Chapter

Financing Procedure of Bangladesh DevelopmentBank Limited in SME Sector
Chapter One
Introduction
1.1 Introduction
ForBachelor of Business Administration (BBA) program. Internship is a 124 credit
compulsory course. Its objective is to create a path between academic and real life situation.
After completion of all academic courses, the students ofBBA are sent to various
organizations for six weeks internship to gather practical knowledge. It helps the students to
be acquainted with the practical working environment. As a requirement of the four-year
academic program, after appearing in final exam, the author of the report joined Bangladesh
Development Bank Limited (Head Office and Branch Office) for the purpose of internship
attachment under the guidance of respected faculty advisorLiana Anwar, Assistant Professor,
School of Business, Ahsanullah University of Science and Technology. The duration of her
organizational attachment was six weeks.
The sole aim of the Internship Program is to blend the academic knowledge with that of
practical ones and give an insight into the Management of organization in real life situations
& finally to submit a report to the Department.
1.2 Background of the Study

As a mandatory requirement of the Bachelor of Business Administration (BBA) program,
School of Business, Ahsanullah University of Science and Technology,this report entitled
"Financing Procedure of Bangladesh Development Bank Limited in SME Sector" is a
connived depiction of the two months long internship program at Branch Office of
Bangladesh Development Bank Ltd. The organization attachment started on April, 2017 and
finished on June, 2017. I have got an opportunity to relate the theoretical knowledge with
practical view, obtained from various courses during my BBA program. It has given me an
opportunity to develop the analytical skill and scholastic aptitude.
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1.3 Objective of the Study

Broad objective:
The broad objective of the Study is to acquire practical knowledge about ''financing
Procedure in SME Sector by BDBL" as a part of BBA program.
Specific objective:
The objectives of the research are to identify the factors that influence the development and
growth of the SME sector. Thus the specific objectives of the Report are as follows:
1.To find out the Small and medium enterprise programs of BDBL.
2.To find out the financing procedure in SME of BDBL.
3.To identify the financing problems of SMEs by BDBL.
4.To recommend some suggestion to the problems.
5. To analyze branch wise data of SME loan.
6. Impact of SME on poverty reduction.
1.4 Scope of the Study

Bangladesh Development Bank Limited is a state owned commercial bank.The main function
of the bank is lending the clients for the development of trade, commerce, industry and
agriculture with all banking activities. A Bank is a dealer of money and credit.Banking
Industry is one of the most promising industries of our country. The importance of the sector
revealed through its contribution in the economic growth of the country. This sector
accelerates economic growth through mobilizing funds from surplus unit to the deficit unit.
Banking Industry is moving towards rapid changes due to technological innovation and
diversified needs of its customers. This report will cover Analysis of SME Banking Services
of Bangladesh Development Bank Limited. It will give a wide view of the different stages of
operational procedure of BDBL SME functions.
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1.5Methodology of the Study

Both the primary as well as the secondary form of information was use to prepare the report.
The details of these sources are highlighted below:-
1.5.[1]Primary Sources:
 Face-to-face conversation with the bank officers.
 Practical desk work.
 Relevant file study as provided by the concern officer.
1.5.[2]Secondary Sources:
Internal Sources
 BDBL Annual Report
 SME Manual of BDBL
 Credit Policy of BDBL
 Business instruction manual
External Sources
 Different books and periodicals related to the banking sector
 Bangladesh Bank Circulars
 Newspapers
 Website information Data collecting instruments: In-depth interview
During theexploratoryresearch,in-depthinterviewswereconductedwithmanagers,approval
officers.
Survey Period: Two Months.
1.6 Limitation of the Study

 Difficult to gather information.
 Unableto obtain indispensable experiences of different departments.
 Many aspects of services have been skipped due to various constraints,security
reason.
 Unauthorized information due to legal restrictions.
 Data are confidentiality.
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Chapter Two
Literature Review
2.1 SME
SME-means Small & Medium Enterprise (SME). The definition of SME differs from country
to country. The industrial policy of Bangladesh, 2010 defines Small &Medium Enterprise as:
“In manufacturing, small industry will be deemed to comprise enterprises with either the
value (replacement cost) of fixed assets excluding land & building between Tk.5 million &
Tk.100 million, or with between 25 & 99 workers,” and “medium industry will be deemed to
comprise enterprises with either the value (replacement cost) of fixed assets excluding land &
building between Tk.100million & Tk.300 million, or with between 100& 250workers”.
2.2 Small Enterprise

Small Enterprise refers to the firm/business which is not a public limited company and
complies the following criteria:
Table 1: Criteria of Small Enterprise
Fixed Asset other than Employed Manpower
Serial No. Sector
Land and Building (Tk.) (not above)
01. Service 50,000-50,00,000 25
02. Business 50,000-50,00,000 25
03. Industrial 50,000-1,50,00,000 50
Source: Website of Bangladesh Bank
2.3 Medium Enterprise

Medium Enterprise refers to the establishment/firm which is not a public limited company
and complies the following criteria:
Table 2: Criteria of Medium Enterprise
Fixed Asset other than Employed Manpower
Serial No. Sector Land and Building (Tk.) (not above)
01. Service 50,00,000-10,00,00,000 50
02. Business 50,00,000-10,00,00,000 50
03. Industrial 1,50,00,000-20,00,00,000 150
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2.4 When does a person feel like building an SME?

Not everyone wishes to have a regular job and not everyone dreams about working in a big,
famous company. That is when SME comes in. Organizers who wish to have business of their
own, who wish to pursue their dreams start an SME. We can think about a person whose
dream is to build automobiles. Now he or she just can’t join BMW or Mercedes or any other
automobile company and start building automobiles. Or a person already working in an
organization has a better idea and it’s impossible to implement it or simply does not wish to
share the idea. Persons like these end up with small business organizations. As it is small, he
does not need to worry about capital because he already may have it. No worry about
workforce because there is plenty. All he needs is his dream and hard work.
2.5 Characteristics of SME

 Easy to commence:A businessman does not need to worry about capital and
workforce because of its small in nature. He/she can start right-off at any moment.
 Easy to organize:Small and medium enterprise does not need large workforce. It is
easy to control and also enable a person to organize the whole structure with ease.
 Easy to finance:The popularity of the structure of this business organization is now
at its peak. So, financial institutions are very eager and ready to provide short,
medium and long term loans. Many banks have separate branch for these kinds of
activities.
 Easy to focus: SME usually focuses on something particular that the investors have
some sorts of knowledge or a set of skills in. Like a textile based SME only focuses
on anything related to Textile. Like export or manufacturing organizations.
 Large turnover: An SME can make a substantial turnover just by maintaining
relationships with stakeholders. They may not make huge turnovers like a public
company does, but compared to the workforce and the capital, it’s huge.
 Large profit margin: The main purpose of a SME is to make a larger profit.
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2.6 Importance of SME

 Employment generation- Developing country like Bangladesh where
unemployment rate is near 17% (according to ADB), SME plays vital role to create
employment. In 2005-2010, around 50% of jobs were created through SME
 Support small and medium enterprises- In Bangladesh, poor people are finance by
microfinance institutes while heavy businesses are encourage by corporate banks.
Within this gap small and medium enterprise were ignorant by the traditional
banking theme. However all those small and medium business are profitable. With
the help of SME loan any potential borrowers can access BDT 2 lac – BDT 30 crore
which were unthinkable even before 10 years back.
 Encourage manufacturing- Though Bangladesh is an agro-based country, for the
time being entrepreneurs are more interested on manufacturing sectors. In the period
of Jan-June 2012, BDT 10,463 billion has been invested in manufacturing sectors
which is more than 2.3% of last year on the same period.
 Enhance living standard- SME sector contributes in increasing living standard
through- GDP growth, GNP growth, and employment generations, providing low
priced local products, transecting local resource and improving rural life.
 GDP growth- In 2011, SME resulted 25% GDP growth in Bangladesh. Through
SME sector, Bangladeshi economy became able to decrease its dependency on
foreign products, at the same time it has increased local resource transactions. SME’s
contribution to national exports is also significant.
 Poverty reduction- Poverty reduction is the logical sequence of employment
generation by SME. Sector wise progress has facilities poverty reduction in both
urban and rural areas.
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Chapter Three
Organization Overview of BDBL
3.1 Historical Background of BDBL
Bangladesh Development Bank Ltd. (BDBL) was established on 16 November, 2009 as a
Public Company Limited. It was incorporated by the shares under the Companies Act, 1994
by merging former Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangstha
(BSRS) which were two Development Financial Institutions (DFIs) in the public sector.
Bangladesh Shilpa Bank (BSB) was established on October 31, 1972.lt was established for
accelerating the industrial pace of the country by providing loan and equity to the industrial
projects as per Bangladesh Shilpa Bank Order, 1972.
Bangladesh Sliilpa Rin Sangstha (BSRS) was also established on October 31, 1972 as per
Bangladesh Shilpa Rin Sangstha Order, 1972 (President's Order No. 128 of 1972) for the
same objective.
Bangladesh Bank issued banking license to BDBL tor carrying on business on 19-11-2009.
The Government of the People's Republic of Bangladeshand theBDBL signed the agreement
on 31 December, 2009 to acquire and take-over all of their (BSB & BSRS) assets, benefits,
rights, powers, authorities, privileges, liabilities, borrowings and obligations and to carry on
with the same business.
As a Public Limited Company. BDBL formally began its journey on January 03, 2010. It
extends financial assistance for setting up industries and provides all kinds of commercial
banking services to its customers through its branch network in Bangladesh. The BDBL also
inherited membership of Dhaka Stock Exchange Limited (DSE) and Chittagong Stock
Exchange Limited (CSE). It acts as stock dealer and stock broker and operates a brokerage
houses, at Motijheel to provide services to the small and medium investors. BDBL also
established a fully owned subsidiary company named BDBL Securities Limited. It transferred
its one membership with DSE and another membership with CSE. It acts as stock dealer and
stock broker and also as operate brokerage House At 12, Karwan Bazar Dhaka. The BDBL is
also managing a close-end Mutual Fund with paid up capital of Tk.5.00 crore.
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represents a particular type of business.
>SME >Current Deposit

High >Real Estate >Mutual fund
Market
Growth
Rate >Fixed Deposit Scheme >Monthly deposit Scheme
>Saving Deposit >Marriage deposit schame
Low
Cash Dogs
Cows
Figure2.4: The Boston Consulting Group (BCG) Matrix of BDBL
3.2 Corporate Profile of BDBL

1) Name Bangladesh Development Bank Limited
2) Registered Office BDBL Bhaban, 8, Rajuk Avenue, Dhaka-1000
3) Legal Status Public Limited Company
4) Date of Incorporation November 16, 2009
5) Extent of Shareholding 100%shareownedbytheGovernmentof Bangladesh
6) Authorized Capital Tk.1000crore

7) Paid-up Capital Tk. 400 crore
8) Face Value of Per Share Tk. 100.00
9) Accounting Period January-December
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10)Date ofBusinessCommencement November 16, 2009

Certificate
11) Date of Vendors' Agreements 3 1 December, 2009
Signed
12) Line of Business AllBankingBusinessincludingCapitalMarket Operations
13) Number of Divisions in Head 11
Office
14) Number of Departments in Head 30
Office
15) Number of Zone Offices 4
16) Number of Branch Offices 39
17) Number of Urban Branch 28
18) Number of Rural Branch 11
19) Number of AD Branch 5
20) Number of Human Resource 850
21) Membership of Stock Exchange Dhaka Stock Exchange Ltd.
22) Subsidiary Companies BDBL Securities Ltd. 12, Karwan Bazar, Dhaka.
BDBL Investment Services Ltd. 8, Rajuk Avenue, Dhaka
23) Corporate Tax Rate 42.50%

24) Auditors Howladar Yunus & co. And MABS & J Partners
25) Income Tax Adviser K.M. Hasan & Co.
26) Credit Rating Agency Alpha Credit Rating Limited
27) Website www.bdbl.com.bd
28) SWIFT Code BIC: BDDBBDDH
Source: Annual Report 2015
3.3 Corporate Organogram of BDBL
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3.4 Board of Directors
Name of the Directors during the year 2016 are as under:
1. Md. Yeasin Ali 7. Amalendu Mukherjee
2. Dewan Nurul Islam 8. Md. Khalilur Rahman Siddiqui
3. Quazi Murshed Hossain Kamal 9. Md. Fayekuzzaman
4. Advocate Md. Abdus Salam 10. Md. Mamun – Al – Rashid
5. Professor Dr. Rustom Ali Ahmed 11. Dr. Md. Zillur Rahman
6. Syed Aftear Hussain Pear
3.5Branch Banking Division
Branch Management Department:

 Zone Office, Dhaka: Principal Branch, Karwan Bazar Branch, Motijheel Branch,
Elephant Road Branch, Narayangonj Branch, Mymensingh Branch, Faridpur Branch,
Ashugonj Branch, Madhobdi Branch, Hossainpur Branch, Ashulia Branch,
Mohadevpur Branch, Saturia Branch.
 Zone Office, Chittagong: Agrabad Branch, Khatungonj Branch, Noakhali Branch,
Comilla Branch, Sylhet Branch, Cox’s Bazar Branch, Osmani Nagar Branch,
Nabinagar Branch, Moulavi Bazar Branch.
 Zone Office, Rajshahi: Rajshahi Branch, Mokamtola Branch, Kazirhat Branch, Bogra
Branch, Rangpur Branch, Dinajpur Branch, Pabna Branch.
 Zone Office, Khulna: Khulna Branch, Jhenidah Branch, Barisal Branch.
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3.6Summary of Manpower
Table 3: Summary of Manpower
Summary of Manpower
Name of Post Head Zonal Branch Total

Office Office Office
MANAGING DIRECTOR 1 0 0 1
DEPUTY MANAGING DIRECTOR 2 0 0 2
GENERAL MANAGER 11 0 1 12
DEPUTY GENERAL MANAGER 32 4 8 44
ASSISTANT GENERAL 22 3 27 52
MANAGER
42 4 45 91
SENIOR PRINCIPAL OFFICER
87 4 101 192
PRINCIPAL OFFICER
116 8 126 250
SENIOR OFFICER
15 0 22 37
SENIOR OFFICER (IT)
79 8 73 160
OFFICER
0 0 64 64
OFFICER (CASH)
28 4 53 85
ASSISTANT OFFICER GRADE-1
0 0 0 0
1 0 10 11
(CASH)
29 0 0 29
SUPPORTING STAFF GRADE-1
38 1 27 66
SUPPORTING STAFF GRADE-2
78 4 38 120
SUPPORTING SUB STAFF
Sub Total: 581 40 595 1216
PROPOSED 23 BRANCHES IN 2014 0 0 253 253
Grand Total: 581 40 848 1469
Source: Human Resource Department
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3.7 Vision, Mission, Strategic Objectives and Core Value of BDBL

Vision
The vision of BDBL is to emerge as the country's prime Financial Institution for supporting
private sector industrial and other projects of great significance to the country's economic
development. Also be active participant in commercial banking by introducing new lines of
product and providing excellent services to the customers.
Mission
 To be competitive with other Banks and Financial Institutions in rendering services.
 To contribute to the country's socio-economic development by identifying new and
profitable areas for investment.
 To mobilize deposit for productive investment;
 To expand branch network in commercially and geographically important places;
 To employ quality human resources and enhance their capability through motivation
and right type of training at home and abroad.
 To delegate maximum authority ensuring proper accountability;
 To maintain continuous improvement and up-gradation in business policies and
procedures;
 To adopt and adapt to new technology;
 To maximum profit by strong, efficient and prudent financial performance ; and
 To introduce new product lines according to market needs.
Strategic Objectives
 Invest in Eco-friendly industries that help mitigate environmental degradation by
lendingmore for renewable energy, effluent treatment plants and other projects that
employ energy efficient low emission technologies including agro-based industries,
small power projects, ICT. Transport and infrastructure projects.
 Select and invest in industrial projects where locational advantages like local
availabilityof raw materials, good infrastructural facilities (road communication,
transport facilities, etc.) and utilities (power, gas, water, etc.) shall be available.
 Identify prospective and potential entrepreneurs and investors/clients and motivate,
guide and help them select profitable industrial venture for investment
 Regularly publish financial disclosures.
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 Undertake from time to time SWOT (Strengths,Weaknesses, Opportunity and

Threats) analysis for reviewing Bank and its market position.
Core Values:
Professionalism
We are committed to provide the best of our attention and ability for discharging our
task,roles and responsibilities and continually upgrading our skill and knowledge base
keepingabreast with ongoing local and global developments for attaining excellence in
bankingbusinesses.
Transparency &Accountability
We are committed to remain transparent and accountable to our stakeholders in
dischargingour responsibilities.
Customer Focus
We maintainstrong customer focus andbuild relationships based on integrity,
trust,commitment, timely solution and mutual benefit to accelerate the growth.
Corporate Social Responsibility
We promote protection of the environment for our children and are law-abiding in all that
wedo.
3.8Product and Services of BDBL

The Bank is always committed to serve the clients with the best values and innovative
products and services to enrich its portfolio looking at the client's demands and desires.
(1) Development Banking
 Industrial Loan with emphasis on syndicated arrangement (Power &Energy,
Telecommunication. Fiber Optic Cable, etc.)
 Public-Private Partnership (PPP) project (Port Development, Transport &
Communication like Road, Water & Air Ways etc.)
 Small & Medium Enterprise (SME like IT industries i.e. development of Hardware &
Software).
 Agro -based ventures depending on indigenous raw materials (like Jute Twin/Yarn
and otherIndustries).
 Green Banking (Environment & Eco-Friendly industries like automatic brick kiln,
renewable energy, effluent treatment plant, etc.)
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 Lease Financing.
 Real Estate business (including housing loan).
(2) Commercial & Foreign Exchange Business
1.Deposit Banking:
 Current Deposit:
Savings Deposit: Short Term Deposit, Fixed Deposit, Deposit Pensions Scheme Other
 Special savings deposit:
1. 5-Year Term BDBL Sanchay Scheme (BDBLSS)
2. 10-Year Term Sheikh Sanchez Scheme (SSS)
3. 10-Year Term Chickasha Sanchez Scheme (CSS)
2.Short Terms Loans:
 Cash Credit (Hypothecation)
 Cash Credit (Pledge) Secured Advances (General)
 Secured Advances (Financial Obligation)
 Retail Banking
(1) Consumer's Credit
(2) Personal Loan
(3)Trade/Foreign Trade Financing
• Export Cash Credit
• Packing Credit
• Purchase of Local & Foreign Documentary Bills
• Payment Against Documents (PAD)
• Loan Against Imported Merchandise (L1M)
• Loan Against Trust Receipt (LTR)
3.Foreign Exchange:
 Local L/C Import L/C Export/C
 Back to Back L/C
 Foreign Remittance
 Foreign Exchange Buy & Sale
4.Other Banking Service:
 Demand Draft issue
 Payment order issue
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 Selling of Prize Bond

 Selling of savings certificates, etc.
(3) Capital Market Operation
Share /Securities Trading Underwriting of Public Issues Brokerage House Services Mutual
Fund operation Banker's to the Public Issues
3.9SWOT Analysis of BDBL

This SWOT Analysis of BDBL provides a strategic SWOT analysis of the company's
Businesses and operations that can provide a competitive advantage.
Strengths Weaknesses
 Existing distribution and sales networks  Lack ofmotivation for the workers
 Experienced business units  Insomecasemanagement-employee
 Domestic Market relation is not good
 State owned image
 Skilled workforce
Opportunities Threats
 Growing economy  Financial Capacity
 Venture Capital  Price Changes
 Growing demand  Policies are not practiced properly
 New acquisitions
 Income level is not at a constant increase
Financial and Strategic SWOT Analysis provides a comprehensive insight into the company
history, corporate strategy, business and financial structure, management and operations. The
report contains a detailed SWOT analysis, information on the company products and services.
The key competitors as well as detailed financial information.
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3.10 Review of BDBL’s Business Strategy and Operations in 2015

The year 2015 may be termed as the year of challenges concerning banking business.
However, in order to face this challenging situation, the Board of Directors of BDBL
undertook various initiatives with policy flexibility and set directions for the institution to
become a dynamic and viable banking company.
As a state-owned specialized commercial Bank, BDBL is committed to provide industrial

financing as before. It is also mandated to operate commercial Banking activities including
Foreign Exchange and International Trade financing as per Memorandum and Articles of
Association of BDBL. As a member of Dhaka Stock Exchange Ltd. (DSE) and Chittagong
Stock Exchange Ltd. (CSE) it has been playing a significant role in Capital Market
Development. In industrial financing, the Bank provides loans to eco-friendly projects
including other projects of great significance to the economy.
The Bank also recruited officers and senior officers including IT and cash officers for
providing quick, smart and quality services to the customers. Need-based training were
imparting to the new and existing officers as a continuous process.
It can also proudly mention that BDBL has no capital shortfall, no deficit for loan provision.
Due to adoption of good corporate governance, no fraud-forgery has happened in BDBL.
Alongside earning of Profit, the Bank is also concerned with the People and Planet. For this,
the Bank has set up a CSR desk under Public Relations Department.
Figure : Operating Profit
2010 2011 2012

Tk. 82.24 crore Tk. 86.11 crore Tk. 102.80 crore
2013 2014 2015

Tk. 211.80 crore Tk. 149.90 crore Tk. 121.02 crore
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3.11Profitability Ratios of BDBL

Comparison of Return on Equity (ROE):
Years 2010 2011 2012 2013 2014 2015

ROE 4.12% 4.61% 5.33% 6.19% 6.44% 2.88%
ROE
7.00%
6.00%
5.00%
4.00%
ROE
3.00%
2.00%
1.00%
0.00%
2010 2011 2012 2013 2014 2015
Here we notice the consistent growth of Return of Equity from 2010 to 2014, (4.12% to
6.44%). But in 2015 we can notice the Return of Equity has decreased in 2.88%. The GM of
BDBL told us, due to political unrest & economic crisis the bank faced some difficulties in
the year of 2015.
Comparison of Return on Asset (ROA):
Years 2010 2011 2012 2013 2014 2015

ROA 2.34% 2.38% 2.56% 1.88% 2.25% 1.01%
ROA
3.00%
2.50%
2.00%
1.50% ROA
1.00%
0.50%
0.00%
2010 2011 2012 2013 2014 2015
Here we notice the consistent growth of Return of Asset from 2010 to 2012, (2.34% to
2.56%), But in the years of 2013 to 2015, fluctuations are noticed.
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Comparison of Return on Investment (ROI):
Years 2010 2011 2012 2013 2014 2015

ROI 52.75% 12.82% 14.62% 24.91% 17.77% 13.79%
ROI
60.00%
50.00%
40.00%
30.00% ROI
20.00%
10.00%
0.00%
2010 2011 2012 2013 2014 2015
Here we can notice the ROI of 2010 is very high in 52.75%. But from 2011 t 2015 so much
fluctuations are noticed. From 2011 to 2013 ROI showed an increasing trend 12.82%, 14.62%
& 24.91% but in 2014 & 2015 it started to decrease.
Comparison of Cost to Income Ratio:
Years 2010 2011 2012 2013 2014 2015

Cost to 55.12% 54.92% 59.21% 50.74% 68.61% 131.27%
Income Ratio
140.00%
120.00%
100.00%
80.00%
Cost to Income
60.00% Ratio
40.00%
20.00%
0.00%
2010 2011 2012 2013 2014 2015
Here we can notice the Cost to Income Ratio is stable between 50.74% to 59.21%.
But in 2014 & 2015 it started to increase in 68.61% & 131.27%.
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Comparison of Net Operating Income to Total Asset:
Years 2010 2011 2012 2013 2014 2015

Net Operating Income to 3.00% 2.98% 3.14% 4.65% 2.98% 2.35%
Total Asset
5.00%
4.00%
3.00%
Net Operating Income to
2.00% Total Asset
1.00%
0.00%
2010 2011 2012 2013 2014 2015
Here we can notice the ratios of Net Operating Asset are fluctuating Income to Total
Between 2.35%- 4.65%. The Net Operating Income to Total Asset at 2013 is 4.65%, which is
considered as the highest The Net Operating Income to Total Asset for BDBL in 2010-2015.
Comparison of Capital Adequacy Ratio:
Years 2010 2011 2012 2013 2014 2015

