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SME ( Small and Medium Enterprises)


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SME loan disbursement and its impacts on the customers of national Bank Ltd .

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SME ( Small and Medium Enterprises)

  1. 1. Report on:“Impact of Small and Medium Enterprises (SME) loan on National BankLimited credit holders in income generation and satisfying their basic needs” SUBMITTED TO Dr. Shaker Ahmed Professor Department of Management Stdies, Business Studies Faculty University of Dhaka SUBMITTED BY S.M. Saifur Rahman ID: 3-10-19-34 Mohammad Shafiqul Alam ID: 3-10-19-30 Md. Mashiur Rahman ID: 3-05-07-40 Kazi Md. Taslim Uddin ID: 3-10-18-45 Nabamita Raut ID: 3-09-16-39 Semester – Spring, 2011 MBA Evening Program. Department of Management Studies Faculty of Business studies. Date if Submission: April 16, 2011 1
  2. 2. Letter of TransmittalDate: April 16, 2011ToDr. Shaker AhmedProfessorDepartment of Management StudiesFaculty of Business StudiesSubject: Impact of SME loan in satisfying basic need of Credit holdersDear SirHere is a report international business on “Impact of SME in satisfying basic need of Creditholders” to fulfill the partial requirement for the course of International Business Research.Here in this report we have tried to find the impact of SME loan in satisfying the basic needs ofthe credit holders. We have tried to focus on the five major basic need i.e. food , education,medical, accommodation. We have tried to show how the income of people influences thesevariables.Sincerely yours,S.M. Saifur RahmanID: 3-10-19-34Batch-19,Semester-Spring 2
  3. 3. AcknowledgementAt first I desire to express my deepest sense of gratitude to almighty Allah. With profoundregard I gratefully acknowledge my respected course teacher Dr. Shaker Ahmed, for his generoushelp and day to day suggestion during preparation of the report..I like to give thanks especially to my friends and National Bank Staffs, for their enthusiasticencouragements and helps during the preparation of this report by sharing ideas regardingthis subject and for their assistance in typing and proofreading this manuscript.S.M. Saifur RahmanID-3-10-19-34Batch-19,Semester-Spring 3
  4. 4. Table of ContentTopic Page No.I. Introduction Part ………………………………………i- vII Report PartChapter- 01: Introduction1.1 Introduction 11.2 Background of the Study 21.3 Definition of SME 31.4 Problem Statement 41.5 Objective: 4Chapter- 02: Methodology2.1 Data Source 52.2 Data Collection Instruments 52.3 Target Population and its location 62.4. Sampling Design and data collection 62.5. Processing of Data 62.6 Scope and Limitation 6Chapter -3Major Findings 7-23Chapter – 44.1 Conclusion 254.2 Recommendation 26Appendix 4
  5. 5. Executive SummeryTo be a medium income nation during the next decade, meeting the millennium developmentgoals (2015) and Vision 2021, the present government is trying to build a sound socio-economicinfrastructure. In doing so, the government initiatives for planning, organizing and controllingthe various sectors of the economy triggers the overall economic growth rate already. Thegovernment provides a separate policy towards SME credit disbursement mentioned earlier forbetter functioning of the sector. Most of the private and public commercial banks are playing roleby disbursing credit amount to the potential entrepreneurs for better doing and sound businessfunctions.Here in this report we have tried to find the impact of SME loan in satisfying the basic needs ofthe credit holders. We have tried to focus on the five major basic need i.e. food , education,medical, accommodation. We have tried to show how the income of people influences thesevariables.For the data analysis we have surveyed the loan holders with a questioners where we haveselected 35 borrower among 120 borrowers of Dhaka city(Jatrabari to Uttara) and we have usednon-probability sampling with convenient method for convenience. In case of data analysis wehave used MS office and excel tools.From the study, it is found that 85.71 per cent of credit holders belong to the group of increasedincome and only a negligible number (14.28) of credit holders are with no changes of incomegroup. But ultimately we have found most of the persons are satisfied with SME loan. 5
