the sme products and functions of

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The SMEproducts andfunctionsOf

Prime Bank Limited

Bangladesh University of business

and technology (BUBT)


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The SMEproductsandfunctions of Prime Bank Limited

Prepared for:

Md. zakir HossainLecturer

Department of financeBangladesh University of business and technology(BUBT)

Prepared by:The extremez

SL No. Name Roll no.

01. Md. Shafiul hasan 10113101056

02. Ayesha siddika 10113101057

03. Md. imadul haque khan 10113101075

04. Fatema-tuz-zohora Tama 10113101077

05. Farzana Anower 10113101090

Intake: 25th section: 02 program: B.B.A

Date of submission: 10th September, 2011

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Date: 10th September, 2011

MD. zakir hossainLecturerDepartment of financeBangladesh University Of business and technology

Dear Sir,It is our pleasure to submit the report on The SMEproductsand functions of PrimeBank Limited as requirement of BUS-101.

We have tried our best to gather all necessary information relevant to our study andpresent as cordially as possible. It is not impossible that there will be minor mistakes inthe report. But still we hope that thus study will provide detail picture ofThe SMEproductsandfunctions of Prime Bank Limited

Finally we want to show our gratitude to you as without your co-operation it would bereally impossible for us to prepare this report. If you need any assistance to interpretanything in this report please call on us.

Thanking you

Shafiul HasanOn behalf ofOur group

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Acknowledgement

This report is prepared with span of 15 days. As the study deals with The SMEproductsandfunctions of Prime Bank Limited we have surveyed our study in many fields wheremany people expanded their friendly hands. Without them it would be impossible tofinish this report.

First of all we owe much to our course teacherMd.Zakir hossain who taught us how tomake a report. So this report is dream without him. He also assured us to help in any kindof difficulties.

We like to thank Mrs. k. Razia Rahman(vice chairmen of Prime Bank Ltd.) who helpedus to collect the information bout the SME function of Prime Bank Ltd.

We also thank Mr. Nafis sikder (Director). Without his assistance in providing data boutSME products of Prime Bank Ltd we could not reach so far.

We also like to thank the people who helped us in conducting our research.

Finally special recognition goes to all classmates who give us time to make us understandand clear about some particular topics.

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Executive summary

SMEs are vital for economic growth and development in both industrialized anddeveloping countries, by playing a key role in creating new jobs. In order to successful ofSMEs many financial sectors (specially banks) provide financial facilities. As acommercial bank, Prime Bank provides different SME loan with their different product.They provide seven types of products on the focusing of entrepreneurs and thecharacteristics of business like - Sahaj Rin, Chalti Rin, Digun Rin, Sampad Rin,Moushami Rin, Agriculture Banking, Anchol (Women Entrepreneurs' Loan). Somerecommendations are concluded at the end of the report that should follow Prime BankLtd.

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Table of Contents

Chapter 1 Topics Page

Introduction

Authorization 1

Methodology 1

Objectives 1

Chapter 2 Concept of SME 2

Concepts

Concept of SME loan 2

SME loan in Bangladesh 3

SME foundation 3

Mission 4

Vision 4

Objectives of SME 4

Chapter 3

SME FunctionOf

Prime bank

Prime Bank Ltd. And its SME 5SME Products of Prime Bank 5

Sahaj Rin 5

Chalti Rin 6

Digun Rin 7

Sampad Rin 8

Moushami Rin 9

Anchol (Women Entrepreneurs' Loan) 10

Agriculture Banking 11

Chapter 4 Findings of the study 12

Chapter 5 Conclusions 13

Recommendations 13

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Bibliography 14

Chapter 1

Authorization

This report was authorized orally by Md. Zakir hossain to conduct

the study on The SME productsandfunctions of Prime Bank Limited.We the students of 25th intake section 2. We have made the report that willsubmit on the 10th September 2011

Methodology :

We used descriptive methodology. We used questionnaire for the

surveys. The questionnaire was constructed in regard to our hypothesis.We also used the official website of Prime Bank Ltd to collect theinformation.

