“Operations of Sme Finance in Bangladesh: Case Study of Brac Bank Limited”

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CHAPTER One

Introduction

1.1 Introduction

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.

Banks deal with the most important factor of the economy i.e. Money. It flow fund from surplus unit to deficit unit and through this it facilitated the efficient allocation of the resources as well as accelerated economic growth. This sector is moving towards new dimension as it is changing fast due to competition, deregulation, financial, reforms.

As the pace of globalization competition in banking sector is increasing very fast. Banks are becoming more customers oriented and offer High Tech customized products to its target market to hold the market. Our central bank always keeps monitoring banks performances. Individual banks also need to assess their own performance to satisfy the parties those are related to its growth. • For Shareholders.

• For depositor.
• For Bangladesh Bank.
• For its own Assessment to view the future growth and profit trend. BRAC bank is one of the giants in our banking sector. One of its core products is SME. It is known as the pioneer of SME banking in Bangladesh. This report aims at providing an overall operation of SME loan, perception of SME loan borrowers of BRAC Bank Limited.

Through this report we will be able not only to get a concept about BRAC bank`s SME but also about Bangladesh`s SME sector. How BRAC bank deals with its borrowers. It`s borrower’s perception about the bank. There will also be recommendations for further development of SME sector of BRAC bank and Bangladesh.

1.2 Background of the Report

This report was done as part of the requirement for successful completion of the internship program. Exposure to the business world and acquiring practical work experience was the primary objective of this assignment. I was attached with BRAC Bank Limited, Gulshan Branch for my internship to enhance the knowledge of practical work experience. The report focuses on the operation of Brac bank limited as I was attached with every division during the tenure of my internship. The topic for this report was decided upon after approval of my honorable program supervisor Dr. Mohammed Dulal Miah, Assistant Professor and Head, Department of Finance, Faculty of Business Administration, American International University - Bangladesh (AIUB).

1.2. Rational of the Report

I had my own as well as my banks rational behind selecting this study. First of all I was asked to prepare this topic by my supervisor in the Bank. He asked me to work on this topic so that he can provide me relevant information, which will help me in completing the report. Most importantly my feeling is that I want to know about the SME finance operation of BRAC Bank Limited. The total functionality of this section should be understood upon completion of this report. Like if in future if I have to work in any Bank then my knowledge of this sector can help me in my work.

1.3. Statement of the Problem

Doing business in a competitive environment and surviving for long-term and hence optimizing to perform above average is a daunting task. Strict control and monitoring of Bangladesh Bank made it tougher for commercial banks to follow all the guidelines as prescribed by it with an excellent performance. Mainly banks Small and Medium Enterprises (SMEs) are accounting for 25 percent of GDP, 80 percent of industrial jobs, and 25 percent of the total labour force in Bangladesh even though the prospective sector gets negligible facilitation from different support service providers.

There...
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