  6. 6. II Report PartChapter- 011.1. IntroductionIn recent times, small and medium Enterprises (SMEs) have come into the forefront ofdevelopment agenda due to the recognition of their contribution in fostering growth, sustainingglobal economic recovery, generating employment and reducing poverty (OECD, 2004). SEAF(2004) report identifies a number of channels through which SMEs can have positive impact onpoverty reduction. Growth of SMEs can reduce poverty through income generation, employmentgeneration ultimately acceleration of economic growth.Empirical studies find that the share of SMEs in GDP is significantly higher in high incomecountries. A cross country study (Ayyagari et al, 2003) shows that SMEs account for over 51percent of GDP and 57 percent of employment in high income countries while the correspondingfigures for low income countries are 16 and 18 percent. This reveals the importance of SME ingrowth and employment generation.1.2 Background of the studyDespite high dependence on agriculture, other sectors are growing significantly in Bangladesh.Over the years, share of agriculture in GDP is declining with services being the drivers ofgrowth. Manufacturing sector in Bangladesh has been contributing at a consistent rate over thelast decade to around 15 percent. SMEs in manufacturing and services combined have 19 percentshare of GDP. A nationwide survey claims that Micro, Small and Medium Enterprises (MSMEs)value addition accounts for 20 to 25 percent of Bangladesh‟s GDP (Daniel, 2003). Theseenterprises are accommodating more than 30 million people aged 15 years and above. Therefore,SME sector deserves more attention and focus to foster growth and generate employment.However, the greatest potential of employment creation is among the SMEs involved inmanufacturing. SMEs in manufacturing are important for the developed countries as well(Baldwin and Picot, 1994) since growth of SME in manufacturing sector creates disproportionate 6
  7. 7. amount of net employment because of its labour intensive character. However, SME inBangladesh is dominated by trading. The key reasons for SMEs not entering the manufacturingsector in a major way are financial constraints, dismal state of utilities and government policydiscriminations (CPD, 2003). Nonetheless, the role of SME in employment generation andpoverty reduction has been well recognized in the PRSP (GOB, 2002).The present government has put much emphasis on the development of SME sector consideringit as “The driving force for industrialization” in meeting the goal of 10 per cent growth*, 40 percent contribution of industrial sector to gross domestic production (GDP)* and for being amedium income nation within the next decade. With a view to reducing income inequality,poverty and high rate of unemployment in densely populated Bangladesh, the SME sector mightbe much better functioned by a towering rate of credit flow in this sector.Source: election manifesto of Bangladesh Awami League, 2008.Financial and development assistance designed especially for small and medium enterprises inBangladesh is a new and upcoming trend. After the surge of micro-finance in the last twodecades, small and medium enterprises have come to the limelight in the financial sector onaccount of their contribution to economy and yet limited access to finance. Both micro-financeinstitutions and banks are beginning to realize the potential of this market and designing newfinancial products for it. National Bank Limited started providing credit to small and mediumenterprises in 2009 in recognition of their special needs.This paper looks at the impact of Small and Medium Enterprises (SME) loan on National BankLimited credit holders in satisfying their basic needs. The analysis reveals that credit holders cansatisfy their basic needs i.e. food, accommodation, children‟s education, medical facilities moresuccessfully than before as their income has increased. 7
  8. 8. 1.3 Definition of SME:The term „SME‟ comprises the following: 1) Small Enterprises and 2) Medium Enterprises.Small Enterprises:Small Enterprise refers to the firm/business which is not a public limited company. A firm orbusiness might be characterized as small enterprises if the following criteria are satisfied: Serial No. Sector Fixed Asset other than Employed Manpower Land and Building (not above) (Tk.) 1. Service 50,000-50,00,000 25 2. Business 50,000-50,00,000 25 3. Industrial 50,000-15,000,000 50Source: Bangladesh Bank (Small and Medium Enterprises Credit Policies and Programmes,2010)Medium Enterprises:Medium Enterprise refers to the establishment/firm which is not a public limited company. Anestablishment or a firm might be pointed out as medium enterprises when the following criteriaare met: Serial No. Sector Fixed Asset other than Employed Manpower Land and Building (Tk.) (not above) 1. Service 50,00,000-10,00,00,000 50 2. Business 50,00,000-10,00,00,000 50 3. Industrial 1,50,00,000-20,00,00,000 150Source: Bangladesh Bank (Small and Medium Enterprises Credit Policies and Programs, 2010) 8