Capital Adequacy 28.08% 28.90 27.26 24.78 24.58 25.77%
Ratio % % % %
29.00%
28.00%
27.00% Capital Adequacy
26.00% Ratio
25.00%
24.00%
23.00%
22.00%
2010 2011 2012 2013 2014 2015
Among ratios, the highest Capital Adequacy Ratio is noticed in 2011 28.90%. Though
Fluctuating trend is noticed among the above mentioned year, the ratios haven’t vary much for
each other.
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Comparison of Earning Per Share:
Years 2010 2011 2012 2013 2014 2015

Earning 16.11% 17.15% 20.92% 22.07% 28.23% 12.93%
Per
Share
30.00%
25.00%
20.00%
15.00% Earning Per Share
10.00%
5.00%
0.00%
2010 2011 2012 2013 2014 2015
From the above graph, we can notice the EPS in 2010 was 16.11% & that was increasing
at every year till 2014. At 2014, we can see the highest percentage of EPS which was
28.33%. But in 2015 there was a noticeable decrease of EPS in 2015 in 12.93%.
Percentage of Classified Loans in BDBL:
Percentage of Classified Loans = [Classified loans/ Total Loans &

Advances]*100
Years 2010 2011 2012 2013 2014 2015

Percentage of Classified 31.31% 38.28 42.99 40% 38.32 46.18
loans % % % %
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50%
40%
30%
Percentage of
20% Classified loans
10%
0%
2010 2011 2012 2013 2014 2015
Percentage of Classified loans of BDBL are fluctuating from 2010 to 2015. In the comparison
of the Total Loans & Advances, the percentage of the classified loans was started with
31.31% in 2010. Then we notice that was increasing till 2012 respectively at 38.28 &
42.99%. After that in the years of 2013 to 2015, we notice the fluctuations between 38.32% -
46.18%. We can notice the highest percentage of classified loans at the year of 2015, which
isn’t the good sign for the Loans & Advances department.
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Chapter Four
SME Banking in Bangladesh- An Overview
4.1 Introduction
The role of Small and Medium Enterprises (SMEs) is indispensable for overall economic
developmentof a country particularly for developing countries like Bangladesh. Since this
sector is labor intensivewith short gestation period, it is capable of increasing national income
as well as rapid employmentgeneration; achieving Millennium Development Goals (MDGs)
especially eradication of extremepoverty and hunger, 96gender equality and women
empowerment. SME sector has played a vital role ineconomic development of some
prosperous countries of Asia. Our neighboring countries have alsogiven due importance on
SME. Terming SME as ‘employment generating machine’ they stressed onSME development
for higher economic growth, narrowing the gap of income inequality and povertyalleviation.
4.2Financial Inclusion
4.2.[1] Financing SME Sector

Access to finance is vital for SME sector development. In many instances, entrepreneurs raise
complain regarding high rate of interest. Indeed, higher rate of interest is a major hindrance,
but availability of adequate fund is very much important. That is why, Bangladesh Bank is
committed to facilitate SME credit through refinance window. To develop SME sector, the
fund of BB, IDA and ADB is being channelized through refinance scheme. So far a total of
Tk. 1,432 crore has been refinanced (up to December 2009) to 14,122 enterprises using the
revolving fund (Tk.918 crore) of BB, IDA & ADB. Moreover, Bangladesh Bank is going to
launch an extended refinance scheme of Tk. 660 crore very soon with the newly arranged
ADB fund.
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4.2.[2] Preference to the Small Entrepreneurs

Among SME enterprises/entrepreneurs in our country, small entrepreneurs have more
prospects for generating employment, reducing unemployment and achieving economic
growth. Keeping this in view, at least 40% of the total disbursement target of SME credit
should be reserved for small entrepreneurs and the rest will be allocated to medium
entrepreneurs.
4.2.[3] 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. 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.
a) Interest rate for women entrepreneurs will be Bank rate (which is at present 5%) plus
maximum 5%.
b) Banks/Financial Institutions will accept and settle all types of loan applications of
SME women entrepreneurs with the highest priority.
c) 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.
4.3 Present scenario of SME Loan in Bangladesh:

4.3. [1] Bank wise Transaction Distribution of Small & Medium Enterprises:
According to the survey report of Bangladesh Bank, among the SMEs having transactions
with financial institutions, most of the SME entrepreneurs (about 77.4%) had banking
transactions with private commercial banks.
23 | P a g e
Bankwise Transction Distribution of SME

Government 12.42%
Private 77.38%
Ban
ks Foreign 2.22%
Specialized 5.10%
NBFIs 2.88%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
Percentage
Source: Survey report, research department, Bangladesh bank, April 2016.

And almost 45% of those enterprises reside within Dhaka Division.
4.3.[2] Sector Wise Distribution of Small and Medium Enterprises

SME loans are distributed in different sectors like: Hotels & Restaurants, Real State,
Transport & Communications, Health & Social works, Agriculture & Forest etc. Different
banks follow different strategy to disburse the loans & they must have to abide by the rules &
regulations declared by Bangladesh Bank.
Sectorwise Distribution of SME

Consrtuction
2%
Industry Hotel and

30% Restaurant
1%
Whole and Retail Real Estate, Rent
Sale and other
59% businesses
Heath and Transport and
Social 1%
Communication
Works 1%
1%
Agricultur Community, Social
e and and Personal
Forest Service
3% 2%
Source : IRBD -CPD,FY -14/15
24 | P a g e
4.3.[3] Credit Related Information of Small and Medium Enterprise

Nature of Credit:
According to statistics of 2010, natures of major number of credits taken by SMEs were
Overdraft/CC/Working Capital. It is to be mentioned that both the entrepreneurs and the
Bankers prefer dealing with these kinds of credit.
Nature of Credits Taken By SMEs in 2010

90
80 84.50
Per70
cen60
50
tag
40
e
30
20
10 14.80 0.70
0
Overdraft & CC Project Loan Work Order Loan
Nature of Credit
Source: Bangladesh bank Survey Report, Research Department-BB, April, 2016
Bankers prefer these loans as they have higher interest charges in comparison to other loans
which yield higher profit. Also, from the point of view of the entrepreneurs, these type of
credits are less cumbersome; they use the facility only when necessary and do not have to pay
interest when the funds stay unutilized.
Duration of SME Credits:
According to the data of 2010, duration of majority of the loans (approximately 82%) of
SMEs was one year or less than one year as most of the credits obtained by those enterprises
were Overdraft/CC to meet the working capital.
25 | P a g e
Duration of SME Credit

49.22
50
Per
40 32.82
ce
nta 30
ge 20 11.97
4.66
10 1.33
0
Less than 1 1 Year Between 1 Between 3 More than 5
Year and 3 Years and 5 Years Years
Duration
Source: Bangladesh bank Survey Report, Research Department-BB,April,

- 2016
Interest Rate of SME Credits:
Weighted averages of interest rate of SME credits obtained by the surveyed enterprises were
13.57% and 15.03% in the year 2010 and 2011 consecutively. However, the rate of increase
in 2011 was very distinct. In 2010, the number of companies taking credit at interest rate of
15% or higher was 150, which was 33.3% of the total number of companies (graph-4.3). In
2011, number of companies taking loan at the same 15% or higher interest rate was 353,
which was 78.3% of the total number of companies. Moreover, in some cases, the policy to
provide credit to woman entrepreneurs at 10% interest rate was not followed.
Utilization of Credits:
Observing the category-wise utilization of credit by SMEs revealed that, most of the credit
was used to purchase industry raw materials (41.1%) and purchase of products (27.5%) for
trading purpose.
Repayment of Credit:
Though majority of the SME entrepreneurs (96.7%) were regular in credit repayment, part of
the credit being unattended had an impact on the increase of outstanding loans of the
enterprises. It is to be mentioned here that, the amount of repaid credit of the surveyed
26 | P a g e
companies in 2010 was Tk. 246.2 crore, which was 57.7% of the received credit. In this case,
due to limit increase of some existing loans (Overdraft/CC/Working capital) and some other
loans being term-loan in nature, it was evident that the amount of repayment was lower than
the amount of disbursement.
4.3.[4] Major use of SME loans

It is observed that the loan is mostly used for purchasing raw materials from the responses.
Where 58% respondents agreed, the most use of this loan is for purchasing raw materials.
28% Salary and daily expense is the second and most used purpose of the loan. 14%
respondents of paying the creditors’ is another use of the loan who agreed to the fact.
Use of the loan

Salary & daily
expenses
28%
58%
Pay Creditors
14%
Raw materials
purchase
4.3.[5] Distribution of Entrepreneurs
( Whether or not they take bank loan to operate their SME)
Whether or not take loan
Yes
62.5
%
9
1
NO
5 37.5
%
27 | P a g e
62.5% that means 15 out 24, a large number of SME entrepreneurs take bank loan to operate
their SME business which is very noticeable. However about 9 out of 24 do not take bank
loan to run their business.
4.3.[6] Distribution of Bank’s Contribution in SME Sector
Very Much Important- 50%

3
Very Important-16.67%
Important-16.67%
3 9
Less Important-16.67%
Not Important 0%
3
Bankers agree that banks play a vital role in the development of SME sector in our
country. 50% said banks are very much important in the development of SME
sector.16.67% Banks have important contribution in SME sector.
4.3.[7] Analysis on SME

 Strength:
Legal mandate with single mission for the development in the country where it is described
the foundation is entrusted with the power to work independently for the development of
SME sector of the country as per the government gazette. The mission and objective is very
well-defined. It also approaches to be followed to accomplish.
Again it is also described as the diversified man power commensurate with different facets.
Through the current man power of the foundation is not adequate the composition is
commensurate with the multi-faceted task requiring expertise on finance, economics, and
Public relations and engineering for the development of SME sector.
 Opportunities:
Here it is described adequately sensitized environment and political endorsement. The

importance of SME sector is well recognized in all planning documents. All medium and
28 | P a g e
long term plans acknowledged the potential role of SMEs to enhance growth and poverty all
aviation in the country The formation of the SME foundation itself reflects the commitment
of the government to the development of a vibrant SME sector. All these provide a favorable
ground for SME foundation to pursuit mandate.
 Weakness:
Insufficient finance may be the weakness of SME banking. The earning on the endowment is
not adequate to undertake different activities by the foundation. Total proceed earn from the
endowment fund which is dependent on the market rate of interest which varies overtime.
This makes the overall planning critical.
 Threat:
Despite the SME foundation setting up with a number of objectives as its mandate, it is yet to
mark notable success. The financing will not be able to accomplish the objectives of
developing a vibrant SME sector as envisioned in different planning documents of the
government if this situation continues.
4.4 Measures taken by Bangladesh Bank for SME development

Bangladesh Bank has already introduced several schemes and programs to flourish and
expandSME Enterprises. Refinance scheme funded by Bangladesh Bank, IDA and ADB has
been facilitatedfor the development of SME Sector. Besides, to ensure institutional financial
facilities under easyconditions Bangladesh Bank has taken diverse steps; like opening of
‘Dedicated Desk’ for SME and‘SME Service Centre’ in the banks and special facilities for
the women entrepreneurs. But reality isthat expected outcome has not been achieved so far in
this sector.In the back drop of recent global recession and changed circumstances, it has
become essential toinclude all segments of people in the growth process through facilitating
credit to the sectors whereless attention has been given due to present market mechanism,
specially, in agriculture and SMEsector. Reasonably, a new department namely ‘SME and
Special Programs Department’ hasbeen established in Bangladesh Bank recently which will
be solely responsible for policy formulation,facilitating fund, monitoring and development of
entrepreneurship in the SME sector.
4.5Bangladesh Bank’s Policies towards SME Financing

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1) Target for SME Credit:

A total target of SME credit worth Tk. 23,995(Twenty three thousand nine hundred ninety
five) crore has been set by the banks and financial institutions for the first time in 2010
considering SME development as one of the important development agenda of the country.
According to the target, SME loan shall be disbursed to the small, medium and women
entrepreneurs. In future, banks/financial institutions will send their target to the SME and
Special Programs Department as well as branch offices of Bangladesh Bank fixing their
target of SME loan sector-wise, region wise and branch wise.
2) Area Approach Method:
‘Area Approach method’ shall be applied for SME sector like agricultural credit. Territorial
industrialproduction, type of industrial products i.e. areas famous for industrial production or
important dueto geographical location will be taken into consideration while disbursing SME
loan. Besides, cluster basedapproach will be helpful for the bank’s risk analysis and intensive
monitoring of SME financing.
3) Cluster Development Policy:

