Acknowledgement
First of all I want to convey my earnest appreciation to the almighty Allah for giving me strengthall thorough the report making and enabling me to finish the report.
Completion of this report made me thankful to a number of persons. I want to thank my
supervisor and teacher Ms. Syeda Shaharbanu Shahbazi Ahmed who helped me to improve
my report by providing necessary guidance and suggestions. Her assistance and encouragement
made it possible to accomplish this report within time.
My heartiest gratitude goes to Mr. M. Sarwar Ahmed, Head of Special Assets Management
(SAM)-SME & Retail Banking, my Mentor in BRAC Bank Limited for allowing me to do
Internship Report on SME Banking Division of BRAC Bank Limited and for his guidance.
I also want to thank Md. Kawsar Ali, Zonal Manager of SME Unit Office of Dinajpur for helping
me to fit in the new work environment, for co-operating me endlessly during my attachment
period. I am also grateful to the entire SME Division working in the Head Office, who in fact,
taught me about SME banking service, described products and important documents.
Executive Summary
Higher growth of the Small and Medium Enterprises (SMEs) can help to cut poverty to asatisfactory level by eliminating various prejudices against labor intensive industry and creating
jobs for the skilled manpower in the SME sector. However, the access to financing is still
recognized as the leading obstacle to SME growth in Bangladesh, alike most other developing
and under-developed countries. Small and medium entrepreneurship have a tremendous potential
in empowering potential entrepreneurs and transforming society. To target this sector with huge
potentiality BRAC Bank Ltd introduced SME Banking Division in 2001.
Being the fastest growing bank of the country currently BRAC Bank is operating all over the
country having 84 Branches, 22 SME Sales and Service Centers, 48 SME/ Krishi Branches, 313
ATMs, 399 SME Unit offices. This fastest growing bank works on 3P- People, Planet and Profit;
ensures sustainable growth and largely focuses on SME financing sector.
BRAC Bank SME division was set up to capture “Missing Middle” and to create socioeconomical
impact in the country. Within 11 years of establishing it has proved its success
through becoming country’s largest SME finance provider and 4th large SME provider in the
world in terms of lending volume.
For the inheriting business risk, SME sector is facing several constrains in terms of growth.
Policy level complexity, financial constrains, legal bindings and industry structure are hindering
financial institutions to support SME sector. Lack of SME supporters, poor infrastructure of the
country, lack of entrepreneur’s skills, lender-borrower gap, huge market competitions are the
major drawbacks for both borrowers and lenders. Again SME sector has tremendously
contributed in the economy. Today it has been considered as the engine of country’s economy.
Being country’s largest SME provider, BRAC Bank is facing several challenges which are
identified in analytical part of the report. Business risk, high interest rate, high defaulter rate,
certain government policy change etc are the major challenges facing by BRAC Bank. At the
same time BRAC Bank has a large number of defaulter. Even though strict loan approval system
is maintained, due to some unavoidable reason “bad-losses” sometimes occur. In order to reduce
credit risk BRAC Bank follows consistent monitoring system upon borrower’s activities. Again
if someone turns in to defaulter special wing called SAM works to enforce law.
The recommendation part of the report tried to find out some steps could be initiated by BRAC
Bank in order to overcome existing weakness. Lowering interest rate, more effective loan
approval system, strong monitoring activities, and entrepreneurs meeting arrangement could
improve BRAC bank’s performance. Analysis of the Loan Repayment Behavior of the borrowers
gives an idea about the current market vibe of SME banking.
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