debtors including EBL's years of operation and at least one
Corporate Clients, MNCs, year experience in import business
Multilateral Agencies, Banks,
NBFIs Insurance Companies,
NGOs

EBL Green Credit

Eligible sectors: Steal Re-rolling,
Light Engineering, Pulp and Paper,
Cement, Poultry, Textile,
Readymade Garments, Chemicals,
Plastics, Food and Beverage and
Others.

SME Liability Products

EBL Repeat-SME EBL Subidha

The account is a term deposit Free Monthly Statement for the
scheme where a SME Client can Current Account and Free Half-
earn interest on a monthly basis at yearly Statement for the Shubidha
26
same rate of interest.
EBL Equity Builder
"SME Equity Builder" from
Eastern Bank Ltd. is designed for
the Small and Medium sector
businesspersons as an exclusive
savings scheme.
SME Priority
Banking Proposition
SME Priority Banking Services
Proposition will offer Personal and
dedicated Relationship Managers
(RMs) and EBL Priority Centers
for catering to customer needs on
24 X7 basis
SME VISA Business
Debit Card
Customers can use it by ATM
Booth for 24 hours, every type of
Bill payment can pay through SME
VISA Business Debit Card
27
Account
Payment & Cash Management
Solution (Pcm) Proposition For
SME Customers
Payment & cash Management
solution (PCM) is a tailor-made
product for SME Clientele with
bundles of value added services
proposition from EBL,
Current Deposit Account
Free e-Statement, Free internet
banking facility, Any EBL Branch
Banking facility, Evening Banking
facility from 6 p.m. to 8.00 p.m. at
selected EBL Branches
SME Fixed Deposits
Rate will be adjusted according to
market prevailing rate & as per
EBL ALCO decision from time to
time
4.5 Security Documentation against Loan:
Features
Without mortgage for loan below 10 lac
Loan for fixed assets purchase & civil construction
Loan repayment can be spread up to 4 years
Minimum documentation
Monthly repayment plan
Quick disbursement
Flexible interest rate based on security

Supplier Finance

Supplier finance is a loan facility for the enlisted Suppliers of various large retailers, marketing
companies, distributors, exporters etc. This product’s main objective is to help various Suppliers
to meet their short-study cash flow shortages or bridge the fund-flow gaps.

Eligibility

If client is an enlisted supplier of a corporate house with which Eastern Bank has a
corporate tie- up
Have minimum 3 years of continuous operation
Have 1 year continuous relationship with the purchasing firm
Maximum Amount

Minimum BDT 3 lac up to maximum BDT 30 lac

Features

No mortgage up to 25 lacks
Equal monthly installment and revolving loan facility
1% of loan amount as the processing fee

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A document is a written statement of facts and a proof or evidence of particular transaction
between parties involved. While allowing any disbursements against credit facilities to
borrowers, it should be ensured that prior to any disbursements; security documentation is fully
and properly completed.
Purpose of Decorate Documentation and its Importance

Documentation is necessary for the acknowledgement of a debt and its terms and conditions by
the borrower and the creation of charge on the securities in favor of the bank by the borrower.
Correct and proper documentation allows a bank to take legal measures against the default
borrowers.
If filing a suit with the courts against a default borrower becomes necessary, the court will first
review all documents. If any of the documents is found to be defect or incomplete, the purpose of
security documentation will be defeated and a court ruling in favor the bank cannot be expected.
Proper care should, therefore, be taken while completing security documentation.

Type of Securities

The following listed securities may be obtained from borrower against loan to enterprises, either
individually or in a combination.
Mortgage of loan and other immovable property with power of attorney to sell
Lien of Fixed Deposits receipts with banks and other non-banking financial institutions,
lined, these have to confirm by the issuer
Lien of Pratirakshay sanchay patra, Bangladesh sanchay patra and wage earner
development bond, all considered Quasi or Near cash items
Lien of shares quoted in the stock exchange (This is rarely accepted)
Pledge of goods (Banks are akin to stay away from such securities now a days)
Hypothecation of Goods, Book Debt & Receivables, Plant & Machineries
Charge on fixed assets of a manufacturing enterprise
Lien of cheque, Drafts and order
Lien of work orders, payment to be routed through the bank and confirmed by the issuer
Shipping documents of imported goods

