...V, Issue– 02, July-December, 2010 Problems and Prospects of SMEs Loan Management: A Study on Mercantile Bank Limited, Khulna Branch S. M. AKTERUJJAMAN 1 Abstract SMEs all over the world have been playing a crucial role in promoting economic development as well as industrial production. SME financing has been identified as a major obstacle to SME growth. Unfortunately, the issue seems to be as unresolved as it always has been. Though the majority of the issues are with the SME themselves, the banks also have major issues in designing financial products for the SMEs. This study tries to find out the underlying problems from the bank’s perspective. The major findings are related to the high interest and loan duration rates, reasons for SMEs relatively informal way of doing business in contrast to bank’s formal procedures and prerequisites, bank’s relative inexperience in this field. They are also related to the bank’s lack of perspective, the viability and benefits of cluster unity, approach to informal loan takers and non-usage of modern technology and accounting procedures. The recommendations were provided based on the analysis and findings. Key words: Small and Medium Enterprises (SMEs), Financing, Loan, Technology, Cluster. 1. INTRODUCTION Small and medium enterprises (SMEs) all over the world have been playing a crucial role in promoting economic development as well as industrial production. In particular, SMEs provide the necessary foundations for sustained growth and rising...
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...Background of the Study Internship program is a career-related work experience conducted as an integral part of the academic program. It is very essential to get exposure to "real" business projects and problems, development of managerial skills and increased insights regarding organizational work environments thereby enhancing communication skills as the foundation of professional correspondences and understanding the general structure of most business situations by acquiring the new information and ideas so as to apply them for the benefits of the organization as well as the one’s own career development. The term “Bank” was derived from an Italian word “Banca”. Banks perform various specialized functions. Banks may be defined in terms of the various functions it performs. So it is quite impossible to define bank in just one word. However, bank can be described as such a financial institution that takes in funds as deposits repayable on demand or at short notice. According to the Shorter Oxford English Dictionary, “Bank is an establishment for the custody of money received from or on behalf of its customers. Its essential duty is to pay their drafts on it, its profit arise from the use of the money left unemployed by them.” Types of Bank There are many types of bank among them the main types of bank can be categorized as follows: a) Commercial Bank b) Development Bank b) Central Bank 1.2 Brief Introduction about Commercial Bank A commercial bank is a financial...
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...Background of the Study The development and improvement of trade routes depend on the development of banking industry. Banking sector occupies an important role in the nation’s economy because of its intermediary’s role. It plays a vital role in the economic development of a country and forms the core of money market of any country. In developing country like Bangladesh the banking sector as a whole has an important to play in the progress of economic development. Hence the schools, colleges and universities are giving emphasis on the applied part of banking education. This report is originated as the academic requirement of the BBA program under the Business Administration Department of DHAKA CITY COLLEGE. Under this program student have to participate in internship program of three month duration toward the fulfillment of the Degree. As practical orientation is an integral part of the BBA degree requirement, I was sent by the department to AB Bank Limited to take real life exposure of the activities of financial institutions. The Human Resource Division of ABBL arranges my internship program at Islampur Branch from December 26, 2010 to March 26, 2011. At the end of the internship period the student have to prepare a report on the organization and this report titled “Loans & Advances and SME sector of AB Bank Limited” is the outcome of my three months practical knowledge at AB Bank Limited. Rationale of the Study Theoretical knowledge is not enough for a student. There...
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...FACTORS THAT INFLUENCE THE CREDIT AVAILMENT OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN TANAUAN CITY A Thesis Presented to the Faculty of College of Accountancy Business, Economics and International and Hospitality Management Batangas State University-JPLPC,Malvar Campus Malvar, Batangas In Partial Fulfillment Of the Requirement for the Degree Bachelor of Science in Business Administration Major in Financial Management By: Chona E. Maquiñana Lorie May R. Catimbang Jonie E. Mendoza October 2013 APPROVAL SHEET This research paper entitled “Factors that influence the credit availment of Small and Medium Enterprise (SME’s) in Tanauan City” as prepared and submitted by ChonaE. Maquiñana, Jonie E. Mendoza and Lorie May R. Catimbang, in partial fulfillment of the requirement for the degree of Bachelor of Science in Business Administration has been examined and is recommended for Oral Examination. ________________________________ KRISTINE ABIGAIL S. DE LUNA, MBA Thesis Adviser Approved by the Committee on Oral Examination with the grade of __________. PANEL OF EXAMINERS _________________________________ ELISA S. DIAZ, MBA, (DBA Candidate) Chairman ____________________ ___________________ JESSIE S. LEONG, Ph. D. LUCINA S. LAT, MBE Member Member Date of oral Examination________________ Accepted...