Banks/financial institutions will inform BB after adopting cluster development policy to
flourish SME sector. Cluster development policy can be formulated in co-operation with
banks, financial institutions and NGOs. The objectives of this policy are to strengthen the
existing cluster, development of new clusters in special sector, development & expansion of
sustainable and competitive technology, skill development of entrepreneurs, and development
of marketing channels, reduce credit risk and enhance overall product development.
Strategies for cluster development:

- Identification of the cluster;
- Formation of committee for cluster development;
- Conduct baseline survey & diagnostic study;
- Fixation of action plan;
- Implementation of action plan; - Review & monitoring.
4) Financing SME Sector:
Access to finance is vital for SME sector development. In many instances, entrepreneurs raise
complain regarding high rate of interest. Indeed, higher rate of interest is a major hindrance,
but availability of adequate fund is very much important. That is why, Bangladesh Bank is
committed to facilitate SME credit through refinance window.
30 | P a g e
To develop SME sector, the fund of BB, IDA and ADB is being channelized through
refinance scheme. So far a total of Tk.1432 crore has been refinanced (up to December 2009)
to 14,122 enterprises using the revolving fund (Tk.918 crore) of BB, IDA & ADB. Moreover,
Bangladesh Bank is going to launch an extended refinance scheme of Tk. 660 crore very soon
with the newly arranged ADB fund.
5) Priority to the Small Entrepreneurs:
Among SME enterprises/entrepreneurs in our country, small entrepreneurs have more
prospects for generating employment, reducing unemployment and achieving economic
growth. Keeping this in view, at least 40% of the total disbursement target of SME credit
should be reserved for small entrepreneurs and the rest will be allocated to medium
entrepreneurs.
6)Priority to Refinance in Industry (Manufacturing) and Service Sector:

Industry and service sectors are given priority over the business sector under refinance
scheme by Bangladesh Bank. 100% claims in industry and service sector is being refinanced.
This policy will be continued to create a friendly environment for employment generation and
higher production.
7) Special arrangement for Women Entrepreneurs:
About half of the population of Bangladesh is women. So, it is crucial that women
participation in the mainstream of economy for attaining sustainable economic growth &
poverty reduction. Especially women participation in micro credit programs and readymade
garments industry is contributing significantly to the country’s industrialization. Similarly,
Economy of Bangladesh will be flourished by participation of women entrepreneurs in SME
sector.
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.
a. 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.
b. Interest rate for women entrepreneurs will be Bank rate plus maximum 5%
31 | P a g e
c. Banks/Financial institutions will accept and settle all types of loan applications of SME
women entrepreneurs with the highest priority.
d. Banks and financial institutions shall take initiative to advertise all the facilities for women
entrepreneurs in both electronic & print media.
e. 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.
8) Acceptance and Consideration of Application:

Respective bank branch will sanction the SME loan limit considering the annual requirement
and following the existing credit norms. For this purpose, respective branches will accept the
application of the small and medium entrepreneurs with their annual production plan. If
necessary, entrepreneurs will be allowed to modify their production plan on reasonable
ground.
9) Grace Period:
The entrepreneurs often raise complaints regarding short duration of grace period for
repayment of SME loan. Therefore, banks and financial institutions will consider the
reasonable grace/moratorium period at the time of formulating credit policy for SME sector.
10) Eligibility of the Borrower:

Real entrepreneurs who are directly involved in SME sector will be considered eligible for
SME credit. Generally loan defaulters will not be entitled to get new loan.
11) Interest Rate on SME Credit:

Banks/financial institutions have privilege to fix up the interest rate on small and medium
loan for the respective sector/sub-sector. The branches have higher operating cost for
maintaining the small entrepreneurs. Reasonably, the rate of interest in this sector is
somewhat higher. But it should be within tolerable limit. Banks and Financial Institutions are
being provided refinanced facility by Bangladesh Bank at bank rate in SME sector. The fund
obtained at bank rate through BB refinance window should be disbursed at bank rate + not
more than 5% interest to the client level (in case of women entrepreneurs).
12) Outsourcing of Credit Disbursement:
32 | P a g e
Banks/financial institutions may seek assistance from private organizations/Non-Government

Organizations (NGO)/self-help group for selecting borrower, monitoring of credit
disbursement, recovery, motivation of the borrowers, training for them etc.
13) Training Programs:

The SME sector in Bangladesh faces problems both from supply side and demand side. The
existing main problem of the demand side, on the other hand, includes: marketing of
products, lac of skill and knowledge of the entrepreneurs to improve quality of products,
absence of SME information data base etc. In order to develop genuine small and medium
entrepreneurs, it is essential to arrange trade fares of the SME products matching
buyersupplier improving the quality of product and package design, workshop and training on
technology and design development. For the purpose, the commercial banks and international
donor agencies will be requested to arrange training on entrepreneurship development where
Bangladesh Bank will play the supporting role.
14) Monitoring of SME Credit:

Three tier monitoring systems (BB Head Office, BB Branch Offices and Banks) will be
established in case of SME credit.
15) Availability of Information:
Banks will display the detailed information regarding SME credit facilities in their website
and also in each of their branches at a common and easily noticeable place. Banks will
maintain - information of credit flow, rate of default, employment creation, outstanding loans
etc. This information will help in evaluating the effectiveness of existing guidelines adopted
by the government and will assist in formulating SME guidelines in the future.
16) Incentives:
Banks should give priority to rural areas instead of urban areas for SME loan. The overall
success in SME target achievement will be considered as an important criteria for allowing
the respective banks to open new branch, Authorized Dealer (AD) branch and exchange
houses abroad.
4.6Credit Disbursement
Bangladesh Bank set the target for credits that should be distributed among the entrepreneurs
of small and medium enterprises. Giving topmost priority to small enterprises and women
33 | P a g e
entrepreneurs Bangladesh bank sets an estimated maximum limit of credit to be distributed by

state-owned commercial banks, private commercial banks, specialized banks, foreign banks
and NBFIs. Bangladesh Bank started this credit disbursement from 2010 and target of credit
disbursement are given below for the year:
Table4: Target of SME Credit Disbursement
Serial Banks & Financial Institutions Target
No. (Tk. in crore)
1 State-owned Commercial Banks 3,897
2 Specialized Banks 600
Private Commercial Banks 17,478
3 Foreign Commercial Banks 707
4 Non-Bank Financial Institutions 1,313
5 Grand Total 23,995
Source: Research Department survey report on SME, Bangladesh Bank, April 2016
4.7 List of Financial Institutions for SME

Table 5: List of Participating Financial Institutions
Refinance Scheme for Small Enterprise Sector
SL Banks Financial Institutions
#
1 AB Bank Ltd Bangladesh Finance and Investment Co Ltd
2 Al-Arafah Islami Bank Ltd Bangladesh Industrial Finance Co Ltd.
3 National Bank Ltd Bay Leasing and Investment Ltd
4 Prime Bank Ltd Fareast Finance and Investment Ltd
5 Mutual Trust Bank Ltd FAS Finance Ltd
6 First Security Islami Bank First Lease Finance and Investment Ltd
Ltd
7 Dhaka Bank Ltd. GSP Finance Ltd
8 Bangladesh Commerce IDLC Finance Ltd
Bank Ltd.
9 IFIC Bank Ltd IIDFC Ltd
10 NRB Bank Ltd. International Leasing and Financial Services Ltd
11 Bangladesh Development IPDC Ltd
Bank Ltd.
12 Eastern Bank Ltd Islamic Finance and Investment Ltd
13 Commercial Bank of Ceylon LankaBangla Finance Ltd
14 Midland Bank Ltd Midas Financing Ltd
15 Mercantile Bank Ltd National Finance Ltd
16 NRB Commercial Bank Ltd National Housing Finance &Investments Ltd
34 | P a g e
17 South Bangla Agriculture and People’s Leasing and Financial Services Ltd
Commerce Bank Ltd
18 One Bank Ltd Phoenix Leasing Co Ltd
19 NCC Bank Ltd Premier Leasing Ltd
20 Jamuna Bank Prime Finance and Investment Ltd
21 Bank Asia Ltd Reliance Finance Ltd
22 Dutch Bangla Bank Ltd Union Capital Ltd
23 Brac Bank Ltd United Leasing Co Ltd
24 Meghna Bank Ltd. Uttara Finance and Investment Ltd
25 Southeast Bank Ltd
26 Standard Bank Ltd
27 State Bank of India
28 The City Bank Ltd
29 The Fermers Bank Ltd
30 The Premier Bank Ltd
31 The Trust Bank Ltd
32 Uttara Bank Ltd
Chapter Five
35 | P a g e
SME Banking in Bangladesh Development Bank
5.1 Introduction: SME financing
Bangladesh Development Bank Limited took several steps for enhancing and accelerating
SME loan portfolio, some of which were:
 Fixation of delegation of power categorically for sanctioning of SME loan by the

Zone, Branch Head and officers concerned in Head office;
 Fixation of target for General and Women Entrepreneurs (10 percent for cluster
projects, 25 percent for Green Banking and 65 percent for other projects);
 For the convenience of selecting SME Projects, a list based on area, sectors and
clusters was prepared and sent to all Branches;
 Provision of collateral free loan for Women up to 10.00 lac;
 Provision of collateral free loan for all up to 5.00 lac;
 Nomination of one Focal Officer in each Branch as well as in SME Department at
Head Office;
 Set up of SME cell, a help desk / Women Entrepreneur Dedicated Desk at all Branch
Offices to advise and assist SME entrepreneurs particularly, women entrepreneurs for
advisory services including all related assistance;
 Set up of Women Entrepreneur Development Unit at all Branch and Zone Offices as
per instruction of Bangladesh Bank;
 Compilation of NGO-Linkage Wholesale Credit Policy;
 Preparation of SME Manual relating to rules, regulations and other related up-to-date
information;
 Introduction of 4 new SME products namely ‘Ashar Alo’ (for women entrepreneurs),
‘Koler Chaka Takar Jhaka’ (industrial loan),‘Khamar Bari’ (loans for processing of
agricultural products) and ‘Proshar’ (Business loan);
 Creation of Database & Market Segmentation Reporting as per Software given by
Bangladesh Bank;
 Creation of database of Women Entrepreneurs Reporting as per software given by
Bangladesh Bank;
36 | P a g e
 Arrangement of Area-Based meeting with the entrepreneurs on a regular basis;
 Preparation of a comprehensive report on Flower Cultivation for financial inclusion of

flowers cultivators according to instruction of Bangladesh Bank; and
 Arrangement of different training programs by the Bank on SME related issues for
enhancing knowledge and awareness of the employees on SME financing.
Comparison of Disbursement of SME loan in differentSectors

[TK in Crore]
Year Service Trade Manufacturing
2014 55.75 62.79 28.06
2015 87.65 111.39 35.41
Growth 12.55% 17.15% 19.79%
Source: MIS Department of BDBL
120
100
80
2014
60
2015
40
20
0
Service Trade Manufacturing
The SME department of BDBL is trying their best to increase the disbursement of loan
amount as well as increase the profit from this department. But the main challenge is that
theapplicants fail to fulfill the condition of the SME loan. If we notice the comparison of
SME loans which are disbursed in 2014 & 2015, then we’ll see the increasing growth.
In addition to the above, the Bank actively participated in different SME fairs and seminars.
The portfolio position of SME loan as on 31-12-2014 was shown below:
Table 6: Portfolio Position of SME Loan
(Tk. in crore)
37 | P a g e
SME Sector Amount

Service 55.75
Trade 62.79
Manufacturing 28.06
Total 146.60
% of Women Entrepreneurs in Total Loans 35.73
% of Male Entrepreneurs in Total Loans 64.27
Source: MIS Department
5.2.[1] Definition of SME

The existing definition of SME according to Ministry of Industry & Bangladesh Bank has
been started as an identical definition. The definition exists in BDBL too and branches
provide loan in SME sector according to the mentioned definition. The contents of the
definition of Small & Medium Entrepreneurs are given in next pages:
Table 7: Contents of the Definition of Small & Medium Entrepreneurs

