CHAPTER-01

INTRODUCTION

1.1 Background of the Report:

Modhumoti Bank Limited is a 4th Generation private commercial bank and commenced its banking
operations on September 19, 2013, serving clients with highest level of integrity, transparency and quality,
hence we call it "Your Access to Success"! The vision of the bank is to lead the new generation of local
commercial banks by excelling in customer delivery through insight, empower employees, smart use of
technology and a full range of highest quality products and services. While forming this bank, it is
focused not only strive towards creating a stable financial institution with quality products, but also the
Bank itself will become an integral part of the community, helping others make positive changes and
improve the life of people around us. We want to provide the highest level of services that you deserve.
Thus, we welcome any propositions, ideas or advice from you regarding the improvement of our service
quality, which we would implement into practice with the best of our abilities.

As a mandatory requirement of the Bachelor of Business Administration (BBA) program under

the department of Business Administration, UNITED INTERNATIONAL UNIVERSITY, this
report entitled Financing Small and medium Business Enterprise by Modhumoti Bank
Limited and SME problems and prospectus is a connived depiction of the three months long
internship program at Compliance & Control Dept. in The Modhumoti Bank Ltd. The
organization attachment started on September, 2014 and finished on December, 2014. I have got
an opportunity to relate the theoretical knowledge with practical view, obtained from various
courses during my BBA program. It has given me an opportunity to develop the analytical skill
and scholastic aptitude.

1.2 Objectives of the study:

Broad objective: The broad objective of the study is- Financing Small and medium
Business Enterprises by Modhumoti Bank Ltd. [SME Problems and Prospectus.]

Specific objective: The objectives of the research are to identify the factors that influence the
development and growth of the SME sector. Thus the specific objectives of the study are as
follows:

1
2
3
4
5

To find out the Small and medium enterprise programs of MMBL.

To find out SME the loan procedure of the MMBL.
To appraise the present situation of SMEs in Bangladesh.
To evaluate the financing performance of SMEs in Bangladesh.
To identify the financing problems of SMEs in Bangladesh. Regarding the identification
of financing problem, they are:
To find out whether lack of investment and operating funds hinder the growth of

the SME sector

To find out whether lack of modern technology hinders the growth of the SME
sector.
To find out whether poor physical infrastructure and high transportation cost
undermine the competitiveness of SMEs.
To find out whether shortage of skilled workforce hinders the development of
SMEs.
6
7

To identify the prospects of SMEs in Bangladesh.

To recommend solutions to the problems.

1.3 Rational of the study:

This report contains three parts. In first part there is overview of Modhumoti Bank Limited.
In the second part there is broad description of SME programs of Modhumoti Bank Limited.
Last but not the least there is analysis of current situation of the Bangladesh SME programs,
problems and prospectus regarding SME in Bangladesh. There is findings and
recommendation at the end of the report.

1.4 Scope and Limitation of the study:

Scope of the study: 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. This report will cover Analysis of SME
Banking Services of Modhumoti Bank Limited. It will give a wide view of the different stages of
operational procedure of MMBL SME functions.
Limitation of the study: Being an intern of Modhumoti Bank Limited, it was difficult to gather
information. As per Banks compliance, as an intern I was unable to obtain indispensable
experiences of different departments. Details of many aspects of the services of Modhumoti
Bank Limited have been skipped in this report due to various constraints, including time and
space, security reason.
One of the main barriers in writing this report was the confidentiality of data. Though I had
access to lot of information regarding the performance of the bank, I am unable and not
authorized to use this information due to legal restrictions.
And as it is a new bank I have faced problem with data collection for my analysis.

CHAPTER-02

LITERATURE REVIEW

2.1 OVERVIEW OF MODHUMOTI BANK LIMITED:

Modhumoti Bank Ltd is the newly enlisted Bank in Bangladesh. The bank's vision is to lead the
new generation of local banks by excelling in customer delivery through insight, empowered
employees, smart use of technology etc. Modhumoti Bank Limited is a fourth generation private
commercial bank and commenced its banking operations on September 19, 2013.We serve our
clients with highest level of integrity, transparency and quality; hence we call it Your Access to
Success! Our vision is to lead the new generation of local commercial banks by excelling in
customer delivery through insight, empower employees, smart use of technology and a full range
of highest quality products and services. In order to achieve this, we put high emphasize on
effectively meeting compliance of all regulatory requirements to ensure adequate transparency
on banking activities and also to set the highest ethical standards of professionalism for
protecting the best interest of all our stakeholders.
Modhumoti Bank Ltd focused on developing something unique a Responsible Bank. It means
we will not only strive towards creating a stable financial institution with quality products, but
also the Bank itself will become an integral part of the community, helping others make positive
changes and improve the life of people around us. We want to provide the highest level of
services that you deserve with a smile and a friendly attitude. Thus, we welcome any
propositions, ideas or advice from you regarding the improvement of our service quality, which
we would implement into practice with the best of our abilities.

