Page |1

Chapter: 1
Introduction
 Page |2

Introduction
The bank is the life blood of modern economy. It is a financial intermediary in todays economy.
In civilian society, for people, without money it is impossible to continue as like as without bank
it is impossible to make sure the effective use, transaction and security of money. So money and
bank are interrelated. There are different views on the subject- Origin of the word bank. Most of
the scholars have agreed upon the following diagram:

banke banco bank

(german word) (italian word) (english word)

Generally, what a bank does are called banking. Banking sector of Bangladesh is one of the major
sectors, which contributes significantly to the national economy. Today this industry in
Bangladesh has flourished over the years, making double digit profit percentages, sustaining
growth and surviving cut throat competition while providing attractive returns to shareholders. It
is generally a high- regulated, promising industry. Though the main tasks of banks are collecting
deposit and provide credit, today this industry provides many other services

Provide service provide service

Income

Deposit money Lending loan

Depositor Bank Borrower
(Deposit money (Financial (Receive money
with low interest) intermediary) with more interest)
Collect money Loan recovery

Interest
Outlay profit
 Page |3

In Bangladesh, there are different types of banks. When we use the term bank without any prefix
we understand commercial bank. Janata Bank ltd, is the second largest commercial bank. As SME
loans Bangladesh change the Bangladesh economy, JBL has been financing Small and Medium
Enterprises (SME) with a view to developing a balanced and dynamic industrial sector having a
strong base of SMEs throughout the country.

Origin of the Report

Basically, theoretical knowledge and practical experience are the two sides of one coin. That
means, without applying theoretical knowledge in the real world, it is ridiculous to achieve our
education purpose. Recognizing the importance of practical experience, the department of
management studies, Jagannath University, a pioneer in the business education of Bangladesh has
introduced 45 days temporary practical work program as a part of the curriculum of Bachelor
Business Administration program which is known as Internship Program. It carries four credit
as well. This report is originated to fulfill the internship program as well as to complete my BBA
program. During the period of my internship, I am adjusting and applying my theoretical
knowledge with my practical experience.

This report title Small and Medium Enterprises(SME) Banking of Janata Bank Limited: A
Special Focus on Islampur Branch was decided upon after approved by Mr. Md. Mohiuddin,
Associate professor of Department of Management Studies, Jagannath University.

Objectives of the Report

I segregated the objectives of the report into two parts. Those are:

General
objectives
Objectives
Specific
objectives
 Page |4

General Objectives:
General objectives of this report are:-

To complete the internship program as preparing a report is a partial requirement of

internship program
To explore SME banking of Janata Bank Ltd. Islmpur branch under the guidance of
Bangladesh Bank.

Specific Objectives:
Specific objectives of this report are:-
To know the SME loan and its different products of Janata Bank ltd. Islampur branch.
To understand the corporate culture of Janata Bank Ltd. Islampur Branch.
To adjust my theoretical knowledge with my practical experience.
To augment the practical knowledge of banking sector.
To examine bank's overall credit policy towards SME facility
To find out the barriers against smooth flow of SME loan.

Methodology of the Report

Methodology is the most important component in any report. The report requires a systematic
procedure from selection of the topic to preparation of the final report. To make the report, the
data sources were to be identified and collected, to be classified, interpreted and presented in a
systematic manner and key points were to be found out. This section of the report mainly includes
data requirements, data processing and analysis.

Data
requirement
Data Data
*data analyses
processing
collection
procedure
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Data Requirements

Data are the raw materials for any report. Relevant data for this report were collected from both
secondary and primary sources.

qustionnaire survey to selected

15 SME proprietors
primary data
sources
practical work expoure at JBL
data
requirements(source
monthly record of JBL
s 0f data)

Official website of the bank

(www.janatabank-bd.com)
secondary data (jb.com.bd)
sources

study related books

bangladesh bank website

Data Processing

As my internship program was only 45 days, I have undertaken one month data (31.01.2017) for
the analysis purpose.

Through the questionnaire survey, I collected the primary data to find out the demographic profile
and their business condition and the success factors and problems faced by them. After the
questionnaire survey, the results were processed and analyzed. For processing the collected
information I used mainly -

MS Word,
Excel
 Page |6

Data Analyses

As my internship program was only 45 days, I have undertaken one month data (31.01.2017) for
the analysis purpose.

Necessary tables have been prepared on the basis of collected data and various statistical
techniques have been applied to analyses on the basis of classified information. Data analysis
portion have been covered in chapter 4 by:

Interpreting collected data through some graphs, charts. This analysis have been done
on the basis of questionnaire survey to the selected SME clients.

Limitations of the Report

This report is not out of limitation. Although the officials were so busy, they gave wholehearted
cooperation in the time of internship also in preparing this report. There have some limitations to
make this report perfectly.

The work is done on a sample of small respondents.