Manufacturing Service Business
According According Accordin Accordin Accordin According to
Serial
Sector to Fixed to g to g to g to Manpower
No.
Asset Manpowe Fixed Manpow Fixed
r Asset er Asset
1 Medium Tk. 10 100 to Tk. 1 50 to Tk. 1 50 to 100
crore-30 250 crore- 100 crore-
crore 15crore 15crore
2 Small Tk. 50 25 to 29 Tk. 5 10 to 25 Tk. 5 10 to 25
lack-10 lack-1 lack-1
crore crore crore
3 Micro Tk. 5 lack- 10 to 24 Less Less Less Less than 10
50 lack or less than Tk. than 10 than Tk.
5 lack 5 lack
4 Cottage The value of fixed asset with establishment expense except land &
factory 38 building is less than Tk. 5 lack. The highest number of
manpower including family member is 10
38 | P a g e
5 Woman If a woman is proprietor or she is a director or shareholder of atleast

Entrepr 51% share of a private company registered under Joint Stock Company
eneur Act then she is considered as a woman industry-entrepreneur

5.2.[2] Sector – Wise Long term & SME loan portfolio position
(8380 Projects)
AS ON 31 DECEMBER, 2014
Table 8: Sector – Wise Long Term & SME Loan Portfolio Position
Outstanding
Sl.
Particulars Not % of
No. Overdue Total
Due Total
1. Food & Allied Products 153.31 162.45 315.76 19.15
2. Jute & Allied Fiber Products 14.99 0.43 15.42 0.93
3. Cotton, Woolen & Synthetic Textile46.27 608.15 155.42 763.57
4. Paper, Paper Products & Printing 0.60 6.27 3.46 9.73
5. Tannery and Its Products 6.73 0.30 7.03 0.43
6. Non-metallic Mineral Products 14.23 4.38 18.61 1.13
7. Forest, Wood Products & Saw Mills 0.42 5.27 1.66 6.93
8. Rubber & Rubber Products 0.49 0 0.49 0.03
9. Metal Products 34.40 9.32 43.72 2.65
10. Electrical Machinery & Goods 7.77 0.97 8.74 0.54
11. Machinery & Spare Parts 0.69 1.38 2.07 0.13
12. Water Transport 1.79 0.04 1.83 0.11
13. Road Transport 3.40 0.17 3.57 0.22
14. Chemicals & Pharmaceuticals 21.55 10.45 32.00 1.94
15. Petro-chemicals 21.03 2.82 23.85 1.40
16. Service Industries 68.69 12.60 81.29 4.93
17. Miscellaneous 257.99 57.50 315.49 19.12
39 | P a g e
Total: 1226.75 423.35 1650.10 100
5.3 SME Organogram

Table 9: SME Organogram
Name of Post Organogram Working as on 20-4-2015

DEPUTY GENERAL MANAGER 1 1
ASSISTANT GENERAL MANAGER 2 2
SENIOR PRINCIPAL OFFICER 2 2
PRINCIPAL OFFICER 3 2
SENIOR OFFICER 4 3
OFFICER 2 1
DATA ENTRY OPERATOR* 0 2
MLSS* 2 2
Total: 14 13
*Conditional
Source: SME Department
5.4 Products of SME Banking

There are 4 types of SME Banking products in BDBL:
(1) AsharAlo
(2) Kaler Chaka TakarJhaka
(3) Khamar Bari
(4) Prosar
40 | P a g e
AsharAlo
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Kaler Chaka TakarJhaka
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Khamar Bari
43 | P a g e
Prosar
5.5 Loan documentation

Documentation Department has to perform a wide range of activities related to
documentation of long term loans sanctioned by the bank. In addition to completion of
documentation formalities of all long term loans sanctioned at Head Office level, arranges
audit clearance for loan sanctioned at the branch level also. However, completion of
documentation formalities of long term loans is the main function of this department.
Documentation procedures followed by the bank for its Head Office &Branches as well are
as follows:
44 | P a g e
1. Papers to be submitted by the Sponsors/Company after sanction of loan:

(a) Acceptance Letter with Companies Board resolution;(b) Documentation fee: One fourth
of one percent on the amount of loan sanctioned or the actual expenses. Whichever is more,
subject to a minimum Tk. 5000 and maximum Tk. 30,000 with VAT and
Other Charges:
(i) Charge filling fee.
(ii) Deed Collection fee.
(iii) Stamps (As per Banks requirement).
(d) Copy of Memorandum and Article of Association with certificate of incorporation.(e)
Attested passport size photographs of all Directors (2 copies for each).(f) Documents/title
deeds of project land and co-lateral security (if any);(g) Non-encumbrance certificate from
district registrar office;(h) Mutation with DCR;(i) C.S. S.A. R.S. Khatian;(j) Mouza
Map;(k)Up to date rent receipt;(l) Chain of previous documents such as bia-deed. Bia Khatian
etc;(m) Registered Mortgage and registered Irrevocable power of Attorney;(n) Necessary
papers/Documents as per Sanction letter;(o) 100% Share Certificate;(p) NOC from
RAJUK/CDA/KDA/Municipal Authorities/Local authority for setting up the project on the
land within this area;(q) NOC from BSCIC authority for project to be set up at BSCIC
Industrial state NOC from BPDB/DESA/BPS/TGT & DC;(s) NOC from Department of
Environment Pollution Control where applicable; and(t) NOC from Director, Drug
Administration (for pharmaceutical projects).
Particulars of documents required on the basis of type of loans and/or location of project
land:-
2. New/Original Loan:
(a) Original registered title deed of project land and collateral land (if any);(b) Bia-Deed;
I C.S, S.A & R.S Khatian with ROR;(d) DCR and Mutation Khation;(e) Rent Receipt;
(f) Non-encumbrance Certificate from District Registrar; &(g) Mouza Map.
3. In case of Project Land acquired by the Govt. acquired project land:

(a) Copy of the relevant Requisition Order;(b) Copy of the Acquisition; Allotment letter in
favor of the company;(d) Possession Delivery Certificate;(e) Original registered deed of
45 | P a g e
transfer;(f) NOC from Govt. for mortgage the land in favor of BDBL;(g) Evidence of
payment of the purchase price; &(h) Site plan.
4. In case of Project Land located at BSCIC area/Industrial Estate &/or Govt. allotted
plot:
(a) Original allotment letter;(b) Possession delivery certificate, NOC to create mortgage in
favor of BDBL;(d) Original registered lease deed; (e) Evidence of payment of purchase price;
&(f) Site plan;
5. In case of rented premises:

(a) Lease Agreement by the borrower with land-lord;(b) Tax payment receipt in the name of
land-lord; &I Approved Building plan by the appropriate authority.
6. Required Documents depending on type of ownership/company:
A. For Limited Liability Companies

(1) DP note (double) accompanied by DP note Revival letters (Form I & II) and delivery
letter;(2) Credit Agreement;(3) Agreement of hypothecation;(4) Memorandum of Deposit of
Title deeds;(5) Resolution/Authority to execute documents;(6) Specimen signatures of
executants of documents on the Banks standard cards;(7) Letter of Guarantee;(8)
Affidavit/Undertaking as per sanction letter;(9) Personal Guarantee of all directors;(10) Share
transfer form (Blank)-117 duly signed by the directors/Shareholders; (11) 100% Share
Certificate;(12) Auditors Certificate in favor of paid-up capital & Necessary papers as per
sanction letters.
B. For Proprietorship
(1) Single D.P Note;(2) D.P Note Delivery Letter;(3) Revival Letter Form-III;(4) Specimen
Signature Card;(5) Personal Guarantee;(6) Acceptance letter;(7) Registered Mortgage &
registered Irrevocable Power of Attorney along with all necessary documents/papers i.e. Bia
Deed, Bia-Khatian, CS, SA, RS parcha, Mutation, DCR, up to date Rent receipt, Non-
Encumbrance certificate from District Registrar;(8) Affidavit for Declaration furnished by the
borrowers/Land owners that the Mortgage Properties are free from encumbrance-from first
class Magistrate;(9) TIN Certificate & Trade License;(10) Photograph of sponsors;(11)
Undertaking as per Sanction letter;(12) Agreement of hypothecation; &(13) Documentation
fee, necessary stamps as per Bank's rules.
46 | P a g e
C. For Partnership Firm

(1) Single D.P Note;(2) D.P Note Delivery Letter;(3) Revival Letter Form-III;(4) Specimen
Signature Card;(5) Personal Guarantee;(6) Acceptance letter;(7) Registered Mortgage &
registered Irrevocable Power of Attorney along with all necessary documents/papers i.e. Bia
Deed, Bia-Khatian, CS, SA, RS parcha, Mutation, DCR, up to date Rent receipt, Non-
Encumbrance certificate from District Registrar;(8) Affidavit for Declaration furnished by the
borrowers/Land owners that the Mortgage Properties are free from encumbrance-from first
class Magistrate;(9) TIN Certificate & Trade License;(10) Photograph of sponsors;(11)
Undertaking as per Sanction letter;(12) Agreement of hypothecation; &(13) Documentation
fee, necessary stamps as per Bank's rules.(14) Credit Agreement;(15) Partnership
Agreement;(16) Memorandum of Association & Articles of Association;(17) Resolution;
&(18) Agreement of Hypothecation along with list of machinery.
7.For Additional Loan & BMR& E Loan:

(a) Letter of acceptance;
(b) Board resolution of the company for documentation;
(c) Memorandum of Association & Article of Association;
(d) Auditors Certificate in respect of paid up Capital;
(e) 100% Share Certificate;
(f) Memorandum of deposit of title deeds/Agreement of Hypothecation with Charge filling
form- form-17;
(g) Deed of continuation and Acknowledgement;
(h) Photographs of each director (two copy);
(i) Particulars of Directors (from RJSC);
(j) Return of allotment of Shares (from RJSC);
(k) DP Note;
(l) DP. Note delivery letter;
(m) Revival letter form I & II;
(n) Credit Agreement;
(o) Specimen signature of executants of document on the Banks standard Cards;
(p) Personal Guarantee of all directors;
(q) Share transfer form of Directors/Share-holders form-117 (Blank); &
(r) Affidavit/undertaking as per Sanction letter.
47 | P a g e
8.In Case of Management Change:

(e) 100% Share Certificate;
(f) Share transfer form - form-17 (Blank);
(g) De–d of continuation and Acknowledgement;
(h) Photographs of each director (two copy);
(i) Particulars of Directors (from Registrar of Joint Stock Companies,RJSC);
(j) Return of allotment of Shares (from RJSC);
(k) DP Note
(l) DP. Note delivery letter;
(m) Revival letter form I & II;
(n) Credit Agreement;
(o) Specimen signature of executants of document on the Banks standard Cards;
(p) Personal Guarantee of all directors;
(q) Share transfer form of Directors/Share-holders form-117 (Blank);
(r) Affidavit/undertaking as per Sanction letter;
(s) Summery of share capital;
(t) Certified copy of share transfer of new inducted director with share transfer form- form-
117 (duly stamped);
(u) Affidavit/undertaking as per sanction letter; &
(v) Company resolution for outgoing director and appointment of new director.
9. In case of change in Board of Directors of the Company/Ownership:

(e) Share Certificate;
(f) Deed of continuation and Acknowledgement;
(g) Photographs of each director (two copy);
48 | P a g e
(h) Particulars of Directors (from RJSC);

(i) Return of allotment of Shares (from RJSC);
(j) DP Note;
(k) DP Note delivery letter;
(l) Revival letter form I & II;
(m) Credit Agreement;
(n) Specimen Signature of executants of document on the Banks standard cards;
(o) Personal Guarantee of all directors;
(p) Share transfer form of Directors/Share-holders form-117 (Blank);
(q) Affidavit/undertaking as per Sanction letter;
(r) Certified copy of Summery of share capital from RJSC;
(s) Certified copy of share transfer of newly inducted director with share transfer form- form-
117 (duly stamped);
(t) Affidavit/undertaking as per sanction letter; &
(u) Company's resolution for outgoing director and appointment of new director.
10. In case of change of Project Land:

(a) Acceptance letter of sanction letter with Company's Board resolution;
(b) Undertaking as per sanction letter;
(c) Charge filling fee- form-18; &
(d) All papers/deeds as per para 1(h-m).
11. In case of Replacement/Rescheduling of Loan Account:

(1) Acceptance letter of the company/partnership/proprietor with Board Resolution; &
(2) Documentation fee TK. 5000/= with VAT.
Besides papers and documents to be submitted are subject to verification, examination &
vetting by the bank's lawyer so as to ascertain whether they are in order to protect bank's
interest.
N.B. The above formalities are subject to amendment, modification and/or change at the
discretion of the Bank Management. Further the documents/papers required for
documentation purpose as delineated above may vary to some extent depending on the merit
of the cases.
49 | P a g e
5.6 Loan appraisal and sanction procedure

When an entrepreneur or business organization is interested to get loan from Bangladesh
Development Bank Limited it has to submit a loan application manually. Then a prescribed
form of Loan Application is provided to it. The required loan is categorized into sector-wise
and enterprise-wise. The organization has to submit various documents required by the bank.
The documents are verified. If the documents meet the requirements of the bank, the loan is
sanctioned and disbursed by the local Branch Office, Zonal Office or Head Office according
to the loan amount and SME Rate Book.
50 | P a g e
ChapterSix
Analysis & Findings
Analysis
6.1 SME Data - Sector –Wise: Loan outstanding position
Bangladesh Development Bank Limited is providing SME loans basically on four sectors:
1. Medium Sector
2.Small Sector
3.Micro Sector&
4.Cottage Sector.
6.1.[1] Medium Sector

Table 10: Sanction&First Disbursement of Loans
Bangladesh Development Bank Limited

Head Office : Dhaka
SME Department
Sector: Medium
SME Loan Outstanding Position as on
31/03/2015 (In Operation)

(Tk.'000')
Year of Sanction Year of First Disbursement
Branch
2012 2013 2014 2015 2012 2013 2014 2015
Ashugonj 1501 1501
0 0 0 0 0 0
Barisal 6336 6336
46 0 0 46 0 0
Bogra 11458 11458 11932
0 11932 0 0 0
Comilla 2277 0
0 0 2277 0 0 0
Hossainpur 0 0 0 4000 0 0 0 4000
Narayangonj 0 0 333 0 0 0 333 0
Total 46 19295 14542 4000 46 7837 14068 15932

Source: SME Department of BDBL
51 | P a g e
Graph: Sanctioned Loans (Medium sector)
Sanctioned Loans
Loan Amount (Tk. '000)
20000
15000
10000
5000
0
2012 2013 2014 2015
Only six branches of Bangladesh Development Bank Limited have provided SME loan on
Medium Sector. The amount of sanctioned loans is very low in 2012, high in 2013 and it is
decreasing yearly.
Graph: First Disbursement of Loans (Medium sector)
First Disbursement of Loans

20000
15000
10000
5000
0
2012 2013 2014 2015
The amount of first disbursement of loans is very low in 2012 and it is increasing with great
difference per year which is indicating that the number of projects of SME on medium sector
is increasing per year.
52 | P a g e
Table 11: Maturity of Loans
Sector: Medium
(Tk.'000')
Year of Maturity
Branch
2015 2016 2017 2018 2019 2020
Ashugonj 0 1501 0 0 0 0
Barisal 46 0 0 6336 0 0
Bogra 0 0 0 11932 0 0
Comilla 0 0 0 0 2277 0
Hossainpur 0 0 0 0 0 4000
Narayangonj 0 0 0 333 0 0
Total 46 1501 0 18601 2277 4000
Graph: Maturity of Loans (Medium sector)
Maturity of Loans
20000
15000
10000
5000
0
2015 2016 2017 2018 2019 2020
Here in 2015 & 2016 the amount of SME loan on medium sector are Nil but it can be seen
that a great amount of SME loan in 2018.
53 | P a g e
Table 12: Branch-wise Status According to Type of Enterprise

Sector: Medium
Branch-wise Status of SME Loan as on
(Tk.'000')
Type of Enterprise
Branch Total
Trade Service Manufacturing
Ashugonj 1501 0 0 1501
Barisal 0 46 6336 6382
Bogra 0 0 14209 14209
Comilla 0 0 2277 2277
Hossainpur 0 0 4000 4000
Narayangonj 333 0 0 333
Total 1834 46 26822 28702
Here we can see that the highest amount of Medium Sector loan is provided for
Manufacturing Enterprise and a little for Service Enterprise.
Table 13: Branch-wise Status According to Class Status

Sector: Medium
(Tk.'000')
Class Status
Branch
STD SMA SS DF
Ashugonj 1501 0 0 0
Barisal 6336 46 0 0
Bogra 23390 0 0 0
Comilla 2277 0 0 0
Hossainpur 4000 0 0 0
Total 37837 46 0 0
The highest amount of loans is of Standard Class and the rest is of SMA Class.
54 | P a g e
Table 14: Total Amount & Loan Outstanding

Sector: Medium
(Tk.'000')
Total Amount of Loan Outstanding
Branch
Sanction Disbursement Recovery Notdue Overdue Total
Ashugonj 1500 1500 372 749 752 1501
Barisal 8652 8652 3585 5665 717 6382
Bogra 50500 14210 0 14209 0 14209
Comilla 3000 2277 0 2277 0 2277
Hossainpur 315452 154162 12272 36747 1469 38216
Narayangonj 400 400 89 333 0 333
Total 379504 181201 16318 59980 2938 62918
The mentioned six branches are indicating that there is a great difference between sanctioned
loans and disbursed loans. The amount of Not Due is huge which is good for the bank.
6.1.[2] Small Sector
Table 15:Sanction&First Disbursement of Loans

Head Office : Dhaka
SME Department
Sector: Small
(Tk.'000')
Year of Sanction
2010 2011 2012 2013 2014 2015
4151 18089 53069 87565 640630 211954
(Tk.'000')
Year of First Disbursement
2011 2012 2013 2014 2015
18623 42226 96957 630081 227571
55 | P a g e
Graph: Sanctioned Loans (Small Sector)
Sanctioned Loans
700000
600000
500000
400000
300000
200000
100000
0
2010 2011 2012 2013 2014 2015
Here is shown that the amount of Sanctioned loan on small sector is increasing from 2010 to
2015 and got highest in 2014.
Graph: First Disbursement of Loans (Small Sector)

700000
600000
500000
400000
300000
200000
100000
0
2011 2012 2013 2014 2015
The Graph is shown that the amount first disbursement loan on small sector is increasing
from 2011 to 2015 but in 2014 is the highest first disbursement of loans.
56 | P a g e
Table 16: Maturity ofLoans
Sector: Small
(Tk.'000')
Year of Maturity
2012 2013 2014 2015 2016 2017 2018 2019 2020
1430 2377 29820 91550 119658 243879 135494 303235 81602

Graph: Maturity ofLoans (Small Sector)
Maturity of Loans
350000
300000
250000
200000
150000
100000
50000
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
The amount of Maturity loans will be increased from 2012 to 2017 but 2018 that’s will be
declined and the greatest amount of loans will mature in 2019.
57 | P a g e

Sector: Small
(Tk.'000')
Type of Enterprise
Branch Total
Agrabad 36910 4586 7994 49490

Ashugonj 132638 69341 42033 244012
Ashulia 3289 0 0 3289
Barisal 5577 1838 1662 9077
Bogra 12550 0 13731 26281
Comilla 11496 2345 6162 20003
Dinajpur 1575 2927 0 4502
Elephant Road 5625 0 0 5625
Faridpur 387 1208 2974 4569
Hossainpur 5198 330 5180 10708
Jhenidah 46594 13086 33719 93399
Karwanbazar 0 0 3542 3542
Khatungonj 1505 4121 4066 9692
Khulna 0 2114 2292 4406
Madhobdi 109456 36 51168 160660
Mohadebpur 9092 1351 2834 13277
Mokamtola 16988 735 4510 22233
Motijheel 434 0 0 434
Mymensingh 26086 39626 53829 119541
Nabinagar 450 0 450
Narayangonj 1613 2170 401 4184
Noakhali 21237 9427 15733 46397
Pabna 2967 4262 22518 29747
Principal 1102 0 0 1102
Rangpur 17384 52344 27773 97501
Saturia 19793 5754 3617 29164
Sylhet 190 0 0 190
Total 490136 217601 305738 1013475
58 | P a g e
Among 32 branches of Bangladesh Development Bank Limited 5 branches is not providing

loan on Small Sector. The greatest amount of loans has been provided for Trade Enterprise,
then for Manufacturing Enterprise and then for Service Enterprise.

Sector: Small
(Tk.'000')
Class Status
Branch
STD SMA SS DF BL
Agrabad 43145 1635 2906 994 810
Ashugonj 216328 19569 7381 996 712
Ashulia 3289 0 0 0 0
Barisal 3292 271 2540 634 2919
Bogra 25213 1068 0 0 0
Comilla 20003 0 0 0 0
Dinajpur 3316 369 817 0 0
Elephant Road 3555 931 775 364 0
Faridpur 4569 0 0 0 0
Hossainpur 7382 3326 0 0 0
Jhenidah 65184 1648 18079 6231 2257
Karwanbazar 3542 0 0 0 0
Khatungonj 9386 306 0 0 0
Khulna 2221 391 0 584 1210
Madhobdi 156212 3744 704 0 0
Mohadebpur 13277 0 0 0 0
Mokamtola 19730 931 1407 165 0
Motijheel 0 434 0 0 0
Mymensingh 105032 2019 1131 3672 7687
Nabinagar 450 0 0 0 0
Narayangonj 284 58 1292 0 0
Noakhali 40130 4547 33 419 1698
Pabna 8242 0 0 12898 8607
Principal 1102 0 0 0 0
Rangpur 39847 20924 12350 0 24380
Saturia 29164 0 0 0 0
Sylhet 190 0 0 0 0
Total 826635 62171 49415 26957 50280
59 | P a g e
Most of the loans provided by 27 branches are of Standard Class. The lowest amount of loans
is of Doubtful Class.
Table 19: Total Amount & Loan Outstanding
Sector: Small
(Tk.'000')
Branch
Agrabad 56350 56350 9256 46802 2688 49490
Ashugonj 266000 266000 36024 230059 14927 244986
Ashulia 4500 4500 1875 3289 0 3289
Barisal 11837 11837 3354 7414 2242 9656
Bogra 30438 30100 1927 25291 990 26281
Comilla 34100 33200 6160 19872 131 20003
Dinajpur 5200 5200 2298 4273 229 4502
Elephant
Road 9500 9500 4913 5110 515 5625
Faridpur 6000 5800 1011 4569 0 4569
Hossainpur 13050 12996 2970 9990 718 10708
Jhenidah 107020 105780 16781 84644 8755 93399
Karwanbazar 4900 4900 2295 3227 315 3542
Khatungonj 11200 11200 2050 9457 64 9521
Khulna 5500 5465 1977 3741 665 4406
Madhobdi 196650 196650 41122 158658 2002 160660
Mohadebpur 16200 16200 532 13277 0 13277
Mokamtola 28300 28300 8880 21233 1000 22233
Motijheel 485 485 159 375 59 434
Mymensingh 125050 124050 4882 113808 5733 119541
Nabinagar 450 450 0 450 0 450
Narayangonj 5815 5815 2124 4142 42 4184

Branch
Noakhali 62350 62350 19392 43521 3306 46827
Pabna 28660 28428 615 21887 7860 29747
Principal 1000 1000 0 995 107 1102
Rangpur 112153 106673 35397 90923 6578 97501
Saturia 32350 30129 1897 29136 28 29164
Sylhet 300 300 192 188 2 190
Total 1175358 1163658 208082 956330 58956 1015287
60 | P a g e
We can see that the difference between the amount of Recovery and Disbursement is great.
The larger portion of Total Loan Outstanding is Not Due which is good for the bank.
6.1.[3] Micro Sector