  9. 9. 1.4 Problem Statement:The small and medium enterprises have not been able to fully build up due to various socio-economic hindrances .Moreover; sometimes credit holders can‟t utilize their loan amount as theyuse it in other purpose rather than using the credit in business, sometimes the sanctioned amountis not enough to contribute in their business as well as in their income generation where incomeis very closely associated with basic needs of a person. So here this paper looks at the impactof Small and Medium Enterprises (SME) loan on National Bank Limited credit holders inincome generation and satisfying their basic needs.1.5 Objective:In this study, we will try to find out the impacts of SME credit on individuals who are the SMEcredit taker in the context of National bank Ltd. The objectives of the study are the followings: Ø Are there any changes occurred in terms of  Income and savings pattern;  Quality Food Intake, Education, Medical Services and Accommodation after taking credit? Ø Are there any stresses found in repayment of the credit amount? 9
  10. 10. Chapter- 02 Methodology:2.1 Data Source:For analysis the data are collected from both primary and secondary sources where moreemphasis is put on primary data. Primary Data : Survey Technique by designing questionnaire. Secondary Data : National Bank Database, Economic Review, Bangladesh Bank, Ministry of Finance, Ministry of Commerce and Industries, USAID, Awami League manifesto etc. Literature Review :  SMEs in Bangladesh and their financing (An analysis and some recommendations (Alam and Ullah- ISSN: 1817-5090). Institutional Lending and Financing Policy for SME in Bangladesh. (Bangladesh Bank Policy Analysis Unit, PN -0804) Constraints to SME Development in Bnagladesh( Nazmul Hossain, October, 1998) SME Credit Policy 2010. Financing SME and its effect on Employment Generation ( A Study of Brac Bank SME lending- Mehnaz, Rabbani, Munshi, Solaiman) The strategy of development of Bangladesh ( Abdur Razzak, Salehuddin).2.2. Data Collection Instruments:A structured questionnaire, which containing 20 questions of various format, was developed toconduct interview. 10
  11. 11. 2.3. Target Population and its location:120 SME customers of National Bank Ltd in Dhaka City. From those 120 customer sampleframe were drawn from the Sayadabad to Uttara region customer and finally sample arecollected mostly from Old Dhaka to Dhanmondi areas branches.2.4. Sampling Design and data collection:Non probability convenient sampling has been used for determining the sample. Initially fromthe National Bank server list 39 were attempt to interview but successful thirty five samples wereinterviewed.2.5. Processing of Data:The collected data are formatted, analyzed though MS. Word and MS. Excel. Somemathematical logical and graphical presentation are used to analyze and presentation of data.2.6 Scope and Limitation:The impact of SME loan has diverse effect but, only the significant effect related to income,basic need, and repayment problem were focused or considered. Though some qualitative changewere monitored and expressed by respondents but not included in the paper.The major limitations of the work were time and money as most of the group members areemployee of various organization it was difficult to participate or give enough time. Moreover,the amount of finance were needed for going to customers of distance place was insufficient andthat‟s why convenient customers were investigated. Besides these, some data those are importantfor us was difficult to access i.e. customers phone no and address. 11
  12. 12. Chapter -3 Major Findings1. Why did you choose NBL for SME loan? Table1: Why choose NBL 1. Why did you choose NBL for SME loan? Freq. a) Previously had account with NBL 9 b) close to working place 13 c) Ease to access 7 d) Reasonable interest rate and charges 4 e) Others (please mention) 2 Total 35 Figure 1: Why choose NBLIn a case of SME loan in NBL, most persons choose this bank for the nearest of their workingplace which accounts for 37 percent and the second major causes are previous dealings withthis bank amounting 26% and the close one is ease to access with 20% 12
  13. 13. 2. Does the interest rate of NBL SME is reasonable comparing to other bank? Table 2: The opinion of interest rate 2. Does the interest rate of NBL SME is reasonable comparing to other bank? Response Freq. a) Yes 21 b) No 14 total 35 Figure 2: The opinion of interest rateThe finding is that the interest rate of SME loan in NBL comparing to others bank is reasonable.From this statement it is evident that the SME loan holders are satisfied with the interest rate ofSME loan. This may be due to this that the SME loan is almost uniform in all commercial bankof Bangladesh. 13