29
4.6 Land Related Securities Documentation Process
Each SME unit offices have with at least two local lawyers who will work on behalf of the bank.
These always will be employed whenever a borrower and where the security will be landed and
immovable property accept a loan sanction. Any one of the lawyers will be provided with
photocopies of all the relevant land related documents and while handing over show the original
documents to them, the lawyers will carry out checks of the originals and if satisfied returned to
the borrower.
The documents generally provided are:
Title Deeds or Deed of conveyance otherwise known as ‘Jomeer Dalil’ which signifies
ownership of a particular land
Baya Dalil or Chain of Documents, which signifies that the conveyance of titles has been
proper and legal
Mutation Certificate if Khatian which signifies that the title if the land has been duly
registered in the Government/Sub-registrar’s records
Duplicate Carbon Receipt or DCR
Latest Khajna or land rent receipt
Purchase such as CS Khatian, SA Khatian and BS Khatian
Mouja Map
Municipal rent receipts if the land falls within a municipal area

Other Security Documents

Letter of Hypothecation of Goods & Stocks and Book Debt and Receivable

These letters Hypothecation are actually two different sets of documents but because of their
similarity, these are being explained together. These documents create an equitable or floating
charge in favor of the bank over the goods and services and/ or book debts and receivables that
are being financed where neither the ownership nor the possession is passed to the bank. Under
this agreement, the borrower undertakes to keep the percent stock of goods and that, which may
increase from time to time in good condition in future, in good condition. This hypothecation
gives the bank the power to possesses and sell the mentioned goods and stocks or claims the
book debts directly from the debtors in order to settle the borrower’s dues to the bank.
30
Letter of Hypothecation of Plant & Machinery

Under this agreement, the Borrower undertakes to keep the present plant and machinery at the
present location in good condition and which gives the bank the power to posses and sell the
mentioned plant and machinery to meet the borrower’s dues to the bank. In case of limited
company, both private and public, these Letters of Hypothecation with schedules are usually
registered with the Registrar of Joint Stock of Companies (RJSC) that provides more security to
the banks.
Letter of Lien

A lien the right of one person to retain property in his hands belonging to another until certain
legal demands against the owner of the property by the person in possession are satisfied. Thus a
bank or a creditor who has in its possession a lien over the goods in respect of the money due by
the borrower, as a general rule has the right to exercise certain powers to hold on to the security.
In addition, if the bank has right to set off the value of the said goods or instrument in its
possession, then the bank can sell the goods or encase the instrument to liquidate the dues by the
borrower.

Personal Guarantees

This is a guarantee of a person or third who is not the direct beneficiary of the loan/credit facility
but is equally liable for the loan. The involvement of a 3rd party creates additional pressure on
the borrower to minimize the risk. The guarantor is the person who has to pay the entire
outstanding loan and interest if the borrower fails to pay for any reason.

4.7 Selection of Potential Enterprise for SME:

Enterprise Selection Criteria

The success of SME will largely depend 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 environment friendly, no narcotics or tobacco business
 The business should be legally registered, i.e., valid trade license, income tax or VAT
registration, wherever applicable

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  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 make to understand the risk faced by the business.

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
the age of 25-50. If he/she is an elderly person closer to 50, it should be seen what the
succession process will be and whether it is clearly defined or not
 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 have and acceptable social standing in the community (People
should speak highly of him), he should possess a high level of integrity (Does not
cheat anyone, generally helps people), and morally sound (Participates in community
building)
 The entrepreneur must possess a high level of enthusiasm and should demonstrate
that he is in control of his business (Confidently replies to all queries) and has the
ability to take up new and fresh challenges to take the business forward
 Suppliers or creditors should corroborate that he pays on time and is general in nature
 Clear-cut indication of source of income and reasonable ability to save.

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 Guarantor Selection Criteria

Equally important is the selection of a guarantor. The same attribute applicable for an
entrepreneur is applicable to a guarantor. In addition he should posses the followings:
 The guarantor must have the ability to repay the entire loan and is economically
solvent (Check his net worth)
 The guarantor should be aware about all the aspect of loan, his responsibility, know
the entrepreneur reasonably well & live in same community
 Govt. and semi-govt. officials can be selected as a Guarantor such as schoolteacher,
college teacher, doctor etc
 Police, BDR and Army persons, political leaders and workers, and Imam of mosque
cannot be selected as a guarantor

