Letter of Transmittal

December 29, 2013 The Director, Centre for Post Graduate Studies, BIBM

Subject: Submission of Dissertation Paper.

Dear Sir,

With due respect, I am submitting herewith my dissertation paper on the above-mentioned title for the partial fulfillment of the requirement of 6th Term of MBM Program. I have striven hard in preparing this dissertation and tried to make the paper comprehensive within the constraints. I sincerely believe that it will serve the required purposes. I shall always be obliged to furnish any clarification regarding this dissertation, if required. Your assignment was an eye-opener for me. I had little knowledge on this issue before writing this paper. I thank you for giving me the scope of developing a humble insight on the subject. I enjoyed writing this paper.

Sincerely yours, Md.Masud khan MBM 16th Batch ID: 161234 BIBM

Acknowledgement

At first, I would like to express my gratitude to Almighty Allah for giving me the strength to complete the report within the stipulated time. A single individual can achieve no noble object. In any creation, the list of expressing thanks- no matter how extensive- is always incomplete and inadequate. This acknowledgment is not an exception. I am thankful to BIBM for giving me such exposure to the practical banking world. My warmest thanks go to Dr. Toufic Ahmad Choudhury, Director General, BIBM & Md. Mohiuddin Siddique, and Director (CPGS) for their indefatigable guidance, careful supervision and unwavering encouragement to guide me throughout the paper. I express my heartiest gratitude to my Dissertation Supervisor Professor dr.shah mohammad ahsan habib , Assist Professor, BIBM for giving me effective suggestions, precious comments, valuable guidance and enormous inspiration without which the effort of pursuing this report would have proved futile. I am very much grateful to all other teachers for their scholarly suggestions and assistance. I would like to give my deep appreciation to all my friends and classmates for providing me all the necessary helps and supports to complete this report. Once again very special thanks go to seniors, and all those persons who have helped me in the correction of this study. However, the responsibilities of errors and omissions in the report, if any, lie with me.

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Executive Summery

SMEs all over the world have been playing a crucial role in promoting economic development as well as industrial production. SME financing has been identified as a major obstacle to SME growth. Unfortunately, the issue seems to be as unresolved as it always has been. Though the majority of the issues are with the SME themselves, the banks also have major issues in designing financial products for the SMEs. Country like Bangladesh which is considered as The Least Developed Countries (LDCs) in the east have started refocusing their attention on SMEs to enhance their role in bringing about structural changes in their economies. Hence, the future of Bangladesh industrial development depends largely on the development of SMEs. In the context of Bangladesh, the development of Small and Medium Enterprises (SMEs) can be considered as a vital instrument for poverty alleviation and ensure the rapid industrialization. This study tries to find out the underlying problems from the banks perspective. The major findings are related to the high interest and loan duration rates, reasons for SMEs relatively informal way of doing business in contrast to banks formal procedures and prerequisites, banks relative inexperience in this field. They are also related to the banks lack of perspective, the viability and benefits of cluster unity, approach to informal loan takers and non-usage of modern technology and accounting procedures. The recommendations were provided based on the analysis and findings.

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

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List of Acronym

Swift- Society For Worldwide Interbank financial telecommunication.

BIC stands for Bank Identifier Codes

RMA Relationship Management Application

LDC-Least Developed Country B.B-Bangladesh Bank ADB-Asian Development Bank IDB-Islamic Development Bank DBBL-Dutch-Bangla Bank Limited IFIC- International Finance Investment and Commerce Bank Limited SCB-Standard Chartered Bank A/C- Account FDR- Fixed Deposit Receipt SOD- Secured Overdraft ECC - Export Cash Credit SHBL-Staff house Building Loan CCS- Consumer Credit Scheme LIM -Advance (Loan) Against Imported Merchandise LRA- Lending Risk Analysis CC-Cash Credit
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