Table 20: Sanction & First Disbursement of Loans
Head Office : Dhaka
SME Department
Sector: Micro
(Tk.'000')
Year of Sanction
2010 2011 2012 2013 2014 2015
3172 19113 43612 112053 267261 155235
(Tk.'000')
Year of First Disbursement
2010 2011 2012 2013 2014 2015
3080 10553 47531 105499 327768 105012
Graph: Sanctioned Loans (Micro Sector)
Sanctioned Loans
300000
250000
200000
150000
100000
50000
0
2010 2011 2012 2013 2014 2015
Graph: First Disbursement of Loans (Micro Sector)
In the graph, Amount of Sanctioned loan on Micro sector is increasing after BDBL’s starting
of incorporation from 2010 to 2015 and got highest in 2014.
61 | P a g e
Graph: First Disbursement of loan (Micro Sector)

400000
300000
200000
100000
0
2010 2011 2012 2013 2014 2015
After starting of BDBL’s incorporation the amount first disbursement loan on Micro sector is
increasing from 2010 to 2015 but in 2014 is the highest first disbursement of loans.
Table 21: Maturity ofLoans
Sector: Micro
(Tk.’000’)
Year of Maturity
2013 2014 2015 2016 2017 2018 2019 2020 2021
2911 29661 76190 138801 139399 87152 91795 29525 5000

Graph: Maturity of Loans (Micro Sector)
Maturity of Loans
150000
100000
50000
0
2013 2014 2015 2016 2017 2018 2019 2020 2021
The mentioned information is including that most of the loans will mature in 2016 and 2017.
62 | P a g e

Sector: Micro
(Tk.'000')
Type of Enterprise
Branch Total
Agrabad 869 0 777 1646

Ashugonj 529 0 10351 10880
Ashulia 152219 15518 30923 198660
Barisal 5854 0 1714 7568
Bogra 3347 0 3167 6514
Comilla 3068 1396 0 4464
Cox's Bazar 21770 4500 4079 30349
Dinajpur 3310 3918 1706 8934
Elephant Road 5974 472 410 6856
Jhenidah 7755 417 5448 13620
Karwanbazar 2206 7112 2432 11750
Khatungonj 11026 11291 3470 25787
Khulna 2112 2386 11341 15839
Madhobdi 2906 0 1165 4071
Mokamtola 747 162 2925 3834
Motijheel 10440 0 1037 11477
Mymensingh 0 0 2978 2978
Narayangonj 1017 333 1286 2636
Noakhali 982 0 0 982
Pabna 4342 25 16558 20925
Principal 0 0 9413 9413
Rajshahi 20469 7969 12740 41178
Rangpur 27983 42219 68201 138403
Saturia 881 0 999 1880
Sylhet 13138 227 2535 15900
Total 302944 97945 195655 596544
Only 25 branches have provided loans on Micro Sector. The greatest amount of loans have
been provided for Trade Enterprise, then for Manufacturing Enterprise and then the lowest
amount for Service Enterprise.
63 | P a g e

Sector: Micro
(Tk.'000')
Class Status
Branch
STD SMA SS DF BL
Agrabad 1178 196 102 170 0
Ashugonj 5107 1832 410 3531 0
Ashulia 198126 0 534 0 0
Barisal 1223 1147 1207 2302 1716
Bogra 5748 0 766 0 0
Comilla 3881 139 444 0 0
Cox's Bazar 26489 3305 492 0 63
Dinajpur 8572 2178 0 0 1047
Elephant Road 3140 2215 410 344 747
Jhenidah 8869 175 3777 475 324
Karwanbazar 8034 1118 1205 0 1393
Khatungonj 21136 3848 626 0 177
Khulna 9839 0 442 0 5558
Madhobdi 3474 597 0 0 0
Mokamtola 3603 231 0 0 0
Motijheel 10549 446 0 482 0
Mymensingh 2049 0 0 0 929
Narayangonj 1416 706 0 0 514
Noakhali 982 0 0 0 0
Pabna 11776 1270 0 1338 6541
Principal 7505 1908 0 0 0
Rajshahi 13477 6192 4631 5875 11003
Rangpur 104869 13451 7673 4114 9296
Saturia 1880 0 0 0 0
Sylhet 9951 1334 1766 1054 1795
Total 472873 42288 24485 19685 41103
Most of the loans are of Standard Class and a few numbers of loans are of Doubtful Class.
64 | P a g e
Table 24: Total Amount & Outstanding Loan

Sector: Micro
(Tk.'000')
Branch Not
Sanction Disbursement Recovery Overdue Total
due
Agrabad 2900 2900 1879 1022 624 1646
Ashugonj 14300 14300 5526 8453 2427 10880
Ashulia 224875 219300 30852 198558 102 198660
Barisal 11100 11100 4871 4720 2875 7595
Bogra 8200 8200 194 6261 253 6514
Comilla 8100 8100 4741 4277 187 4464
Cox's Bazar 44900 44900 17003 28860 1489 30349
Dinajpur 17557 17557 11257 10613 1184 11797
Elephant
Road 9300 9300 3352 5529 1327 6856
Jhenidah 17450 17450 6329 10797 2763 13620
Karwanbazar 16630 16617 6745 10130 1620 11750
Khatungonj 34150 34150 9785 24727 1060 25787
Khulna 20940 18740 2383 13142 2697 15839
Madhobdi 7250 7250 4404 3785 286 4071
Mokamtola 5300 5300 2375 3725 109 3834
Motijheel 12229 11519 1364 11187 290 11477
Mymensingh 2700 2700 1 0 2978 2978
Narayangonj 4741 4741 2569 2343 293 2636
Noakhali 1000 1000 24 982 0 982
Pabna 22030 21900 213 16879 4221 20925
Principal 12550 10954 3825 7003 2410 9413
Rajshahi 55950 55950 21998 33660 7519 41178
Rangpur 172591 153079 42646 128927 10483 139403
Saturia 2200 2179 133 1880 0 1880
Sylhet 20150 20150 7278 12815 3085 15900
Total 749093 719336 191749 550275 50282 600434
The table is indicating that the amount of Loan Recovery is so lower than the amount of
Disbursement. But the amount of Overdue of loans is low which is good for Bangladesh
Development Bank Limited.
65 | P a g e
6.1.[4] Cottage Sector

Table 25: Sanction, First Disbursement &Maturity ofLoans
Head Office : Dhaka
SME Department
Sector: Cottage
(Tk.'000')
Year of Sanction
2011 2012 2013 2014
1283 1567 5356 1041
(Tk.'000')
Year of Disbursement
2011 2012 2013 2014
1131 1719 5356 1041
(Tk.'000')
Year of Maturity
2013 2014 2015 2016 2017 2018
152 557 637 5417 1011 1473
Graph: Sanctioned Loans (Cottage Sector)
Sanctioned Loans
6000
4000
2000
0
2011 2012 2013 2014
From the graph of cottage sector we can easily say that the lowest amount of loans has been
provided in 2014 and the highest 2013.
66 | P a g e
Graph: First Disbursement of Loans (Cottage Sector)
Disbursement of Loans
6000
5000
4000
3000
2000
1000
0
2011 2012 2013 2014
In the graph of first disbursement of loans (cottage sector) is increasing from 2011 to 2013
but the lowest in 2014.
Graph: Maturity of Loans (Cottage Sector)
Maturity of Loans
6000
4000
2000
0
2013 2014 2015 2016 2017 2018
The amount of Maturity loans will be increased from 2013 to 2018 but the most amount of
the loans will mature in 2016.
67 | P a g e
Sector: Cottage
(Tk.'000')
Type of Enterprise
Branch Total
Agrabad 120 0 60 180
Barisal 0 0 2811 2811
Bogra 0 0 152 152
Dinajpur 0 0 596 596
Faridpur 0 0 921 921
Jhenaidah 158 0 606 764
Mokamtola 0 0 172 172
Motijheel 0 0 1064 1064
Rangpur 67 0 1968 2035
Total 345 333 8569 9247
The greatest portion of loans has been provided for Manufacturing Enterprise.
Sector: Cottage
(Tk.'000')
Class Status
Branch
STD SMA SS DF BL
Agrabad 60 0 0 120
Barisal 264 0 339 507 1701
Bogra 152 0 0 0 0
Dinajpur 406 0 81 109
Faridpur 921 0 0 0 0
Jhenaidah 362 0 213 0 189
Mokamtola 172 0 0 0 0
Motijheel 0 0 1064 0 0
Narayangonj 219 333 0 0 0
Rangpur 745 0 93 1130 67
Total 3301 333 1790 1866 1957
68 | P a g e
Table 28: Total Amount & Outstanding Loan

Sector: Cottage
(Tk.'000')
Branch Not
Sanction Disbursement Recovery Overdue Total
due
Agrabad 350 350 207 157 23 180
Barisal 3550 3550 1082 1783 1028 2811
Bogra 500 800 17 152 0 152
Dinajpur 950 950 508 521 75 596
Faridpur 1500 1500 850 921 0 921
Jhenaidah 1000 1000 371 620 144 764
Mokamtola 300 300 177 172 0 172
Motijheel 1500 1500 1076 703 361 1064
Narayangonj 700 700 194 552 0 552
Rangpur 3150 3150 2059 1640 395 2035
Total 13500 13800 6541 7221 2026 9247
The amount of Loan Recovery is low as on March, 2015 but the amount of Not Due is greater
than Overdue.
Graph: Sector and Enterprise-wise loan status
Loan Status
600000 (Tk. '000)
500000 Medium Sector

400000 Small Sector
300000 Micro Sector
200000 Cottage Sector
100000
0
From Loan status graph, we say that, there has four loan sectors- Medium,Small,Micro and
Cottage.Among them Small sector loan is highest and Cottage & Medium sector loan is
lowest.
69 | P a g e
Table 29: Branch-wise SME Loan Outstanding Position

Head Office : Dhaka
SME Department
SME Loan Outstanding Position as on 31/12/2015
(Tk.'000')
Branch Loan
Sanction Disb Recovery Not Due Overdue Total
1 2 3 4 5 6 7 8
Term 47850 47850 10990 37653 3335 40988
Agrabad CC 11750 11750 352 10328 0 10328
Total 59600 59600 11342 47981 3335 51316
Term 259300 259300 40528 219159 17489 236648
Ashugonj CC 22500 22500 1394 20102 617 20719
Total 281800 281800 41922 239261 18106 257367
Term 226425 221200 32653 199779 102 199881
Ashulia CC 2950 2600 74 2068 0 2068
Total 229375 223800 32727 201847 102 201949
Term 35139 35139 12892 19582 6862 26444
Barisal CC 0 0 0 0 0 0
Total 35139 35139 12892 19582 6862 26444
Term 326038 165133 10061 46365 1115 47480
Bogra CC 10900 10900 214 8729 128 8857
Total 336938 176033 10275 55094 1243 56337
Term 31200 29577 10347 23201 318 23519
Comilla CC 14000 14000 554 3225 0 3225
Total 45200 43577 10901 26426 318 26744
Term 44900 44900 17003 28860 1489 30349
Cox's Bazar CC 0 0 0 0 0 0
Total 44900 44900 17003 28860 1489 30349
Term 19407 19407 12975 10546 1488 12034
Dinajpur CC 4300 4300 1088 4861 0 4861
Total 23707 23707 14063 15407 1488 16895
Term 18800 18800 8265.3 10639 1842 12481
Elephant Road CC 0 0 0 0 0 0
Total 18800 18800 8265 10639 1842 12481
Term 3400 3400 1672 2389 0 2389
Faridpur CC 4100 3900 189 3101 0 3101
Total 7500 7300 1861 5490 0 5490
Term 14350 14296 2970 12016 718 12734
Hossainpur CC 2700 2700 0 1974 0 1974
Total 17050 16996 2970 13990 718 14708
Term 118470 117230 23143 90204 10306 100570
Jhenidah CC 7000 7000 338 5857 1356 7213
Total 125470 124230 23481 96061 11662 107783
Term 16530 16517 8388 9913 1451 11364
Karwanbazar CC 5000 5000 652 3444 484 3928
Total 21530 21517 9040 13357 1935 15292
Term 38750 38750 12175.75 27284 1195 28479
Khatungonj CC 7000 7000 0 7000 0 7000
Total 45750 45750 12176 34284 1195 35479
Khulna Term 26440 24205 4360 16883 3362 20245
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CC 0 0 0 0 0 0
Total 26440 24205 4360 16883 3362 20245
Term 182400 182400 44752 145059 2288 147347
Madhobdi CC 21500 21500 774 17384 0 17384
Total 203900 203900 45526 162443 2288 164731
Term 1500 1500 0 1333 0 1333
Mohadebpur CC 14700 14700 532 11944 0 11944
Total 16200 16200 532 13277 0 13277
Term 33300 33300 11314 24530 1091 25621
Mokamtola CC 600 600 118 600 18 618
Total 33900 33900 11432 25130 1109 26239
Term 8031 8031 2367.75 6956 710 7666
Motijheel CC 6183 5473 230.96 5309 0 5309
Total 14214 13504 2599 12265 710 12975
Term 104050 103050 4605 95300 5683 100983
Mymensingh CC 23700 23700 278 18508 3028 21536
Total 127750 126750 4883 113808 8711 122519
Term 450 450 0 450 0 450
Nabinagar CC 0 0 0 0 0 0
Total 450 450 0 450 0 450
Term 11656 11656 4976 7370 335 7705
Narayangonj CC 0 0 0 0 0 0
Total 11656 11656 4976 7370 335 7705
Term 53850 53850 19145 36311 3306 39617
Noakhali CC 9500 9500 271 8192 0 8192
Total 63350 63350 19416 44503 3306 47809
Term 38690 38560 828 26824 10068 36892
Pabna CC 12000 11768 0 11942 2013 13780
Total 50690 50328 828 38766 12081 50672
Term 10750 9154 3702 7003 502 7505
Principal CC 2800 2800 123 995 2015 3010
Total 13550 11954 3825 7998 2517 10515
Term 51150 51150 21121 29723 6863 36585
Rajshahi CC 4800 4800 877 3937 656 4593
Total 55950 55950 21998 33660 7519 41178
Term 220424 195432 62883 161224 12995 174212
Rangpur CC 67470 67470 17220 60266 4461 64727
Total 287894 262902 80103 221490 17456 238939
Term 25350 25350 1758 23582 28 23610
Saturia CC 9200 6958 272 7434 0 7434
Total 34550 32308 2030 31016 28 31044
Term 17050 17050 7207 9623 3038 12661
Sylhet CC 3400 3400 263 3380 49 3429
Total 20450 20450 7470 13003 3087 16090
T-Term 1985200 1786187 393081 1329311 97979 1427342
Grand Total T-CC 268053 264319 25814 220580 14825 235230
T-Total 2253703 2050956 418895 1550341 112804 1663022
The table contains the data of 29 branches those have provided loans for 2557 projects as on
March, 2015. The newly established Osmani Nagar Branch, Moulavi Bazar Branch and
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Kazirhat Branch have not provided SME Loan as March, 2015. The greatest amount of loan
has been provided from Ashugonj Branch, Dhaka. This table summarizes branch-wise data of
Terms and Cash Credits.
6.2 Determination of problems faced by Bank