4.8 Terms and Conditions of SME Loan:

The SME department of Eastern Bank will provide small loans to potential borrower under the
following terms and condition:
The potential borrowers and enterprises have to fulfill the selection criteria
The loan amount is between Tk. 2 lacs to 30 lacs
SME will impose loan processing fees for evaluation / processing a loan proposal as
following:
Loan Amount Loan Processing Fee
2 lacs to 2.99 lacs BDT 5,000
3 lacs to 5 lacs BDT 7,500
5.01 lacs to 15 lacs BDT 10,000
15.01 lacs to 30 lacs BDT 15,000

Loan can be repaid in two ways:

1. In equal monthly loan installment with monthly interest payment

Or
2. By one single payment at maturity, with interest repayable a quarter end residual on
maturity
Loan may have various validates, such as, 3 months, 4 months, 6 months, 9 months, 12
months, 15 months, 18 months, 24 months, 30 months and 36 months
The borrower must open a bank account with the same bank and branch where the SME
has its account
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 Loan that approved will be disbursed to the client through that account by account payee
cheque in the following manner: Borrower name, Account name, Banks name and
Branch’s name
The loan will be realized by 1st every month, starting from the very next month’s
whatever the date of disbursement, through account payee cheque in favor of Eastern
Bank Limited A/C. With Bank’s named and branches name
The borrower has to issue an account payable blank cheque in favor of Eastern Bank
Limited before any loan disbursement along with all other security
The borrower will install a signboard in a visible place of business of manufacturing unit
mentioned that financed by “Eastern Bank Limited”
The borrower has to give necessary and adequate collateral and other securities as per
bank’s requirement and procedures
In case of fixed asset financing 50% of the acquisition cost of the fixed asset may be
considered. While evaluating loans against fixed asset, adequate grace period may be
considered depending on the cash generation after the installation of the fixed assets.
Maximum period to be considered including grace period may be for 36 months.

4.9 Monitoring:

Monitoring is a system by which a bank can keep track of its clients and their operations. So
monitoring is an essential task for a CRO to know the borrowers activities after the loan
disbursement. This also facilitates the buildup of an information base for future reference.

4.10 Importance of Monitoring

Through monitoring a CRO can see whether the enterprise invested the sanctioned amount in the
pre-specified area of his business, how well the business is running, the attitude of the
entrepreneur, cash credit sales and purchase, inventory position, work in process and finished
goods etc, This information will help the CRO/Eastern Bank to recover the loan accruing to the
schedule and to take the necessary decisions for repeat loans. Moreover, monitoring will also
help to reduce delinquency. Constant visit over the client /borrower ensures fidelity between the
bank and the borrower and tends to foster a report between them.

35
 Area of Monitoring

The purpose is to know the entire business condition and all aspects of the borrowers so that
mishap can be avoided.

Business Condition

The most important task of the CRO to monitor the business frequently, it will help him to
understand whether the business is running well or not, and accordingly advice the borrower,
whenever are necessary. The frequency of monitoring should be at least once month if all things
in order.

Production

The CRO will monitor the production activities of the business and if there is any problem in the
production process, the CRO will try to help the entrepreneur to solve the problem. On the other
hand the CRO can also stop the misuse of the loan other than for the purpose for which the loan
was disbursed.

Sales

Monitoring sales proceed is another important task of the CRO it will help him to forecast the
monthly sales revenue, credit sales etc. which will ensure the recovery of the monthly loan
repayments from the enterprise as well as to take necessary steps for future loans.

Investment

It is very important to ensure that the entire loan has been invested in the manner invented. If the
money is utilized in other areas, then it may not be possible to recover the loan.

Management of raw materials

In case of a manufacturing enterprise, management of raw materials is another important area for
monitoring. If more money is blocked in raw materials, then the enterprise may face a fund
crisis. On the other hand the production will suffer if there are not enough raw materials.