Limited access to necessary information preserved by the bank. Therefore, it is very
difficult to carry out detailed analysis of the Banks problems and prospects of Small and
Medium Enterprises (SMEs) financing.
Lack of records
Due to lack of experience, there may have been faults in the report through maximum
efforts have been given to avoid any kind of mistake
The length of this internship program (45 days) is not sufficient to conduct a detailed report
on the subject of research.
Hard to reach the SME proprietor.

--------------------
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Chapter:2
Overview
of
Janata Bank Ltd.
 Page |8

Background of the Company

Janata Bank Ltd. is the second largest commercial bank and is catering the need of the mass
business people. It was corporatized on 15th November 2007. Janata Bank ltd. was born with a
new concept of purposeful banking sub serving the growing and diversified financial needs of
planned economic development of the country.

The bank was initially emerged in the banking scenario of the then East Pakistan as The United
Bank Limited and The Union Bank Limited at the initiative of some Bengalese entrepreneurs
in the year1959 under Bank Companies Act 1913. After the independence of Bangladesh in 1972
this Bank was nationalized as per policy of the Government and renamed as Janata Bank Limited.
Janata Bank Limited is a 100% government owned commercial bank in Bangladesh. Janata Bank
Limited welcomes you to explore the world of progressive Banking in Bangladesh.

List of Region/ Area of Janata Bank Ltd.

List of branches

Local Office 01
Corporate-1 Branch 12
Corporate-2 Branch 40
Overseas Branch 04
Grade-1 Branch 204
Grade-2 Branch 209
Grade-3 Branch 296
Grade-4 Branch 117
Total branches 893

Table: List of branches of Janata Bank Limited

Note: Islampur Branch, Janata Bank Ltd. is Grade-1 branch.

 Page |9

Vision
To the effective largest commercial bank in Bangladesh to support socio-economic development
of the country and to be a leading bank in South Asia.

Mission
Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy,
delivering high quality financial products, providing excellent customer service through an
experienced management team and ensuring good corporate governance in every step of banking
network.

Award and Recognition

The journey of Janata bank ltd. has been passed many years. Meanwhile it shows many outstanding
performs, to be the effective largest commercial bank. Because of its performance based on number
of criteria including growth in assets, profitability, customer service, product innovation ,advanced
technology, strategic relationships, competitive pricing, remarkable progress, financing program
for women entrepreneurship, exclusive use on all publicity and advertising, it has been domed with
a number of lofty awards and recognitions by different crowned organizations & magazines of
home and abroad.

Growth in
Assets
Remarkable
progress Profitability

Financing
Program for Customer
Women Entre- Criteria Service
preneurship

Strategic Product
relation- innovation
ships Advanced
Technology
 P a g e | 10

Few of these recognitions and awards are given below:

World's Best Bank Award-

2006, 07, 08 & 09 in Bangladesh

Asian Banking Awards 2004 & 2005

The Bank of the Year awards
-2001, 02, 03, 04, 05, 07, 08, 11
in Bangladesh

ICMAB Best Corporate Award-2011, 12,

14, 15

Business Asia Most Respected Company

Awards-2012

Banker's Global Ranking of Banks-2012

SAARC Anniversary Awards
for Corporate Governance Disclosures 2013

Foreign Remittance Awards

Quality Recognition Award 2009

Organizational Structure
The Board of Directors which manages Janata Bank Ltd. affairs consist of 13 (thirteen) members.
The members of the Board of Directors of the Bank hold very respectable positions in the society.
They are from highly successful group of Business and Industries in Bangladesh. For efficient
operations of the bank the BOD forms an executive committee of 19 members. The bank maintains
transparency in its entire decisions. All decisions of management comes through discussion in an
orderly manner. The following chart shows the organizational hierarchy of Janata Bank ltd.
 P a g e | 11

Additional Deputy
Managing
Chairman managing managing
director
director director

Assistant vice Senior vice Executive vice

Vice president
president president president

Senior
Executive
executive Principle officer Senior officer
officer
officer

Officer

Figure: organizational structure of Janata Bank Ltd.

Products and Services

Janata Bank is always conscious of the changing needs of the customers and strives to develop
new and improved products and services for its valued customers. Bank offers various Products
& Services to meet all kinds of financial needs of its customers.

Products offered by Janata Bank

Mainly three types of products offered by Janata Bank.

Deposit
Loans and advance
Products Special products
 P a g e | 12

Deposit Products
Current Deposit: Janata Bank Limited offers customers current deposit facility for day-
to-day business transaction without any restriction.
Features:
Pays no interest
A customer can withdraw money from this account when he wants by presenting
his account cheque over counter during any working day.
This type of account may be opened in the name of individual or firms.
Best suits best for business man or business firm.

Saving Deposit: Savings Bank Account can be opened in any branch of Janata Bank
depositing any amount of taka by any Bangladeshi citizen in the name of an individual or
a group of individuals.
Features:

Can be operated singly or jointly.

Account holder can deposit or withdraw any amount during any working day with
prior notice or without notice.

Special Notice Deposit: Janata Bank Limited offers interest on customer's special notice
deposit (SND) account and gives facility to withdraw money at any time.