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...SME Financing in the United Arab Emirates www.khalifafund.ae SME Financing in the United Arab Emirates Executive Summary 1. Introduction & Context 1.1 Background to the Study 1.2 Objectives of this Work 1.3 Consultations 1.4 Limitations 2.1 Definition of ‘SME’ 2.1.1 EU Definition of SME 2.1.2 World Bank Definition of SME 2.1.3 Criteria Used by Banks to Define SMEs 2.1.4 UAE Definitions of SME 2.2 Current overview of SME prevalence in Abu Dhabi/UAE 3.1 Scale of SME Finance in the UAE 3.2 Supply of Finance by Type 3.3 Sources of Finance 3.4 Stakeholder Mapping 3.5 SME Access to Finance Process 3.6 KPIs / metrics and baseline data 4.1 Key Findings – Supply Side 4.2 Key Findings – Demand Side 5.1 International Research Findings on Key Obstacles to Improving SME Access to Finance 5.2 Critical Success Factors to Improving Access to Finance for SMEs 6.1 Leading Practice SME Ecosystems: Singapore and the United Kingdom 6.2 Key Lessons Learned for the UAE 6.3 Detailed Review of Leading Practice and Regional Comparator Ecosystems 6.3.1 Singapore 6.3.2 United Kingdom 6.3.3 Jordan 6.3.4 Qatar 7.1 The core issues 7.2 n overview of the opportunities for KF and other (public and private) entities to A support SME access to finance in Abu Dhabi / UAE 7.2.1 Legal and Regulatory Transparency 7.2.2 Access to information 7.2.3 Capacity Building 7.2.4 Diversify SME Financing Mechanisms 7.3 Criteria 4 5 5 6 6 6 7 7 7 8 8 8 9...
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...private bank, which is “Southeast Bank Limited.” This program helps me to enlarge my analytical skills and scholastic aptitudes. During my internship period I got the opportunity to work in credit and I have interested to prepare my internship report on the credit department and also my supervisor Mr. Md. ShahanShah Molla allow me to prepare the report on my interested topic. 1.2. Objective of the Report: The study has been undertaken with the following objectives: To analysis the pros and cons of the conventional ideas about credit operation of a Bank. To have better orientation on credit management activities specially credit policy and practices, credit appraisal, credit-processing steps, credit management, financing in various sector and recovery, loan classification method of SEBL. To identify and suggest scopes of improvement in credit management of SEBL. To get an overall idea about the performance of Southeast Bank Ltd. To fulfill the requirement of the internship program under BBA program 1.3. Scope of the Report: The study focus on the following areas of Southeast Bank Limited: Credit recovery system of the SEBL Credit appraisal procedure of the Southeast Bank Ltd. Credit evaluation principles of the SEBL Credit management of the SEBL Procedure for...
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...ensuring conditions are satisfied. CRM has ownership of all rating systems/scorecards and recommends and monitors the credit risk appetite for the year, and reports periodically to the Board and Management. The department serves as the credit secretariat and manages the documentation and other credit process initiatives for the Group. Credit risk management verifies and manages the credit process from origination to collection. In designing credit policies, due consideration is given to the Bank’s commitment to: Create, monitor and manage credit risk in a manner that complies with all applicable laws and regulations; Identify credit risk in each investment, loan or other activity of the Bank; Utilise appropriate, accurate and timely tools to measure credit risk; Set acceptable risk parameters; Maintain acceptable levels of credit risk for existing individual credit exposures; Maintain acceptable levels of overall credit risk for the Bank’s portfolio; coordinate credit risk management and other risks inherent in the Bank’s business activities; and Set remedial and recovery actions. Credit Risk With regulatory attitude towards bad loans hardening,...