Objectives:There are two objectives of the study. These are given below:

Broad term objectives:

SMEs are the driver of economic growth and innovation. The broadterm objective is to prepare a report on the important role of SMEs inEconomic development of a development country.

Specific term objectives:

The specific term objectives of this study is how SMEs play animportant role in the reduction of poverty and innovation of new products

by using different kind of Prime Bank SME products.

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Chapter 2

2.1 Concept of SMEs:

SMEs are usually enterprises that employ no more than 300 employees. It variesfrom country to country in the Asia Pacific region but is usually based on employment,assets, or a combination of the two.

Small enterprise

Small enterprise fulfill these requirements

(a) 10 < Employees < 50(b) US$100 000 < Total Assets < US$ 3 million(c) US$ 100 000 < Total Annual Sales < US$ 3 million

Medium enterprise

The requirements of Medium enterprise are-(a) 50 < Employees < 300(b) US$ 3 million < Total Assets < US$ 15 million(c) US$ 3 million < Total Annual Sales < US$ 15 million

2.2 concept of SME loan:

Financing is necessary to set up a business and expand their operations. SME loanis the financial support of small and medium sized enterprises and represents a majorfunction of the general business finance market.

2.3 SME loan in Bangladesh:

In most countries, commercial banks are the main source of finance for SMEs(Figure- 1). Like other countries in Bangladesh, many commercial bank and Financeleasing company provide this loan in many sectors like trading and manufacturing.

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Figure 1: SOURCES OF FINANCING FOR SMEs

2.4 SME Foundation:

SMEF was formally inaugurated July 17, 2007, by Dr. A. B. Mirza, Md. AzizulIslam, Honorable advisor, ministers of Finance, Commerce, post andtelecommunications, and government of the peoples Republic of Bangladesh at aceremony held at the Hotel sonargaon, Dhaka.

SMEs are recognized as engine of economic growth and employment generationfor sustainable industrialization in both developed and developing countries of the world.In context of Bangladesh, there is no alternative of small and medium enterprises forrapid industrialization and national economic growth through lower capital investmentand employment generation.

The SME Foundation is playing its role in helping the SME entrepreneurs includingthe women entrepreneurs by conducting various programs with an aim to develop theSMEs of Bangladesh. One of the major aims of SMEF is to bring the grassrootsentrepreneurs into the main stream of economic development through employment

generation, reduction of social discrimination and poverty alleviation

The objectives of SME foundation are to promote, support, strengthen andencourage the growth and development of SMEs in all productive sectors of theeconomy.

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2.5 mission of Bangladesh SME Foundation:

The primacy of pro-poor development of Bangladeshs small and mediumenterprises (SMEs) is the abiding mission of SMEF. This flagship mission indicates thespurring growth rate of SMEs, upgrading innovative new products, generate selfemployment and reduce poverty.

2.6 Vision of Bangladesh SME foundation:

Increasingrelentless integration of markets, internationalization of productionnetwork by leading and name-brand companies, lowering business threshold foralternative competitive entry, and therefore exacting competition are the vision ofBangladesh SME foundation.

2.7 Objectives of SME:

SMEs play a particularly important role in developing countries where poverty ismost severe. The core objectives of SMEs are

employing poor and low-income workers,

removing regional and sector imbalances in the economy

creating competitive market pressure

making economies more flexible and more competitive

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Chapter 3

3.1 Prime Bank Ltd and its SME function:

Prime Bank was created andcommencement of business started on 17th April 1995. Prime Bank has already madesignificant progress within a very short period of its existence. They constantly focus onunderstanding and anticipating customer needs. The bank has been graded as a top classbank in the country through internationally accepted CAMELS rating.Prime Bank offers all kinds of Commercial Corporate and Personal Banking services.SME function is one of them. They provides different kinds of loan for SMEs.

SME products of Prime bank Ltd.

Commercial banks are the main source of finance for SMEs. Prime Bank Ltd. is one ofthem. It provides exclusive products on the basis of different characteristics of business.They are stated below -

Sahaj Rin (Collateral Free Loan):

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Sahaj Rin provides you an easy to access loan facility to successfully grow yoursmall & medium enterprise business. It is for any justifiable business purpose for small &medium enterprise customers. Its investment amount -Taka 2 lac to Taka 6 lac and tenure- Maximum 36 months

Any entrepreneur (at least 21 years old)having the experience of successfullymanaging the business for at least two years may apply for the loan.