Fixed Deposit: A depositor can open Fixed Deposit Account for different terms with any
branch of Janata Bank easily. Any individual or a group of individuals can go to any branch,
fill a prescribed form, depositing cash or easily cashable instrument of FDR amount and a
Fixed Deposit Receipt will be issued by the Bank on behalf of the applicant.

Schemes: Under this scheme Janata Bank offers various deposit schemes following
monthly savings plan suitable for all classes of people and continue depositing to complete
the respective tenor.

Loans and Advance

The main difference between loans and advance is Loans is a debt provided by a financial
institution for a particular period while Advances are the funds provided by the banks, which needs
 P a g e | 13

to be payable within one year. The main focus of Janata Bank Limited Credit Line/Program is
financing business, trade and industrial activities through an effective delivery system.

Agriculture loans
Term loan for medium and large industries
Working capital loan
Export loans
Import loans
Financing in green banking
Term loan for small and cottage industry
CC (HYPO & PLEDGE)
SME loans

Special Products
Loan to Travel Agencies
Loan to Diagnostic Centres
Financing IT Sector
Financing of Industries
Windows for SMEs
Ready Cash
NRB Escrow Account
NRB Gift Cheque

Services offered by Janata Bank

Mainly 4 types of services offered by Janata Bank

Personalized services
Utility services
Services One stop services
e-services
modern banking
 P a g e | 14

Personalized Services
Transfer of fund from one branch to another
Collection of cheques through clearing house
Electronic transfer through Ready Cash Card
Issuance of payment order
Locker facilities for safe keeping of valuable
Corporate client services with computerized systems at selective branches

Utility Services
Besides normal banking operation, Janata Bank Limited offers special services to a large number
of clients/agencies throughout the country. Under the network of utility service, customers of
different govt. organizations, corporate bodies, local bodies, educational institutions, students, etc
are continuously getting benefits from the Bank. Janata Bank Limited's utility services are :

Bills Collection:

Gas bills of Titas, Bakhrabad and Jalalabad Gas Transmission and Distribution Companies.
Electricity bills of Dhaka Electricity Supply Authority, Dhaka Electricity Company,
Bangladesh Power Development Board and Rural Electrification Board.
Telephone bills of Telegraph and Telephone Board.
Water/Sewerage bills of Water and Sewerage Authority.
Municipal holding tax of City Corporation/Municipalities.
A pilot scheme is underway to provide personalized services to our clients.

Payments Made on behalf of Govt. to:

Non- Govt. teachers salaries
Girl Students scholarship/stipend & Primary Student Stipend
Army pension
Widows , divorcees and destitute Women Allowances
Old-age Allowances
Food procurement Bills
 P a g e | 15

One Stop Service

JBL, first among the Nationalized Commercial Banks in Bangladesh, has introduced One Stop
Service. The salient features of this system are as under:

A customer can deposit and withdraw money from a single

counter
The system of Token and Scroll has been dispelled
Customers are getting prompt and personalized services from a single counter
Verification of signature is easy as the same is stored in the computer.

E-Service
ATM: To offer modern Banking service, Janata Bank
Limited is providing ATM facilities with Debit and Credit
cards to the customer.

Q-cash: JBL is one of the pioneer members of shared Q-

cash consortium.

Automated Branch Banking: Janata Bank Limited is a committed partner in the process
of making a "Digital Bangladesh". To make the slogan "Digital Bangladesh" true, all the
branches have already been automated.

Janata Bank e-library: Task of building the library namely Janata Bank e-library is
progressing fast. E-Library refers to all the library resources that are available online
through computers and databases. They have restricted access.

JBL Data Bank: According to the article 6.37 of 234th meeting of the Board of Directors
held on 12.06.2012, a decision was taken to setup a Data Bank DataBank is an analysis
and visualization tool that contains collections of time series data on one or more subjects,
or for a particular purpose

E-GP Payment Service: The e-GP system provides an on-line platform to carry out the
procurement activities by the Public Agencies - Procuring Agencies (PAs) and Procuring
Entities (PEs).

PMIS: Personnel Management Information System (PMIS) holds and manages all the
basic information of employee such as: personal information, family background,
 P a g e | 16

educational background, service background etc. It monitors employee performance, leave

of absence etc.

Green Banking: The core objective of green banking is to

ensure customer services, finance, protection of internal
environment of management through adoption and
compliance of environment friendly banking policy

Other Services: BEFTIN User Manual, OMIS ERP

Modern Banking
Online banking: To protect environment by reducing paper and fuel dissipate, carbon
emission Janata Bank Limited introduces online banking service to its customers.
Online activity parallel introduction of Real Time Online Core Banking is in progress

JB Remittance: Janata Bank Limited launched own software JB Remittance Payment

System at all its branches for providing online Cash Deposit and Cheque Payment as
well as instant payment of foreign and inland remittances in a more secured manner to
its customers. The system provides faster and secured remittance service by using
Virtual Private Network (VPN).