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...non-performing advances. The banking industry disbursed Sh1, 335 billion, out of which only Sh61.4 million was defaulted. The risk has consistently decreased from 7.9 per cent in 2009 to 6.3 per cent in 2010. With the increase in interest rates and inflation rate, non-performing advances were expected to go higher, but it is not the case. This shows that the risk in the Kenyan market is low Interest rates spiked in December 2011 after the Central bank increased its key lending rate to a high of 18 per cent to curb the inflation rate which had peaked at 19.72 per cent in November that year. Though both the Central Bank Rate and inflation rate have dropped to 9.5 per cent and 4.11 per cent, banks are still lending at an average of 17.84 per cent. Microfinance institutions in Kenya have suffered significant loan repayment default resulting into subsequently decreased employment levels and cash flow problems in microfinance institutions this can partly be attributed to the high interest rates of government borrowing. Commercial banks hold about 53.7 per cent of total bills and bonds so banks are left with just about Sh250 billion to lend to private sector keeping demand for loans higher than the supply. Based on this, the Government should...
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...REPORT ON CREDIT OPERATIONS SYSTEM IN THE PRIME BANK LIMITED PREPARED FOR M. MUZAHIDUL ISLAM ASSOCIATE PROFESSOR DEPARTMENT OF BANKING UNIVERSITY OF DHAKA PREPARED BY NIPA SAHA ROLL-423, MBA 1ST BATCH DATE OF SUBMISSION: MAY 10, 2006 DEPARTMENT OF BANKING UNIVERSITY OF DHAKA Supervisor's Certificate This is to certify that the Internship Report on "Prime Bank Ltd." in the bona fide record at the report is done by Nipa Saha as a partial fulfillment of the requirement of Masters of Business Administration (MBA) degree from the Department of Banking, University of Dhaka. -------------------------------------- Signature of Supervisor ---------------------------------- Date. Declaration I do hereby solemnly declare that the work presented in this Internship Report has been carried out by me has not been previously submitted to any other University/ College/ Organization for an academic qualification / Certificate / Diploma or degree. The work I have presented does not breach any existing copyright and no portion of this report is copied from any work done earlier for a degree or otherwise. I, further undertake to indemnity the department against any loss or damage arising from breach of foregoing obligation. -----------------------------------...
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...Introduction OF THE REPORT 1.1 Introduction National bank limited (NBL) is a full service scheduled commercial bank. It has both local and International Institutional Shareholder. The bank is primarily driven with a view of creating opportunities and pursuing market niches not traditionally meet by conventional banks. National Bank has been motivated to provide “best-in-the-class” services to its diverse assortment of customers spread across the country under an on-line banking dais. Today, National Bank is one of the fastest growing banks in the country. In order to support the planned growth of its distribution, network and its various business segments, National Bank is currently looking for impressive goal oriented, enthusiastic, individuals for various business operations. The bank wants to build a profitable and socially responsible financial institution. It carefully listen to the market and business potentials, It is also assisting stakeholders to build a progressive, healthy, democratic and poverty free Bangladesh. It helps make communities and economy of the country stronger and to help people achieve their financial goals. The bank maintains a high level of standards in everything for our customers, our shareholders, our acquaintances and our communities upon, which the future affluence of our company rests. Risk is inherent in all aspects of a commercial operation. However, for Banks and financial institutions, credit risk is an essential factor that needs to...
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...Overview of SME On Mercantile Bank Submitted to: Sharmin Sabnam Rahman 1st Supervisor Kohinur Akter 2nd Supervisor Submitted by: SHETU GUPTA ID# 05104092 Course no-Bus400 1 May 13, 2010 Sharmin Shabnam Rahman ( Lecturer) BRAC Business School BRAC University, 66, Mohakhali, Dhaka- 1212 Dear Madam, I am very pleased to submit my internship report on “Mercantile bank Limited” which is an essential requirement for the completion of BBA program. This report is the result of the Internship Program that I have conducted in Mercantile Bank Limited at Bijoynagar Branch. All the information presented in this report is done with outmost sincerity and honesty. I have tried my best to make this report holistic and informative. Apart from the academic knowledge gained, this internship program and preparation of this report have given me the opportunity to know about the overview of SME Loan. I believe that, the experience I have acquired from this Internship Program will be a valuable asset in my life. Working with such an interesting program has given me the opportunity to achieve experience, which will be helpful in my future professional career. However, there may be some mistakes or lacking due to some limitations. Therefore, I would be highly be obliged if you would kindly consider my limitations. Sincerely Yours, _________________ Shetu Gupta ID- 05104092 BRAC Business School BRAC University. 2 Acknowledgement The report titled as “Overview of SME loan of Mercantile...