  14. 14. 3. Do you think that loan recovery pattern of NBL is customer friendly on the basis of recoverytime? Table 3: The opinion of recovery pattern regarding tome Frq. A) Friendly 3 b) its ok 27 c) its rigid 5 Total 35 Figure 3: The opinion of recovery pattern regarding tomeIt is found that the major number of customer think the loan recovery pattern of NBL is flexibleand customer friendly. About 77% think that the system or pattern is ok and 9% think itscustomer friendly. In contrast, remaining 14% think the system is rigid and not customer friendly 14
  15. 15. 4. To what extent has SME loan assisted your business? Table 4: The extent SME loan assisted freq. Very large extent 1 4 2 large extent 9 3 Good extent 11 4 Neutral 2 5 some extent 4 6 sometimes 3 7 Not at all 2 total 35 Figure 4: The extent SME loan assistedThe most of the respondent amounting 11 respondents out of 35 respondent said that the SMEloan has assisted their business in various way where about 9 people and 4 people consecutivelysaid the loan support has supported their business in a large extent and very large extent. On theother side, very few respondents (2 respondents) said the loan did not assisted their business andsame no of people were neutral in the opinion where they believe the impact of loan isinsignificant. However among 35 respondents approximately 70% thing the loan support hasfacilitated their business very large to good extent. 15
  16. 16. 5. In what way(s) has the SME Loan Assisted your business? Table 5: The ways SME loan assisted Freq.A. Improving the capability of securing bank loans. 2B. Increasing the number of marketing/sales activities, such as exhibitions. 5C. Enhancing the overall competitiveness of the company. 2D. Enabling business expansion. 16E. Improving the capital liquidity of the company. 5F. Achieving business goals ahead of schedule. 4G. Others (Please specify ) 1 total 35 Figure 5: The ways SME loan assistedThe most of the respondent amounting 16 respondents out of 35 respondent said that the SMEloan has assisted their business in business expansion where about 2 groups each containing 5people each said the loan support has supported their business in increasing sales activities andliquidity function. On the other hand, 4 respondents said the loan facilitate their business inachieving strategic goal. 16
  17. 17. 6. In what way(s) would your business have been affected if your company did not apply for the SMELoan? Table 6: The ways business could affected A. Not affected at all. 2 B. Reduced capabilities of business expansion. 11 C. Loss of business opportunities. 3 D. Less marketing /sales activity. 17 E. Reduced overall competitiveness of the company. 0 F. Others (Please Specify :) 2 total 35 Figure 6: The ways business could affectedSource: Author’s calculation.According collected information it is seen that most of the people (48%) believe if the loan werenot taken their marketing activities could have been affected. In addition next largest group 17
  18. 18. (38%) believes it could limit business expansion or growth and 6% said they were not affected atall and could have reduce competitiveness and remaining 9% believe if the loan was not takenthey might loss business opportunity.Income:To be a medium income nation during the next decade, meeting the millennium developmentgoals (2015) and Vision 2021, the present government is trying to build a sound socio-economicinfrastructure. In doing so, the government initiatives for planning, organizing and controllingthe various sectors of the economy triggers the overall economic growth rate already. Thegovernment provides a separate policy towards SME credit disbursement mentioned earlier forbetter functioning of the sector. Most of the private and public commercial banks are playing roleby disbursing credit amount to the potential entrepreneurs for better doing and sound businessfunctions. 18
  19. 19. 07. Have your monthly income changed?From the study, it is found that 85.71 per cent of credit holders belong to the group of increasedincome and only a negligible number (14.28) of credit holders are with no changes of incomegroup.( Figure: 07) Figure 07: Credit Holders Income StatusSource: Author‟s Calculation 19
  20. 20. 08. What is your monthly income after receiving SME Loan?On average income is increased thirty (30) per cent after credit taking. Among the 35entrepreneurs, most of them experienced 30 per cent and more than increase of their income.(Figure: 08) Figure 08: Pre and post Income levelSource: Author’s CalculationThree (3) of them experienced a slightly less than twenty (20) per cent increase of their incomelevel. Unfortunately, five (5) of them cannot do any form of increments of their income level.(Figure: 08). 20