JB Pin Cash: This is a new service of Janata Bank through which money can be send
account holder as well as non-account holder

--------------------
 P a g e | 17

Chapter: 3
SME Banking of
Janata Bank Ltd. at
Islampur Branch,
Dhaka
 P a g e | 18

Introduction of SME (Small and Medium Enterprises)

SMEs are recognized as engine of economic growth and employment generation for sustainable
industrialization in both developed and developing countries of the world. Small and medium
enterprises are referred to as the missing middle because its size is neither small enough for
microcredit from microfinance institutions nor big enough to be considered viable to finance in
the formal financial sector. Therefore, in most of the developing countries, including Bangladesh,
lack of adequate access to finance is considered one of the major constraints to the growth of the
SME sector.

According to the legislation of BB (Bangladesh Bank), SME includes small and medium
enterprises as well as cottage and micro enterprises.

The following table shows the no. and percentage of SMEs in Bangladesh

Category of No of enterprises Percentage of total

enterprises enterprise
Small & Medium 50,000 2.2%
Enterprises

Cottage and micro- 2.5 million 97%

enterprises
Source: SME Foundation Survey

The role of Small and Medium Enterprises (SMEs) is indispensable for overall economic
development of a country. Since this sector is labor intensive with short gestation period, it is
capable of increasing national income as well as rapid employment generation ; achieving
Sustainable Development Goals (SDGs) especially eradication of extreme poverty and hunger,
gender equality and women empowerment.

Janata Bank Limited, as development associate of the government, gives more importance in SME
financing for economic development, creating employment opportunities and increasing GDP.
 P a g e | 19

Definition of SME on the Basis of Business Size by Bangladesh Bank

On the basis of the following two standards Bangladesh Bank sever SME financing into small,
medium, cottage and micro enterprises:

Manpower
The amount of fixed assets (excluding land & building)

Defining Criteria
Business Segment Business Type Fixed assets at cost Manpower
(excluding land & building)
Manufacturing Tk. 50LacTk.10 Crore 25-99
Small
Service Tk. 5 Lac-Tk. 1 Crore 10-25
Trade Tk. 5 Lac-Tk. 1 Crore 10-25
Manufacturing Tk. 10 Crore-Tk. 30 Crore 100-250
Medium
Service Tk. 1 Crore-Tk. 15 Crore 50-100
Trade Tk. 1 Crore-Tk. 15 Crore 50-100
Cottage Manufacturing Up to 50,000 10
Predominant
family

Manufacturing Tk.5 lac-Tk. 50 lac 10-24

Micro
Service Less than Tk. 5 lac 10

Trade Less than Tk. 5 lac 10

(Source: Bangladesh Bank SMESPD Circular No. 01, dated 19 June 2011)
 P a g e | 20

SME Banking of Janata Bnak Ltd, Islampur Branch:

Products of SME Loan

Working capital to existing shop

Purchasing of capital machinery
Delivery Van /Transport for business purpose
Renewing office/ Business premises
Purchase of commercial land, possession for new venture
Expansion of existing shop & providing term loan

SME Finance Policy:

JBL SME Loan Policy contains the views of total macro-economic development of the country.
As a whole by way of providing financial support to the trade, commerce and industry throughout
its loan operation JBL goes to every possible corners of the society. They are financing large and
medium scale business house and industry. At the same time they also take cares entrepreneur
through its operation of lease finance and some micro loan, small loan scheme etc. The bank has
come up with a scheme where women will be given financial support for their self-employment
and development.

SME Loan Scheme offered by Islampur Branch:

Double Loan (Double Amount of Loan FDR Value):

Under this product, if the loan amount is covered by FDR up to 50% of the loan amount and the
customer has regular cash-flow to pay installments and deposit of installments by the customer is
followed up the loan is likely to be secured and for experienced customers with good past track
record who have successfully repaid loan under Double Loan Scheme at least twice business cash
flow has grown accordingly, loan facility up to 03 times of the FDR value may be considered.
 P a g e | 21

The following formalities should be followed by the SMEs Double Loan-

Customer Segment :Any Small and Medium Size Entrepreneur.

Mode of Finance :Term Loan
Purpose :a) Capital Investment b) Working Capital
Finance
Experience :Minimum 02 years with successful track
records
Nationality :Bangladeshi
Age Limit :Between 25 years to 50 years.
Loan Size :Tk. 2.00 Lac to tk. 50.00 Lac (Depending on
requirement and regular source of cash flow to
service the loan installment)
Security / Collateral (Case to Case :a)Loan of FDR;
basis)
b) Hypothecation of machineries, equipment,
vehicles, inventories;
c) Personal Guarantee of the person(s);
Rate of Interest/Return :16% P.A
Loan processing fee :1% of the loan amount
Penal interest/Compensation :4% P.A on the overdue amount
Maximum period of Loan :05 years
Repayment method :Installment basis
Disbursement mode :Shall be disbursed in lump-sum/ at a time.