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...bank it generally means ‘commercial bank’ that collects the deposit from surplus unit of the society and then lends the deposits to the deficit units of the society. The word ‘Bank’ was probably derived from the word ‘Bench’s during ancient time Jews used to do money –lending business sitting on long benched. First modern banking was introduced in 1668 in Stockholm as ‘savings bank’, which opened up a new era of banking activities throughout the European Mainland. In the north Asia region, the afghan traders popularly known as Kabliwallas introduced early banking system. Muslim businessmen from Kabul, Afghanistan came to India and started money lending business in exchange of interest sometime in 1312A.D, they were known as Kabliwallas. All over the world the dimension of Banking has been changing rapidly due to Deregulation, Technological innovation and Globalization. Banking in Bangladesh has to keep pace with the global change. Now Banks must compete in the market place both with local institution as well as foreign ones. To survive and thrive in such a competitive banking world, two important requirements are Development of appropriate financial infrastructure by the central bank and Development of "professionalism" in the sense of developing an appropriate manpower structure and its expertise and experience. To introduce skilled Banker, only theoretical knowledge in the field of banking studies is not sufficient. An academic course of the study has a great value when...
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...Credit crunch and SME financing ----Take China as an example * * Shu Ruochen Noah 4063148 * Yuan Ziting Circle 40631 * Chou Xue Snow 40631 * * ABSTRACT ------------------------------------------------- SME are always important forces of social and economic development,and they play important roles in optimizing the economic structure, promoting innovation,easing social pressures and maintaining social stability.However, the world crisis was triggered by financial crisis in 2008 in USA, which has great impact on China’s economy, especially on SME.Since the credit crunch, SME are unable to obtain full production and operation funds needed timely,and Bank loans to enterprises are more cautious, so financing of SME will become more apparently difficult.Therefore, in order to solve the financing problems of SME, exploring development mode and long-term mechanisms which is adapt to economic structural has been an urgent strategic issues. * 1. Definition of credit crunch * A credit crunch is a sudden reduction in the general availability of loans (or credit ) or a sudden tightening of the conditions required to obtain a loan from the banks . * A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates . * 2. Background of Credit crunch. ------------------------------------------------- 2008 the financial crisis took place in USA...
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...Gulshan-1, Dhaka. Here I have conducted my study on “Credit Approval & Monitoring process of BRAC Bank Limited” with respect to Bangladesh Bank guidelines. My faculty supervisor Mr Khandaker Zahidul Alam, Assistant Professor of BRAC Business School, BRAC University, also approved the topic and authorized me to prepare this report as part of the fulfillment of internship requirement and gave me proper guidance and assistance over time. 1.2 Background of the Report Four years back, Bangladesh Bank undertook a project to review the global best practices in the banking sector and examines in the possibility of introducing these in the banking industry of Bangladesh. Four ‘Focus Groups’ were formed with participation from Nationalized Commercial Banks, Private Commercial Banks & Foreign Banks with representatives from the Bangladesh Bank as team coordinators to look into the practices of the best performing banks both at home and abroad. These focus groups identified and selected five core risk areas and produced a document that would be a basic risk management model for each of the five 'core' risk areas of banking. The five core risk areas are as follows- a) Credit Risks; b) Asset & Liability / Balance Sheet Risks; c) Foreign Exchange Risks; d) Internal Control & Compliance Risks; and e) Money Laundering Risks. Bangladesh Bank in one of it’s circular (BRPD Circular no.17) advised the commercial banks of Bangladesh to put in place...
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...Preclude Credit is an arrangement whereby bank acting at the request and on the instructions of a customer or on its own behalf to make a payment to or to the order of a third party or is to accept and pay bills of exchange drawn by the beneficiary. In an economy banks play the role of an intermediary that channels resources from the surplus group to the deficit group. So obviously one of the core functions of Commercial banks is to sanction Credit facility to it’s customers as per requirement. UTTARA BANK LTD. Bank’s Mission is to actively participate in the growth and expansion of our national economy by providing Credit to various customers in most efficient way of delivery and at a competitive price. Risk is inherent in all aspects of a commercial operation; however for Banks and financial institutions, credit risk is an essential factor that needs to be managed. Credit risk is the possibility that a borrower or counter party may fail to meet its obligations in accordance with agreed terms. Credit risk therefore, arises from the bank’s dealings with or lending to corporate, individuals and other banks or financial institutions. In general, a banking system aggregates a high number of low value deposits to fund enterprises with a smaller number of high value loans. This intermediation through a well functioning bank helps to achieve some economic benefits for the depositors, the borrowers and above all -- the economy. The Bank must allocate loans effectively for achieving...
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