  21. 21. 9. If increase or decrease, what would be the Percentage Figure 09: percent change in incomeThe authors thought about the failure of the increments of their income may be noted as:  Either they expended the loan amount for other family purpose  Or there exist some inefficiencies of proper managing the credit amount.10. Do you think that SME loan has helped to change your standard of living?Standard of Living Indicators: Relationship with IncomeStandard of living is a multidimensional concept and is generally measured by standards such asincome per person. Other measures such as access and quality of health care, quality food intake,better accommodation facilities and educational standards are also used. It is the ease by whichpeople living in a time or place are able to satisfy their needs and/or wants.Persistent poverty and malnutrition are present in Bangladesh, despite its otherwise strikingeconomic growth in recent years. About half of the countrys population cannot afford anadequate diet. Here the humble signs of improvement are indicated by long term trends in the 21
  22. 22. overall incidence of poverty in Bangladesh. About one quarter of the population in Bangladeshmaintain a precarious existence -- chronically underfed and highly vulnerable.In this backdrop, the need for targeted incomes to ensure minimum standard of living is required.In this regard, the current government provides a separate SME policy and allocated a handsometotal of credit for this sector‟s sound environment for ensuring rapid economic growth andoverall standard of living.11. Have any improvement occurred in case of your children‟s education?Income and education:Education is fundamental to the development of Bangladesh. The Government has placed a highpriority on it; particularly at the primary school level. Bangladesh conforms fully to theEducation For All (EFA) objectives, the Millennium Development Goals (MDG) andinternational declarations. Article 17 of the Bangladesh Constitution provides that all childrenbetween the ages of six and ten years receive a basic education free of charge.But the real picture is different; 6 percent of children do not enroll in the school and the dropoutrate of primary school students is 23.6 per cent that means around 30 per cent of students do notcomplete primary education and engage as a wage laborer.Source: USAID, 2010, collected from the website of USAID ( why is this high dropout rate? Why is this child labor?The most apparent answer might be the poverty or more specifically poor income of the family,may trigger the children to dropout from the school and bound them to engage in wage laboring.Table 07: Standard Of Living Indicators & Their Corresponding % no. of Credit Holders Standard Of Living Indicators & Their Corresponding % no. of Credit Holders Educatio Medical & Health Accommodati Quality Food Overall Standard Status n Facilities on Intake of Living Improved 51.42 31.42 20 14.285 29.28125 Some Improvemen ts 34.28 48.57 74.28 68.57 56.425 No Changes 14.285 20 5.71 17.14 14.28375Source: Author’s calculation. 22
  23. 23. Figure 10: Standard of Living StatusIn our study, it is observed that 51.42 percent respondents‟ children experienced better educationfacilities than the earlier period of having poor income of the family head. 34.28 per cent ofrespondents‟ children enjoyed some improvement of the education facilities. Due to no changesin income level, there are 14.28 percent respondents with no improvement of their children‟seducation.12. Have you experienced any changes in your food intake?Income and quality food intake:According to the World Bank, approximately 33 million of the 160 million people inBangladesh cannot afford an average daily intake of more than 1800 kilocalories (theminimum standard for nutrition as set by the World Food Program). For people in mostdeveloping countries, the daily calorie average is 2,828. In Bangladesh, that average is only2,190.Poor income level is the major factor effecting food security in Bangladesh. Despite the foodprice hike and much more complexities with living, there observed in our study that around15 per cent credit holders are taking some sorts of quality food than the earlier period of no 23
  24. 24. credit and a negligible income level followed by some improvement (68.57) and nochanges (17.14).13. Major mentioned change in food intake Table 8: Major change in food intake Frq a) Can have regular food 11 b Can have fruits and expensive food item 14 c) Can attain guest with good items 6 d) others 4 total 35 Figure 11: Major change in food intakeIn the response of this questions most of the respondent said now they can have and providegood food to their family (40%). Moreover 31% said no significant change occurred.Interestingly 17% said they can entertain their guests with good food and its an importantchange for them. 24