Loan for Purchase of Business Space/Possession Right:

It is very comfortable and convenient if SMEs can run the business from own office shop. A
permanent place of business can serve rental expense and other hassles as well as can enhance loan
worthiness of the enterprise in the market. But a mare dream to SME for want of fund at his
disposal to purchase a business space/possession right. Because now-a-days it is too costly in the
part of SME to materialize this dream from his own source(s).
 P a g e | 22

The following formalities should be followed by the SME- Loan for Purchase of business
space/possession right.

Customer Segment : Any Small and Medium Size Entrepreneur.

Mode of Finance :Term Loan
Purpose :Purchase of business space/possession right.
Experience :Minimum 02 years with successful track
records
Nationality :Bangladeshi
Age Limit :Between 25 years to 50 years.
Loan Size :Tk. 2.00 Lac to tk. 50.00 Lac (Depending on
requirement and regular source of cash flow to
service the loan installment)
Security / Collateral (Case to Case :a)Ownership of the space/possession right
basis)
purchased in the banks name;
b)30% of the purchase value in the form of
FDR duly likened and discharged;
c) Hypothecation of machineries, equipment,
vehicles, inventories;
Rate of Interest/Return :16% P.A
Loan processing fee :1% of the loan amount
Penal interest/Compensation :4% P.A on the overdue amount
Maximum period of Loan :05 years
Repayment method :By monthly rental/Installment basis
Disbursement mode Direct to the seller

Loan for Women Enterprises:

50% populations of our country are women. Gradually women are coming out of homes. They are
now working in different work places very successfully undertaking different innovative/creative
ventures.
 P a g e | 23

The following formalities should be followed by the SMEs Loan for Women Enterprises-

Customer Segment : Any Small and Medium Size Entrepreneur.

Mode of Finance :Term Loan

Purpose :a) Fixed Investment b) Working Capital
Experience :Minimum 02 years with successful track
records
Nationality :Bangladeshi
Age Limit :Between 25 years to 50 years.
Loan Size :tk. 2.00 Lac to tk. 50.00 Lac
Security / Collateral (Case to Case :a)Registered mortgage of property/assignment
basis)
of possession right;
b) Hypothecation of machineries, equipment,
vehicles, inventories;
c)Personal Guarantee of the spouse(s)
d)Personal Guarantee of the person(s);
Rate of Interest/Return :10% P.A
Loan processing fee :1% of the loan amount
Penal interest/Compensation :4% P.A on the overdue amount
Maximum period of Loan :05 years
Repayment method :Installment basis
Disbursement mode :Shall be disbursed in lump-sum/ at a time.

Shop/Office Renovation Loan:

Now-a-days, Office/Commercial space renovation with most modern interior and exterior
decoration is essential to attract customers. But attractive interior and exterior design of a
shop/office is too costly to afford by SMEs. To overcome this problem, JBL has come forward
with a new product for SME customers named as Shop/Office Renovation Loan. The
 P a g e | 24

Shop/Office should preferably be owned/possession right purchased by the customers or minimum

10 years valid Lease Agreement with the owner.

The following formalities should be followed by the SMEs Shop/Office Renovation Loan

Customer Segment : Any Small and Medium Size Entrepreneur.

Mode of Finance :Term Loan
Purpose :Shop/Office Renovation
Experience :Minimum 02 years with successful track
records
Nationality :Bangladeshi
Age Limit :Between 25 years to 50 years.
Loan Size :tk. 2.00 Lac to tk. 50.00 Lac (Depending on
requirement and regular source of cash flow to
service the loan installment)
Security / Collateral (Case to Case :) Registered mortgaged of
basis)
property/Assignment of possession right;
b) Lien of FDR duly discharged covering at
least 25% of the Loan amount
c) Hypothecation of machineries, equipment,
vehicles, inventories
Rate of Interest/Return :16% P.A
Loan processing fee :1% of the loan amount
Penal interest/Compensation :4% P.A on the overdue amount
Maximum period of Loan :05 years
Repayment method :Installment basis
Disbursement mode :One time.

Loan Purchasing Capital Machinery and Vehicle:

Most of the SME customers suffer from not being able to expand further the business due to lack
of capital. But, business is an on-going process and to survive the market BMRE of the project and
procurement of vehicle is essential.
 P a g e | 25

Under this product, if the customer is able to provide 30% of the cost of machinery in the form of
FDR and has regular cash flow to pay loan installments, then further security may not be insisted
other than hypothecated stock and personal guarantee of the customer.

The following formalities should be followed by the SMEs Loan Purchasing Capital Machinery
and Vehicle SMEs-

Customer Segment : Any Small and Medium Size Entrepreneur.