It requires o At least 2(two) years old trade license

o Notarized partnership deed/registered by Sub Register Officer( in case of

partnership )o Memorandum and Articles of Association in case of Private Limited Co.

o Passport/National voter ID/ ward commissioner/UP chairman certificate of

the proprietor/ Partner.

Hypothecation of machineries, equipments, vehicles, inventories can be the collateral of

sahaj Rin.

Chalti Rin (Working Capital Loan)

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Chalti Rin offers you the loan facility to increase the working capital base byfinancing day to day business of your Small Medium Enterprise (SME) business.

It is for any justifiable working capital need for small and medium enterprisecustomers. Its investment amount - Taka 2 lac to Tk 50 lac for small enterprise customers

and Tk. 2 lac to Tk 300 lac for small and medium enterprise customers and Tenure-Maximum 12 months for continuous loan and Maximum 60 months for term loan.

Any entrepreneur (at least 21 years old) having the experience of successfully managingthe business for at least two years may apply for the loan


o Notarized partnership deed/registered by Sub Register Officer( in case of


o Passport/National voter ID/ ward commissioner/UP chairman certificate ofthe proprietor/ Partner.

o Last 12 months bank statement of transactional account.

o Photo of the proprietor/Partners and guarantors.

Security/Collateral:

Registered mortgage of property/ownership of the space/possession rightpurchased in Banks name.

Hypothecation of machineries, equipment, vehicles, inventories.

Lien of cash collateral (FDR) and other encashable financial instrument

Digun Rin (Double Loan):

Prime Bank's Digun Rin helps you to avoid enchasing your long held savingand provide you the required capital for your business operation. Under this SME

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product, if you offer any encashable security i.e. FDR, you will be entitled to receivedouble amount of the value of security provided.

It is for any justifiable business purpose for small & medium enterprise customers.Its investment amount -Taka 2 lac to taka 50 lac for both small enterprise and medium

enterprise customers and tenure - Maximum 36 months.

Any entrepreneur (at least 21 years old) having the experience of successfully managingthe business for at least two years may apply for the loan.

It requires o

At least 2(two) years old trade licenso Notarized partnership deed/registered by Sub Register Officer( in case of


o Passport/National voter ID/ ward commissioner/UP chairman certificate of

the proprietor/ Partner.o Last 12 months bank statement of transactional account.

o Photo of the proprietor/Partners and guarantors


Hypothecation of machineries, equipment, vehicles, inventories. Lien of cash collateral (FDR) and other encashable financial instrument.

Sampad Rin (Capital Loan):

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Sampad Rin offers you the loan facility to augment capital base foryour business expansion, purchase of new business space or expansion ofexisting outlets and capital machineries and also to purchase light or heavyvehicles for business use.

This loan facility is available for business expansion, purchase of newbusiness space or expansion of existing outlets and capital machineries andalso to purchase light or heavy vehicles for business use. Investmentamount-Tk 2 lac to Tk 50 lac for small enterprise customers and Tk 2 lacto Tk 300 lac for medium enterprise customers and tenure- Maximum 60months.

Any entrepreneur (at least 21 years old) having the experience of

successfully managing the business for at least two years may apply for theloan.

It requires o At least (one) years old trade license

o Notarized partnership deed/registered by Sub Register Officer(

in case of partnership )o Memorandum and Articles of Association in case of Private

Limited Co.

o Passport/National voter ID/ ward commissioner/UP chairmancertificate of the proprietor/ Partner.

o Last 12 months bank statement of transactional account.



Registered mortgage of property/ownership of the space/possessionright purchased in Banks name.


Lien of cash collateral (FDR) and other encashable financialinstrument.

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Moushami Rin (Seasonal Loan):

Moushami Rin offers you the loan facility to grab the additionalopportunities in various festivals and seasonal events (i.e. Eids, Pujas,Christmas, Bengali and English New Year etc.) by organizing special

business arrangements to increase sales and profit for your SME business.