  25. 25. 14. Have any improvement occurred in case of medical and health facilities?Income and Health Facilities:Socio-economic development for all citizens is the heart of Bangladesh‟s Constitution.According to the articles 15-18 in part II of the Constitution, the State has the responsibility toensure to its citizens certain basic needs such as health.Due to poor earnings, the backward inhabitants are always discriminated with having meagerfacilities of health services. The government is still not capable of being able to provide healthservices to all the citizens due to not only inadequate resources but also a poor management. Ourstudy shows that an approximate 31.42 per cent of respondents could improve their healthfacilities with their newly generated income from proper managing of the credit they took fromNational bank. A 48.57 per cent of credit holders bring fortune himself with some improvementsin health services. On the other hand, a 20 per cent of credits holders are not so perfectly manageto have a better fortune for them.15. Have any improvement occurred in case of your accommodation?Income and Accommodation:As a densely populated country, Bangladesh has one of the lowest land-person ratios. Thescenario for the capital city is shoddier than other cities in domestic and even abroad in case ofquality and chief accommodation simultaneously.High (housing) price is to accept for a better and safe accommodation for the most of theinhabitants in Dhaka city. But, with a negligible income no one can lead such life. Always theyare to fight for living.In our study of impact of SME credit on the credit holders of national bank in terms of basicneeds, it is found that twenty (20) per cent of respondents have experience a handsomeimprovement of accommodation with their higher income than pre-credit period followed by 25
  26. 26. moderate improvements (74.28) and due to poor management of credit amount 5.71 per cent ofrespondents (credit holders) unfortunately do not bring any betterment of housing forthemselves.16. Are there any changes taken place in your savings pattern after receiving SME loan? Table 9: Changes in savings pattern Freq. a) Yes 7 b) Some Changes 23 c) No 5 total 35 Figure 12: Changes in savings patternWhen it is asked whether any changes taken places in case of their saving patterns about 65%said that some changes has taken place where about 20% said significant change has occurred incase of saving patterns. In contrast, only about 14% said no change has occurred in case ofsaving patterns. 26
  27. 27. 17. Are there any stresses found in repayment of the credit amount? Table 10: Stresses found in loan repayment Freq. a) Yes 7 b) sometimes 16 c) No 12 35 Figure 13: Stresses found in loan repaymentIn case of EMI (Equal monthly installment) payment most of the respondent (16) said they havefall in stresses as the EMI payment is started just after one months of disbursement. Where 12said no stresses found in paying EMI. Where some other seven respondents said the have fall instress in repayment as no advance payment of EMI is not possible when there is money on handand little late payment is not possible such as paying two EMI together ( previous EMI andCurrent EMI) without ant penal interest. 27
  28. 28. 18. Are you satisfied with the SME Loan? Table 11: Satisfaction on SME loan Satisfaction level Freq. Highly satisfied 5 Very satisfied 7 Satisfied 16 Neutral 2 Dissatisfied 3 Very dissatisfied 2 Highly Dissatisfied 0 total 35 Figure 14: Satisfaction on SME loanFrom the survey it is found that most of the borrowers are satisfied by with NBL SME loan accountingabout 46% and 20% is highly satisfied. in contrast 6% respondent was neutral with equal percent ofrespondent was very dissatisfied. 28
  29. 29. 19. If you need, would you take SME loan again? Table 11: who will take loan again yes 21 May be 10 No 4 total 35 Figure 15: who will take loan again This question also measures some extent to satisfaction of credit holders. About 60% respondent saidthey will take loan again if they feel necessary where another said they are not quite sure but they maygo for SME loan again as other loan category is not suitable for them. In contrast’ 11% said they will nottake SME loan again at any condition as they are not capable of coping with the systems and procedureand it was not helpful to them 29
  30. 30. Chapter – 4: Conclusions and Recommendation:4.1. Conclusion:Innovations in addressing the credit market failures faced by poor households throughmicrofinance have been a major development breakthrough of recent times. Recent realization ofthe need of micro finance government has encourage and force financial institutions to introduceand stimulating SME financingMany microfinance providers in Bangladesh have started providing enterprise finance targeted atthe small enterprises. Formal banks have also started operating in this market and National bankLtd was one of them.The studies reviewed reveal that SME loan is provided to almost establish organization andaverage age of loan holders is 36.25 where average loan size is 2.55 lacs.Financing SMEs as a core business is still relatively new for formal financial providers inBangladesh. This is fundamentally different to microfinance. Though there are some problems inpolicy, disbursement and collection as well as monitoring it is observed that most of the creditholders have benefited from it.If further improvements in the sanctioning and other administrative procedures affecting SMEs;simplification, transparency, and accountability are established SME can be a feat financial toolfor economic development. 30