36
4.11 Monitoring System
The CRO can consider the following things for monitoring

The CRO will monitor each business at least once a month. He/she will make a monitoring plan/
schedule at beginning of the month
During monitoring the CRO must use the prescribed monitoring from and preserve in the client
file and forward a copy of the report to SME head office immediately. An SME branch will
maintain the following files: The file will contain-
Purchase Receipt
Delivery Memo’s
Quotations
In addition, all other papers related to furniture and fixture procurement

Economic Mapping Survey:

After starting a SME, unit office in a new area the CRO will conduct a survey of the business.
The objective of the survey is to collect relevant information about the business, which will help
to select potential business for SME loans. To conduct the economic mapping and survey
properly; the following 5cs should be followed:
i. Capacity
Capacity refers to the ability of the firm to repay the loan. In loan application, CROs must
discuss exactly how and when borrower intends to repay the loan. Not only need to state clients
revenues and expenses, but also need to indicate the amount of clients cash flows and the timing
of cash flows with regard to repayment. Capacity also refers to client’s credit history. Do have a
good credit score? The bank will look at clients past repayment history, both business and
personal. Don't forget to indicate every possible source of repayment at disposal in application.
ii. Collateral
Collateral is a distinct relationship to capacity. Collateral refers to forms of security which can
provide assurance to bank for getting money. Collateral may be buildings or equipment owned
by small business or by personally, including home, land etc. Collateral may also include a
guarantee by someone else that, in case clients cannot repay the loan, the other party will.
Eastern Bank treats loan guarantees by the term "co-signer."
37
iii. Capital
Capital, in this context, represents the owner's investment in the business. Before applying for a
bank loan, the owner has to have a significant investment in the business before a lender will
even consider making a business loan. The loan officer will look carefully at the amount and
quality of capital the owner has to offer.
iv. Conditions
Conditions are two-fold. First, conditions refer to the overall economic climate and external
environment surrounding the bank and the business firm. During a recession or periods of tight
credit, it is obviously more difficult for a small business to repay a loan and more difficult for a
bank to find the funds to loan. It becomes even more important for the small business firm to
present an iron-clad loan application to the bank. The second part of conditions refers to the
intended purpose of the loan. Are borrowers buying new equipment for expansion? Are
borrowers replenishing working capital to prepare for seasonal inventory buildup? Why do
borrowers need the money? Spell it out in detail in loan application.
v. Character
Character is often a subjective judgment made by the banker about the prospective client. The
lender decides if the client is trustworthy with regard to repaying the loan and generating a return
on the investment. To justify character CROs meet with suppliers, ex- lenders & third party.

For initial assistance, CRO may approach-

BRAC office
Trade Associations and Chambers
Local govt. office like UNO and Municipal office
Once potential borrower is formally approached, then all details should be incorporated in the
client register as per the prescribed format.

4.12 Procedure of Eastern Bank SME loan:

Loan Sanction activities

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.

38
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 mortgage is necessary)
Collect Confidential Information
Another important function of a CRO is to collect confidential information about the client from
various sources. The sources of information are suppliers regarding the client’s payment,
customers regarding the delivery of goods of services according to order, various banks where
the client has account, which shows the banks transactions nature of the client
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 an bank
account where Eastern Bank has a STD a/c. Eastern 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 Bureau) 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 sends 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

In the CIB report Bangladesh Bank uses any of the following reference no:
NIL: if the client has no loan facility in any bank or any financial institution then BB
(Bangladesh Bank) use ‘NIL’ in the report
UC (Unclassified): if the client has any loan facility in any bank or financial
institution and if the installment due 0 to 5.99 then BB use UC in the report
SS (Substandard): if the client has any loan facility in any bank or financial
institution and if the installment due 6 to 11.99 then BB use SS in the report
DF (Doubtful): if the client has any loan facility in any bank or financial institution
and if the installment due 12 to 17.99 then BB use DF in the report
39
 BL (Bad lose): if the client has any loan facility in any bank or financial institution
and if the installment due 18 or above then BB uses BL in the report. This report
indicates that the client is defaulter and the bank should not provide loan the client
Loan decision considering CIB report: Considering CIB report, Eastern Bank decide
whether it will provide loan the client or not. If the bank decides to provide loan then
the SME of head office keep all information and send all papers to the respective
unit office to apply with all necessary charge documents.

Loan Sanction

The respective unit office sanctions loan to the client if it is 2 to 5 lacs, and then sends the
sanction letter including all necessary charge documents to the loan administration division for
disbursing the loan. If the amount is higher than 5 lacs then the respective unit office sends the
proposal to SME, head office for sanction. The head of SME sanctions the loan and sends the
sanction letter including all documents to the loan administration division for disbursement and
inform the respective unit office regarding sanction of the loan.