Interviews with the SME bankers revealed some problems or risks that bank faces in SME
management. Problems or risks associated with SME loans for bank are as follows:
1.Limited opportunity to offer flexible repayment options for private loan
borrowersprior to default:Currently, BDBL has this type of problems for the term SME
loan facilities. The borrowers become defaulter if they fail to pay 3 installments in a row and
if they face someproblems JBL authorities find it hard to provide the flexible repayment
options to them.
2. Confusion with borrowing terms and conditions:Most of the SME proprietors are not
experienced in transacting with banks and for this reasons they are not easy to handle.
Managing them is a bit problematic for the bankers due to this reason.
3. Inaccurate information regarding the borrower:The CIB (Credit Information Bureau)
is the base for the information of the prospective clients of the bank. Currently the bankers
are facing constant challenge due to inaccuracy in the CIB report of the borrowers. Problems
are created when classified loans are not mentioned in the CIB report and the classified
borrowers get the loans.
4. Collateral Risk:Risks with collateral means that whether the collateral is under possession
of the owner, whether the collateral is the correct property shown by the borrower etc.
5. Risks with Documentation:Applying SME loans from the banks with fake or faulty
documents is a common thing for the borrowers. In order to ensure safety lending, banks
must ensure the originality of the documents related to the mortgaged properties.
6. Moral Hazard:Even when loans are made to the SMEs, it may so happen that the owners
of these SMEs take higher risks than they otherwise would without lending support from the
banks.
7. Unsecured Lending:In this type of lending, personal guarantee of the proprietor and
his/her relative or some other persons is considered as the main security. But when the
borrower fails to repay the loan, the bank faces difficulty in recovering that because personal
guarantee is not sufficient for lawsuit and other legal steps.
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8. Monitoring Activity:In most of the cases, lack of proper monitoring of the SME loans
causes default loans. Most SME loans are term loans and that is why the officers have to
monitor closely the monthly repayments.
6.3 Percentage of SME loan to total loan of BDBL in 2016

 Total SME Loan is Tk. 87.12 crore and Loans & Advances is Tk.1813.75 crore
as on 31-03-16.
 4.80% of Loans & Advances has been provided for SME Loan.
Percentage of SME loans:[Disbursed by BDBL till (31/03/16)]
Percentage of SME Loans = [SME loans/ Total Loans & Advances]*100

= (87.12/1813.75)*100
= 4.80%
SME loans
Others
Total Loans & Advances
Fig: Percentage of SME Loans
The total loans & advances of BDBL till 2015 was 1813.75 crore. The bank disbursed loan in
the SME sectors was 87.12 crore. So the percentage of SME loan disbursed by the bank is
4.80% which is comparatively low as the bank started the journey of SME department from
2011. Till now bank are facing a lot of trouble to collect the loan amount.
6.4 Achievement of SMS target given by Bangladesh Bank
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The target for SME Loan given by Bangladesh Bank for State-owned Commercial Banks is
Tk. 3,897 crore and Bangladesh Development Bank Limited has achieved Tk. 146.62 croreas
on 31-12-2015.
6.5 Award
Bangladesh Development Bank Limited (BDBL) has been chosen as the best bank in the
"SME Performance Ranking- 2012' of Bangladesh Bank.
The BDBL obtained the full-point in giving women priority for SME loans, achieving growth
and loan disbursement target for service sector."Experienced entrepreneurs were given
priority for loans", said BDBL Managing Director Dr. M Zillur Rahman. He said strict
coordination was maintained between the head office and branch offices for recovery of loans
properly. BDBL sources said the desk for women entrepreneurs, SME
Cell and focal officials at head office and branch offices played very important role to give
loans to small entrepreneurs, especially the women.
As part of Corporate Responsibility (CSR), BDBL followed cluster and area approach to give
credits on flexible conditions to SME entrepreneurs. For example, "Shatronchi' weaver of
Nishbetganj in Rangpur were given loan at an interest rate of 9 percent on cluster basis, said a
BDBL official. M Zillur Rahman said BDBL has published a study report on the economic
potential of flower cultivators through including them in financial inclusion. BDBL holds
regular view-exchange meetings with entrepreneurs for expansion of its SME loan programs.
Besides, BDBL has prepared an entrepreneur-friendly credit manual to ease the SME loan
disbursement system.
6.6Findings
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From The data collected the following things are found:

 The number of projects of SME Loan is increasing per year
 Bangladesh Development Bank Limited SME authority should carefully choose the
proprietors while disbursing the SME loan because most of the projects are not
regular to repay installments and some projects get default to repay loans
 The bank has provided SME Loan to 2557 projects with an amount of Tk.
225,37,03,000 as on March,2015
 Most of the loans is provided for Manufacturing Enterprises
 Most of the loans is not of Standard Class
 35.73% of total SME loan has been provided to Women Entrepreneurs and 64.27% of
total SME Loan has been provided to Male Entrepreneurs as on 2014
 The bank encourages Entrepreneurs specially Women Entrepreneurs to take SME
Loans, be independent and run their business in a good way.
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Chapter Seven
Recommendations & Conclusion
7.1Recommendations
It is very difficult to give any Recommendation about the operation of BDBL because I am
not am efficient banker. As 1 have worked there so I noticed some drawbacks in the daily
operation of BDBL. However as per as 1 understand, going through various banking related
books and journals I can give some suggestions that how to recover existing problems of loan
operation performance:
 SME Policy of Bangladesh Bank should strictly be followed through the SME loan,
Sanction process.
 SME Manual should be up-dated.
 Relevant and accurate data about SME should be collected.
 Persons involved in SME Sector should have more expertise and practical
Knowledge.
 In analyzing the viability of SME, market of the products or services and management
should rigorously be analyzed.
 Central observation committee can be established to analyze, evaluate and solute
SME loan recovery.
 Over invoicing should be checked and detected by expertise.
 The entire department should be well informed regarding their goal and objectives.
 IT is essential to execute Firm's objective into individual target.
 There must be clear allocation of responsibilities, authority and accountability.
 The bank should introduce more promotional activities.
 The bank should take initiative to develop an effective research and development
center to get innovative ideas to capture the competitive market.
 The nepotism by the high officials and political influence should be slopped. The
defaulting borrower should be monitored so that he cannot channel his fund to other
business firms.
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7.2Conclusion
Bank is a financial intermediary. Banks take deposit at a cost and lend at a higher rate to cover its
operational expenses and make some profit. In this process, if loans are stuck-up, the entire process
becomes jeopardized.
However, as one of the leading Commercial Bank, BDBL is playing an important role in its area of
business in mobilizing financial resources through deposit collection and loan disbursement. It helps
creating and maintaining a sound business environment in the economy.
In recent years, BDBL’s performance in SME sector compared to other banks is good and they
showed a regular growth from 2010 to 2015. 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, Bangladesh Development Bank Limited (BDBL)
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.
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Financing Procedure of Bangladesh DevelopmentBank Limited in SME Sector

1.2 Background of the Study

1.3 Objective of the Study

1.4 Scope of the Study

1.5Methodology of the Study

1.6 Limitation of the Study

2.2 Small Enterprise

2.3 Medium Enterprise

2.4 When does a person feel like building an SME?

2.5 Characteristics of SME

2.6 Importance of SME

represents a particular type of business.

>SME >Current Deposit

Figure2.4: The Boston Consulting Group (BCG) Matrix of BDBL

3.2 Corporate Profile of BDBL

6) Authorized Capital Tk.1000crore

9) Accounting Period January-December

10)Date ofBusinessCommencement November 16, 2009

23) Corporate Tax Rate 42.50%

28) SWIFT Code BIC: BDDBBDDH

Source: Annual Report 2015

3.3 Corporate Organogram of BDBL

3.4 Board of Directors

Name of the Directors during the year 2016 are as under:

1. Md. Yeasin Ali 7. Amalendu Mukherjee

2. Dewan Nurul Islam 8. Md. Khalilur Rahman Siddiqui

3. Quazi Murshed Hossain Kamal 9. Md. Fayekuzzaman

4. Advocate Md. Abdus Salam 10. Md. Mamun – Al – Rashid

6. Syed Aftear Hussain Pear

3.5Branch Banking Division

Branch Management Department:

Name of Post Head Zonal Branch Total

Sub Total: 581 40 595 1216

PROPOSED 23 BRANCHES IN 2014 0 0 253 253

Grand Total: 581 40 848 1469

Source: Human Resource Department

3.7 Vision, Mission, Strategic Objectives and Core Value of BDBL

 Undertake from time to time SWOT (Strengths,Weaknesses, Opportunity and

3.8Product and Services of BDBL

 Selling of Prize Bond

3.9SWOT Analysis of BDBL

3.10 Review of BDBL’s Business Strategy and Operations in 2015

As a state-owned specialized commercial Bank, BDBL is committed to provide industrial

Figure : Operating Profit

2010 2011 2012

2013 2014 2015

3.11Profitability Ratios of BDBL

Years 2010 2011 2012 2013 2014 2015

Years 2010 2011 2012 2013 2014 2015

Comparison of Return on Investment (ROI):

Years 2010 2011 2012 2013 2014 2015

Comparison of Cost to Income Ratio:

Years 2010 2011 2012 2013 2014 2015

Comparison of Net Operating Income to Total Asset:

Years 2010 2011 2012 2013 2014 2015

Comparison of Capital Adequacy Ratio:

Years 2010 2011 2012 2013 2014 2015

Comparison of Earning Per Share:

Years 2010 2011 2012 2013 2014 2015

15.00% Earning Per Share

Percentage of Classified Loans in BDBL:

Percentage of Classified Loans = [Classified loans/ Total Loans &

Years 2010 2011 2012 2013 2014 2015