  31. 31. 4.2. Recommendations:  Only Tk.26000000 of credit disbursed by National bank in Dhaka city up to December, 2010 and in the mean time about Tk.50, 00,000 is recovered. So, the net disbursement is only Tk. 1, 50, 00,000. Since there observed a favorable atmosphere of impressive standard of living after having SME credit, the authority might spread the ‘credit net’ for ensuring rapid SME development and thereby strengthen the social safety net program. So, the disbursement of credit should be extended.  The repayment rate of different bank should be revised for small and medium enterprises separately.  Time of repayment of the credit amount should be extended and set up separately for small and medium enterprises.  Close and effective supervision of relevant government bodies and related institutions are needed.  For generating more income for the entrepreneurs, the authority should offer training to the entrepreneurs for better business operations functioning.  Appropriate policies of the sector should be introduced. 31
  32. 32. Appendix –i: Basic Data Loan Amt.(in Recovered Amt.(in Name of the Client Gender Age Type of activity Branch lac) ) 1 M/S Shahid Glass & Thai Aluminium Male 44 Commerce & Trade Bongshal Road 3 1.5 2 M/S Rabeya Tailors Female 28 Commerce & Trade Elephant road 5 3.56 3 M/S Zia Electic Male 31 Commerce & Trade Bongshal Road 4 2.02 4 M/S Salman Cloth Store Female 24 Commerce & Trade Islampur 4 1.93 5 M/S Jamuna Saloon & Skin Care Female 34 Service Lake circus 2.5 1.46 6 M/S Nazma Cosmetics Male 27 Commerce & Trade Elephant road 2 1.41 7 M/S Macca Jori house & Cosmetics Male 38 Commerce & Trade Islampur 2 1.43 8 M/S Jalani Varieties Store Male 36 Commerce & Trade Progoti Sharani 3 2.36 9 M/S Auto Prience Hair Fashion Male 35 Service Dhanmondi 2.5 1.86 10 M/S Sezan Fashion Male 29 Commerce & Trade Islampur 2 1.56 11 M/S Jahanara Cloth Store Female 29 Commerce & Trade Islampur 1.5 0.96 12 M/S Himu Fashion Female 43 Commerce & Trade slampur 2 1.31 13 M/S Afroza Cosmetics Female 32 Commerce & Trade Elephant road 2.5 1.28 Bongshal 14 M/S Haji Malek Welding Workshop Male 58 Manufacturing Road 2 1.26 15 M/S Shuvo Fashion Male 44 Commerce & Trade Islampur 2 1.46 16 M/S Dewan Confectionary Male 36 Manufacturing Islampur 2 1.26 17 M/S Al Baraka Confectionary Male 33 Manufacturing Pragoti shorony 2.5 1.25 18 M/S Rabbi Cloth Store Male 42 Commerce & Trade ISLMPUR 3 2.2 Mohammadpur 19 M/S Sohrab Store Male 23 Commerce & Trade 2.5 1.81 20 M/S Mayer Doa Lighting Male 26 other Khilhaon 1.5 0.86 21 M/S Ruma Fashion Female 31 Commerce & Trade Elephant road 1 0.75 22 M/S Janani Jewellers Male 35 Manufacturing Mohammadpur 2.5 1.72 23 M/S Shafique Hardware Male 39 Commerce & Trade Bonshal Road 1 0.63 24 M/S Nasim Furniture Male 52 Manufacturing Mohammadpur 2 1.44 25 M/S The Arpa Jewellers Male 34 Manufacturing Islampur 1.5 0.66 26 M/S Modina Furniture & Varieties Store Male 38 Commerce & Trade Khilgaon 3 1.96 M/S Ikra Mobile computer & Varieties 27 Store Male 29 Commerce & Trade Elephant road 2.5 1.52 32
  33. 33. 28 M/S A R Computer & Varieties Store Male 36 Commerce & Trade Elephant road 3 1.3329 M/S jakaria Fashion Male 31 Commerce & Trade Islampur 1.5 0.5530 M/S Bismillah Furniture Male 46 Manufacturing Khilgaon 2 1.1231 SK Motors Male 32 Service Bonshal Road 3 1.532 Binimoy Enterprise Male 37 Commerce & Trade Bonghal Road 4 1.533 Jahid Engineerings Male 53 Manufacturing Bongshal Road 5 334 Janani laundry Male 28 Service Lake circus 1 0.435 Nazma Metal works Male 56 Manufacturing Bongshal Road 5 3.5 Loan Amt. (in Recovered Amt.(in Age lac) lac ) Avg 36.257 2.557142857 1.552 Std Dev 8.8329 1.083101677 0.724925148 Mean 23 1 0.4 Median 34.5 2.5 1.46 Mode 31 2 1.5 Variance 78.02 1.173109244 0.525516471 Appendix –ii: Structured questionnaire. 33
  34. 34. SOURCES1.Constraints to SME Development in Bangladesh : SMEs and its Effect on Employment Generation: A Study of Brac Bank’s SMELending SMEs in Bangladesh Empirical Study of SME Loan on the Borrowing Household Bangladesh Bank, 2011. ( Ministry of Industries, Republic of the government of Bangladesh.6. Economic Review-2010 collected from the website of ministry of finance, 34
  35. 35. 35