4.13 SME Loan Recovery Procedures:

The repayment process starts immediately after one month of the loan taken. Suppose if a loan is
taken in January 5, 2013 then the repayment process will be started from February 5, 2013 and
the borrower will pay his/her first installment in that date. Before that date, the borrowers will be
informed about the number of installments and amount of each installment. He can deposit the
installment by himself or by the Customer relationship officer (CRO). Again they can deposit the
installments either in any branch of Eastern Bank or in any correspondence bank (where Eastern
Bank has no branch). If the borrower cannot pay the installment in the stipulated date, interest
will be charged for each day before they pay that installment. Again interest will be reduced if
the borrower pays the installment before the date of repayment. Interest will be charged and
added to the principal amount for every month or every 3 three months depending on the policy
for each loan disbursement.
However, after the borrower repays the loan installments there are number of steps done in the
repayment procedure of SME loan. These steps are:

40
Receive SMS/Fax for installment deposits
When the borrower repays any installment of the loan then he/she informs it to the unit
office/CRO. Then the unit office/CRO sends an SMS through mobile phone or a Fax to the loan
administration division informing the repayment. A loan administration division collects these
SMS /Fax and takes a paper print of these SMS.
Entry the installment information to MBS
Loan administration division entries the repayment installment information to the banking software
Finacle.
Print Vouchers
Completing the entry, the loan administration division takes paper print of all vouchers in a
prescribed yellow paper.

Check SMS/Fax and solve problems (If any)

The loan administration is responsible for all entry in Finacle. If there is any error found in future
then the respective officer who is entering this information in Finacle will be liable for it. User ID
will easily identify it. So they are always aware of to ensure the correct entry. Completing the entry
of information, they print a hard copy and check it with the SMS/Fax. If there is any error found
then it is solved and ensures the correct information entry.

Repayment voucher check and posting

If it confirmed that all entering information is correct and there is no error, then the responsible
officer of the loan administration division posts it to Finacle. If one time posted, it is not rectifiable
without permission of the higher authority. So the loan administration is always aware of regarding
the recovery procedures of SME loan.

41
4.14 Identification of location wise fixed assets:

I along with two had to visit almost 135 locations in Dhaka, Chittagong, Rajshahi, Rangpur,
Barisal, Sylhet, Jessore, Comilla and Khulna divisions. On each location outside Dhaka there is
an IT specialist person who guidelines us. The main objective of this project is to identify the
fixed assets based on the location of the fixed asset. For instance whenever we had to visit a
branch first we had to make sure that the fixed asset list as well as the tag of those assets is with
us, without those things we cannot identify the fixed asset on a location wise basis. A sample of
the sheets that we used to collect information is given as followings:

Item Brand Model Object Serial No Pin Appro Locati Rema

Name Id No x.date on rks
Monitor Dell Rev 40 PCD00 CN0M875N64180 1231 2 YRS Cash
02150 94R12ZU
CPU Dell Optiplex COM0 R5TX8WU 1231 2 YRS Cash
960 002150
Laptop Lenovo B400 PLC00 LXTZYRSUHAD 3420 1.5 MNG
03030 32 YRS ROM
AC GENE ASGH1 E0163740 TAG
RAL SH N/A
Iron SAF00
Safe 00150

We had to collect the brand, model, product serial number and the user pin number of the assets.
The detail information about the location that we have visited is given in the end of appendix.

42
4.15 Affixing barcode on all the fixed assets

Barcode is a tag on which the asset’s number is written with the specific the description as well
as the particular location of the assets. Beside this, there is a Logo with the name of Eastern
Bank on that barcode which represents that the owner of the assets is Eastern Bank Limited.
Earlier the barcode that are affixing on the fixed asset is purchased from the third party but now
EBL has its own barcode printer to print the barcodes.
The sample of a barcode is given as followings:

|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

ACR0002003

Object des: AC General 2.5 ton

Location: Natore Branch

1.16 Reconciliation of the assets with the asset register book in IFS

We had to tag all the fixed assets of almost 135 locations including Branches, SME Unit Offices,
ATM Booths, Apon Shomoy, AB centers, ROC (Regional Operations Center), CRM (Credit
Risk Management) of Eastern Bank Limited within three months. After that we had to prepare
two Excel Sheets; one is for the tagged assets and the other one is for the untagged assets.
Untagged assets were those assets that are completely new or transferred from other locations
and had no existence on that particular location in the IFS. After preparing those Excel Sheets
with all the update information regarding the fixed assets then we had to reconcile the fixed
assets with the asset register book in IFS software. We also had to enter the serial number as well
as the model of the IT equipments (such as monitor, CPU, Laptop, AC, Money counting
machine, UPS, Printer, Scanner, Fax machine, ATM machine, Online UPS, Generator etc.) in the
IFS. In case of Monitor, CPU and UPS we had to collect the user pin number of the employees
who were using those IT equipment.