Mode of Finance :Term Loan

Purpose :Loan Purchasing Capital Machinery and
Vehicle
Experience :Minimum 02 years with successful track
records
Nationality :Bangladeshi
Age Limit :Between 25 years to 50 years.
Loan Size :tk. 2.00 Lac to tk. 50.00 Lac
Security / Collateral (Case to Case :a) Registered mortgaged of
basis)
property/Assignment of possession
b) Ownership of the machinery/Vehicle
purchased in the name of JBL
c) Lien of FDR duly discharged covering at
least 30% of the Loan amount;
Rate of Interest/Return :13% P.A
Loan processing fee :1% of the loan amount
Penal interest/Compensation :4% P.A on the overdue amount
Maximum period of Loan :05 years
Repayment method :Installment basis
Disbursement mode :One time.
 P a g e | 26

Working Capital Finance:

Most of SMEs suffer from working capital shortage. Business is an ongoing process and to
survive in the market, working capital is an essential. . To overcome this problem, JBL has come
forward with a new product for SME customers named as Working Capital/Trade Finance.

The formalities followed by SME for Working Capital/Trade Finance-

Customer Segment :Any Small and Medium Size Entrepreneur.

Mode of Finance :Term Loan
Purpose :To meet Working Capital Requirement
Experience :Minimum 02 years with successful track
records
Nationality :Bangladeshi
Age Limit :Between 25 years to 50 years.
Loan Size :tk. 2 Lacs to tk.50Lacs
Security / Collateral (Case to Case :a) Registered mortgaged of
basis)
property/Assignment of possession;
b) Ownership of the machinery/Vehicle
purchased in the name of JBL;
Rate of Interest/Return :13% P.A
Loan processing fee :1% of the loan amount
Penal interest/Compensation :4% P.A on the overdue amount
Maximum period of Loan :05 years
Repayment method :Sales proceeds to be deposited in the
concerned A/C
Disbursement mode :By Installment or in lump sum within the loan
period. In case of term loan installment may be
realized as under
 P a g e | 27

SME Loan Process Flow

When a client comes for a loan request, first he/ she meets a loan and advance department, then
the following process take place

Loan and
SME businness
advance Loan proposal
division
department

SME loan
Final loan
officer Manager
approved
observation

Asset
operation
:

Documents for SME Loan

Common documents applicable for Proprietorship/Partnership/Limited Company:

Loan Application from duly signed by the customer. Loan Application form should be
accompanied by a Borrowers Basic Fact Sheets Basic Fact Sheet under the seal and
signature of the borrower.
A written declaration shall be obtained from the borrower divulging details of various
facilities already obtained from other institutions.
Acceptance of the terms and conditions of Sanction Advice.
Trade License.
Photographs of the proprietor / partners / directors duly attested.
Personal net worth statement of the proprietor / partners / directors.
Copy of TIN Certificate
Short description of the products of the enterprise
Project Profile (if new project).
 P a g e | 28

Quotation / Intent / Pro-forma Invoice etc (as applicable)

Marketing / distribution system of the company.
Short profile of the proprietor / partners / directors mentioning their business experience /
education etc.
Brief description of the management of the company mentioning their educational
professional experiences.
Name and address of the sister/allied concerns.
Group Brochure.
Name and address of present bankers.
A latest liability statement of all the business concerns of the Group with other
Bank/Financial Institutions (Mentioning-name of business concern name of bank and
branch, nature of facility, limit amount, outstanding, Overdue if any etc.)
Loan information Bureau (CIB) report from Bangladesh Bank.
Wherever practical, insurance policy for 110% of the stock value covering potential with
banks mortgage clause in joint of the bank and client.

Eligibility Criteria for Enjoying Janata Bank Ltd. SME Financing Facilities
To enjoy JBL SME loan, a client needs to meet the following eligibility criteria:

Borrower must be a lucidity , educated person and a citizen of 18 years in Bangladesh

Borrower must have the accounts at JBL,Islampur branch
Have to be considered experience and management ability of the entrepreneur
Must be a firm (like, proprietorship and partnership) or a private limited company
incorporated in Bangladesh.
Must meet the criteria of either Small or Medium Enterprise.
Must have a minimum average monthly income of BDT 35,000.
Must have a TIN
Must be able to provide last 3 years financial report (audited/unaudited), i.e. Income
Statement, Balance Sheet, Cash Flow Statement etc.
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Must have adequate A/C turnover during the last 2 or 3 years.

Must be able to provide fresh/offer existing lien or mortgage of first/third party collateral
Women entrepreneur and experienced person on case of small industry have to be preferred
Have to be enough equity for the establishment of industry

Special Arrangement for Women Entrepreneurs

About half of the population of Bangladesh is women. Therefore, women participation in the
mainstream of economy is crucial for attaining sustainable economic growth & poverty reduction.
But women participation in institutional economic sector is inadequate & the rate of women
entrepreneurs is very low compared to that of male counterparts. In fact, there exist many obstacles
in women participation in the mainstream of economy although the degree of integrity, devotion,
creativity and expertise of women society make us surprised. Especially women participation in
micro credit programs and readymade garments industry is contributing significantly to the
countrys industrialization. Similarly, participation of women entrepreneurs in SME sector is vital
for the flourishing of Bangladesh economy.

Meantime, Bangladesh Bank has taken some steps and formulated a guideline for the banks &
financial institutions to ensure more institutional financial facilities for women entrepreneurs in
SME sector.