It meets short term financing need of any existing small and mediumenterprise customers. Investment amount -Maximum Tk 50 lac for short

enterprise customers and maximum Tk 300 lac for medium enterprisecustomers. Tenure- Maximum 6 monthsAny entrepreneur (at least 21 years old) having the experience ofsuccessfully managing the business for at least two years may apply for theloan.




Limited Co.o Passport/National voter ID/ ward commissioner/UP chairman

certificate of the proprietor/ Partner.o Last 12 months bank statement of transactional account.

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o Statement of all active bank loans (if any).



Hypothecation of machineries, equipment, vehicles, inventories. Lien of cash collateral (FDR) and other encashable financial

instrument.

Anchol (Women Entrepreneurs' Loan):

Anchol is the credit facility for the women entrepreneurs to expandand operate their businesses at desired level.

It is for Any justifiable business purpose for Small Enterprise womenentrepreneurs. Investment amount - Tk 1 lac to Tk 50 lac (up to Tk. 25.00lac unsecured limits) and tenure - Maximum 12 months for continuousloan and Maximum 60 months for term loan.Interest rate- 10% is applicable for this loan.

Any entrepreneur (at least 21 years old) having the experience ofsuccessfully managing the business for at least two years may apply for theloan.

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Limited Co.o Passport/National voter ID/ ward commissioner/UP chairman

certificate of the proprietor/ Partner.o Last 12 months bank statement of transactional account.



Registered mortgage of property/ownership of the space/possessionright purchased in Banks name.


Lien of cash collateral (FDR) and other encashable financialinstrument.

Agriculture Banking:

It provides loan for two sectors. Like Abad (Crop Loan)Khamar ( Farm/Non-Crop Loan)

Abad (Crop Loan):

It helps farmers, share cropper and landless farmers to bear the costof tilling of land, fertilizers, pesticides, irrigation, seed etc. for

producing different crops and vegetables. Farmers can lend the moneyup to Tk.3.00 lac taka and its tenure: Maximum 6 months (Maximum12 months for financing in banana & mango cultivation).

Any real farmers age is between 19 65 years of age can borrow themoney. Reside within locality/command area for minimum 2 years

Security

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Hypothecation of crops/vegetablesCollateral:

registered mortgage (where applicable)Irrevocable Power of Attorney

Group/Cross Guarantee from the Group members on nonjudicial stamp paper is to be obtained (in case of loan is madeby making a group)

other security is required as per banking rule

Khamar ( Farm/Non-Crop Loan)

This loan is provided for capital expenses or working capital and

project finance in the area ofFisheries Poultry Hatchery.

Chapter 4

4.1 Findings of the study :

At the end of the study we find that commercial Bank is the mainsource of SMEs. Prime bank Ltd. provides different SME products for bothmen and women entrepreneurs. They receives low rate of interest againstSME loan. There are some requirements needed for collect loan.

Chapter 5

5.1 Conclusions

It is already known that Small and medium-sized enterprises (SMEs)are the backbone of all economies and are a key source of economicgrowth.SMEs constitute the dominant form of business organization.

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The findings of the study also lead us to an end that as a commercialbank, Prime Bank Ltd Provides high quality SME products and by usingthis product many entrepreneurs of small and medium enterprises can leadtheir business easily. That is why self created employment and reduced

poverty.

5.2 Recommendations

Like bank sector, other financial sectors( leasing companies, privateinvestors, venture capital companies ) should come ahead strongly forSMEs.

The recommendation to the managing director of Prime Bank Ltd isto maintain their SME products and to reduce the requirements for

collecting loan.

5.3 Bibliography

1. www.google.com/2. www.smef.org.bd/3. www.primebank.com.bd/4. www.sme.net/
http://www.google.com/http://www.smef.org.bd/http://www.primebank.com.bd/http://www.sme.net/http://www.google.com/http://www.smef.org.bd/http://www.primebank.com.bd/http://www.sme.net/

the sme products and functions of

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