43
Chapter: 5
FINDINGS

44
5.1 Findings : From The data collection the following things are found:
1. EBL SME authority should carefully choose the proprietors while disbursing the SME loan.
Because overly aged persons cannot pay the SME loans. The maximum age limit for taking
any SME loan program is 60 years according to EBL SME policy.
2. Inexperienced proprietors are not encouraged to gain the SME loans. From the data, it
was found that most of the proprietors have 5-10 years of experience who are currently
getting the SME loan.
3. Most of the interviewed proprietors use this SME loan for purchasing raw materials. The
other major use of the SME loan is for meeting salary and daily expenses.
4. Most of the proprietors (48%) said that it took less than 1(one) month between loan
application and sanction. 24% proprietors said that it took around 1 month to get the loan.
That means EBL SME is serving the clients quite well in terms of granting SME loans.
5. According to the proprietors those who apply for the loan, EBL SME service should be
more attractive in time length between loan applications and loan payment. Inexperienced
marketing force is also the negative thing to discourage the proprietors to the loans. This
means that the EBL Management should make some proper steps to organize the whole SME
marketing and disbursement process for better results.
6. After taking the loans from EBL, some proprietors said that they are either highly
satisfied or just satisfied with the SME loan of Eastern Bank Ltd. It means that more than
60% of the proprietors think that the service level of Eastern Bank Ltd is quite good and it’s
also quite satisfactory to the clients.
7. 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.
11. Compared to other banks (public and private)Eastern Bank Ltd has not been
successful in increasing their SME Portfolio over the years, but the growth they are
showing is good.
12. SME market is highly competitive and EBL might lose a big portion of its future
client portion to the other banks, but EBL has a strong human resource and experienced
SME team which can help the bank achieve the future targets successfully.

45
 Chapter: 6
RECOMMENDATION

46
 6.1 Recommendations
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

 EBL 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, EBL should put more time and money in developing new SME products

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

 The loan approval process should be made simpler.

 Prioritize indirect support measures like capacity building for SME, supporting exchange/sharing
of good practices of non-competitors.

 As the SME Banking in Bangladesh are habituated to operating in a semi-formal manner and
banks are probably one of the most formalized institutions in our country, a big gap has
opened up. The first step for EBL would be to minimize this gap by relaxing bank procedures.

 The bank should develop an official credit-rating system in easier way, even if in a limited
manner, as soon as possible so that they can have some idea about the reliability of their SME
clients

47
 Chapter: 7
CONCLUSION

48
7.1 Conclusion:

As a third generation private commercial bank, Eastern Bank Ltd. has a good possibility
to be a leading bank in the economy of Bangladesh. To achieve that, they need to find
out the areas where they can expand. In recent years, their performance in SME sector
compared to other banks is not so much satisfactory, but they showed a regular growth
from 2010 to 2014. This means that they have the possibility to be one of the best banks
in SME sector. SME is a successful sector in Bangladesh which can be important for all
the banks in the near future. All the banks are always trying to maximize their SME
collection. That is why, to keep up with other banks in Bangladesh, Eastern Bank Ltd.
(EBL) 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.

49
 BIBLIOGRAPHY

1. Annual Report of Eastern Bank Limited 2011 and 2012.

2. Daily Affairs of Card division, Report.
3. Different Types of Form of EBL.
4. Jeff Madura, International Financial Management, 8th Edition, Thomson & South-
Western, http://finance.swlearning.com.
5. Besley Scott & Brigham Eugene F. 2004, Essentials of Managerial Finance, 13th
Edition, the Dnyden Press, Harcourt College Publications
6. Daily Statement of Eastern Bank Limited Mirpur Dar-Us-Salam Road Branch,
Dhaka.
7. Monthly Report of Eastern Bank Limited of the year, 2011-2012.
8. Schedule Bank Statistics of Eastern Bank Limited, December-March, 2012.

Website:
 http://www.ebl.com.bd/
 http://www.ebl.com.bd/annual_report.htm
 www.google.com
 http://www.investorwords.com/
 http://www.yourdictionary.com/finance/
 http://www.netmba.com/finance/financial/ratios/

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