JBL, Islampur branch strictly follow the following guidelines of Bangladesh Bank-

With a view to organizing and making uniform industrial development and to ensure
institutional credit facilities, at least 15% of total BB refinance fund for SME sector has
been allocated for women entrepreneurs.
Interest rate for women entrepreneurs will be Bank rate (which is at present 5%) plus
maximum 5%; i.e. not more than 10% per annum.
Banks/Financial Institutions will accept and settle all types of loan applications of SME
women entrepreneurs with the highest priority.
Banks and financial institutions shall take initiative to advertise all the facilities for women
entrepreneurs in both electronic & print media.
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Banks and Financial Institutions may provide a maximum loan facility of Tk.25, 00,000/-
against personal guarantee if borrower is woman or majority of the owners of the
enterprise are women.
Banks/Financial Institutions shall establish special advice and service centre for women
entrepreneurs in selected branches and ensure service friendly approach towards women
entrepreneurs.

Potential SME sectors for Islampur branch:

Because of the circumstances of the Islampur area, the followings potential SME sectors are
identified by Islampur Branch, Janata Bank:

Electronics

Yarn and
Construction
handloom
materials
industry

Potential
SME
Sectors
Business of
corrugated iron Fishery
sheet

Furniture

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 P a g e | 31

Chapter: 4
Data Collection and
Analyses
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Age Limit of the Clients:

In this survey, it was found that 38% of the surveyed clients are between 30-50 years. For SME
banking in Bangladesh, it would be risky to provide loans above 60 aged clients and Janata Bank
SME authority also discourages the loan to the proprietors aged above 60.

40 38
35

30

25

20

15
10
10
4.3
5

0
below 30 30-50 above 50

Figure: Age limit of the clients

Education Qualification of the Clients:

In the survey, it was found that most of the proprietors are H.S.C pass. In Bangladesh, a common
perception about the SME customers is that they are educationally not much advanced.
The result of the surveyed clients also reflects that perception.

Below Post graduation

S.S.C 5%
9%

Graduation
34%

H.S.C
46%
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Figure: Education qualification of the clients

Major Use of Business Loan

From the responses obtained it is observed that the loan is mostly used for purchasing raw
materials. 58% respondents agreed that the most use of this loan is for purchase of capital
machinery. Working capital to existing shop (28%) is second most used purpose of the loan.
Renewing office is another use of the loan. 14% respondents agreed to the fact.

60

50

40

30

20

10

0
PURCHASING OF WORKING CAPITAL RENEWING OFFICE
CAPITAL TO EXISTING OR SHOP(14%)
MACHINERY(55%) SHOP(31%)

Figure: Major use of business loan

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Most Common Business Obstacles

The proprietors were given 5 options to choose between. These 5 were: a. Cost of inputs b.
Fluctuations in sales c. Increasing competition d. Political unrest and e. Any other. These options
were predetermined and the proprietors were asked to choose one of these options. From the
responses obtained, most number of respondents marked increasing competition as the most
common problem. 45% responses were obtained in favor of that cause. The second most important
reason was found fluctuation in sales (23%). The other two were Political unrest (15%) and Cost
of inputs (17%). In this survey, only 4 choices were given. That is why they were forced to answer
only one of them. Later on, the respondents were given other choices and questionnaire survey
was conducted on the other problems.

increasin competition flactuation of sales

political unrest cost of inputs

23%
15%

32%
17%

45%

Figure: Most common business obstacles

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SME Proprietors Perception on the Drawbacks of Janata Bank SME

Respondents were asked to identify the problems which they think is most frequent for Janata
Bank, Islampur Branch, SME service. 50% of respondents pointed out that lengthy procedure are
a problem for Janata Bank SME division. 20% of respondents pointed out that inexperienced
marketing force is a problem. Other two problems of Islampur Branch, Janata Bank Ltd SME are
High Interest Rate (14%) and Client service (16%).

16%

lengthy procedure

14% inexperience marketing

50% high interest rate
client service

20%

Figure: Problem of JBL, Islampur branch,SME

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Satisfaction Level on the SME Service of Islampur Branch,JBL

The respondents were given 5 levels of satisfaction starting from Highly Satisfied to Highly
dissatisfied. In response, among the 15 respondents,3 gave their opinion that they are highly
satisfied, 7 are satisfied, 3 are neutral, 2 are dissatisfied and none are highly dissatisfied with the
SME service of Islampur Branch JBL

0
highly satisfied satisfied neutral dissatisfied highly
dissatisfied

Figure: Satisfaction level of respondents on SME service

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Chapter:5
Findings of the
Report
 P a g e | 38

Positive Findings
During my 45days internship in the Janata Bank Ltd, Sadarghat Branch,Dhaka following positive
things are found from my observation:

Attractive Location of this branch is a very strong site. Because most of the clients are
business organization in the old Dhaka.

Competition from the rival banks is not so high in this branch. Because the number of
public and private banks are limited in this area.

Janata Bank Ltd. introduced new software called JB Remittance Payment System which
enables this bank to transfer fund within any branches of JBL in a moment.

JBL, Islampur Branch,Dhaka has been producing a good profit from the last several
years.

The organizational culture of this branch is very much helping to its banking practices.

The staffs of this branch of JBL are proving a very good customer services.

Branch Manager puts Conscious efforts to achieve the targets and knows how to motivate
employees and how to represent the Bank well in the local community.

After taking the loans from Janata Bank, some proprietors said that they are either highly
satisfied or just satisfied with the SME loan of Janata Bank Ltd. It means that more than
60% of the proprietors think that the service level of Janata Bank Ltd is quite good and
its also quite satisfactory to the clients.
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Areas need to be improved

However the satisfaction level of Janata Bank Ltd, Islampur Branch,Dhaka is good enough. But
some customers have expressed their dissatisfaction about this branch in various aspects.
Following are the problems found which this branch of JBL faces:

Numbers of staffs are not sufficient in this branch.

The period of loan procedure system is long.

Most of the staffs of this bank are not expert in computer based banking .Because
maximum employees are older.

Job responsibilities are not specified to each and every employee of this branch of JBL

According to some clients, introducer is one of the problems to open an account.

There is no ATM booth near this branch of JBL.

Lack of promotional activity is another problem that is responsible for the decline of the
customers satisfaction of Janata Bank Ltd. It has been found that people could hardly
recall any advertisement of Janata Bank Ltd.

Janata Bank Ltd is giving the lowest interest rate to its saving account holders. Lowest
interest rate makes them demoralize and consequently they are shifting their accounts to
other banks to make more money

Compared to other banks (public and private) Janata Bank Ltd has not been successful in
increasing their SME Portfolio over the years.

Janata Bank 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 Janata Bank SME policy

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Chapter: 6
Recommendations
& Conclusion
 P a g e | 41

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

The Bank should appoint some skilled manpower in this branch.

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 .

Janata Bank 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, Janata Bank should put more time and money in developing new SME products

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

The Bank should reduce the number of terms and conditions for its clients.

Janata Bank Ltd. should give the competitive interest rate, so that the clients are not shifting
their accounts to other bank.

Janata Bank Ltd. must build a ATM booth near this branch.

Janata Bank Ltd. should develop advertisement that promotes the service attributes and
benefits with the models reflecting the target segments they are approaching. To promote
the image promotional activity can play an important role.
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Conclusion

In Bangladesh, SMEs playing a significant role for the development of our economy by creating
employment opportunity and producing important alternative machines and machinery parts for
saving huge foreign currency for our country. So as a part of our development strategy, we should
intensify our efforts to develop this sector to grow industrial base and volume of foreign trade. As
we know that in this age of globalization, it is impossible to stop the flow of foreign goods to any
country. Only quality products can meet the challenges in global market. For meeting this situation
SMEs need to upgrade their technological capabilities and production facilities in order to produce
quality products at a competitive price. Though it is highly labor intensive but still major portion
of job opportunity is generated by this sector. For the balance development in all over the country
it plays a vital role. As a result the standard of living in country areas is increased. The government
should persist the effort to improve infrastructure, legal framework and policy regarding SMEs
financing. From the analysis and findings it can be concluded that Janata Bank Limited has already
started to contribute in the economic development through SME financing and having growth in
accordance with industry in investing Trade sector. Thus financing entrepreneurs in this industry
leads to the enlargement of the industry as well as the overall economic growth of the country.

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References:

Books:

khan, D. A. (2009). Bank Management (3rd ed.). Dhaka: Decent Book House.

kothari, C. R. (2014). Research Methodology. New Delhi: New Age International(P) Ltd.

Websites:

janatabank-bd.com. (n.d.). Retrieved February 2107, from Janata Bank Limited:

http://jb.com.bd/about_us/bank_at_a_glance

SMEF. (2016, march 5). Retrieved from smef.org: http://www,smef.org.bd/v2/

Bangladesh Bank. (2016, march 7). Retrieved from bb.org.bd:

https://www.bb.org.bd/sme/index.php
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Appendix

Questionnaire for
Proprietors

1. Name:
2. Age:
3. Address/ Location of Business: .............................................................
4. Educational Qualification:
5. Enterprise Profile:
Trading Manufacturing Serviced.
6. Business Type: .........................
7. What is the main reason do you think that the employees working in your concern leave the job?
.................................
8. Owner experience in business: ...................... years
9. Most common obstacles in business:
Cost of inputs Increasing competition
Fluctuations in sales Political situation e. Other
10. Major Use of this loan: ...........................................
11. Waiting period between loan application and sanction:
Less than I month More than one month
2 months 1 month
12. Please mention your satisfaction level on the service of Janata Bank SME:
Highly Satisfied Neutral Highly Dissatisfied
Satisfied Dissatisfied
13. What are the negative things about Janata Bank SME? .....................................
14. Why do you prefer Janata Bank for SME for SME finance? ................................
15. Any recommendations regarding SME finance of Janata bank? ...........................

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