Table-1

Registered name

Modhumoti Bank Limited

Commencement of business

19th September, 2013

Head office

Modhumoti Bank Ltd., Head Office,DCCI

Building (3rd Floor), 65-66, Motijheel C/A,
Dhaka-1000.

Chairman

Barrister Sheikh Fazle Noor Taposh MP

Managing director

Mr. Md. Mizanur Rahman

No of branches

No of ATM booths

No of SME centers

No of employees

172

Brief Profile of MMBL, Gulshan Branch:

Modhumoti Bank Ltd. Gulshan Branch is very important Branch of Dhaka city. It is a profit
earning branch as it is situated in a profitable area where many Business is running, also very
good marketing organizations surrounded by. Every day they have to operate lots of transactions
with big amount of money in this branch. MMBL Gulshan branch is having 15 employees out of
which the Head of branch, 1 SEVP, 3 AVP, 1 senior executive officer, 1 executive officer, 2
senior officer, 1 officers, 4 (TAO), 2 cash service officers and rests others are supporting officers.

Management hierarchy of Modhumoti Bank Ltd:

Table-2

Managing Director
Deputy Managing Director
Senior Executive Vice President
Executive Vice President
Senior Vice President
First Vice President
Vice President
First Assistant Vice President
Assistant Vice president

Principle Officer
Senior Executive Officer
Executive Officer
Officer

Assistant Officer

Trainee Assistant Officer

Mission & Vision of Modhumoti Bank Limited:

Mission:
Fast customer service.
Maintain sustainable growth
Follow strong business ethics
Offer quality financial services with latest technology
Provide smooth return on shareholders equity
Attract and retain qualified human resource.
Maintain Corporate Social Responsibility

 Explore un-banked areas

Vision: Our vision is to lead the new generation of local commercial banks by excelling in
customer delivery through insight, empowered employees, smart use of technology and a full
range of highest quality products and services.

MMBL Green Banking:

Having a vision of preservation of natural resources
Not being involved in any activities hazardous to environment
Creating awareness to do an environmental friendly business
More automation in banking operations like sharing of files, recruitment, transfer,
promotion or circulation of instructions to reduce use of paper
Adopt and implement eco-friendly lending standards.
Use of audio-video conference for regular meeting
More use of renewable energy in Branch & Head Office
Focusing on energy efficiency.

Products & Services:

MMBL provides a broad range of financial services to its customers and corporate clients.
However, description of some products is given below: MMBL has several types of deposits for
its customers.

MMBL Savings (SB) Account: The Interest Rate for Savings Deposit is 6%. There are four
types of savings, Individual Account, Joint Account, Proprietor Ship Account & Limited
Company Account. The code for SB account is 121. Customers can deposit or withdraw money
from their SB account two times in a week. SB account is essential if anyone wants to apply for a
debit card in MMBL.

MMBL Current Deposit (CD) Account: A minimum initial deposit of Tk.1000/= shall be
required for opening a Current Deposit Account at MMBL .It is popularly identified as Current
Account. Any individual, companies, firm, are eligible to open this type of account in its own
name. Withdrawal of money by the customer from the account shall be allowed only through the
leaves of the cheque book issued by the bank. This is non-interest bearing account. Account
holder can deposit or withdraw money from his/her account any time he/she wants. The code for
CD account is 111.

MMBL Short Term Deposit (STD) Account: This is opened and operated for short term and
for specific purpose like salary payment etc. It is also an interest bearing account and where rate
of interest is generally below the savings rate. The code for STD account is 135.

MMBL Fixed Deposit Receipt (FDR): Fixed Deposit Receipt (FDR) is one, which is repayable
after the expiry of a predetermined period fixed by him. The period varies from 1 month to 12
months. These deposits are not repayable on demand but they are withdrawing able subject to a
period of notice. Hence, it is a popularly known as Time Deposit or Time Liabilities.
Normally the money on a fixed deposit is not repayable before the expiry of a fixed period.
Individuals, Firms, Companies, Associations may open this account. The deposit is taken for a
specific fixed period of time, such as 1 months, 3 months, 6months, 1-year etc.

There are also few schemes MMBL is offering its customers. Such as-

MMBL Double Benefit Scheme (DBS): In this scheme, the time period is 5.6 years. If any
customer deposits an amount of 10,000 or above for (Five years; six months), the customer will
receive double amount of his/her deposited amount. The customer can apply also for loan against
this amount.

Minimum amount have to be 10,000.

Loan facilities maybe allowed up to 80% of deposit against lien/pledge under
MMBL rules.
Condition any customer wants to get back his/her before 5.6 years he/she will get
interest of savings account.

MMBL Extra Services:

Card services (DEBIT CARD)

Locker services
Loan
Foreign exchange (WESTERN UNION)
SME

Student file: The targeted customers for MMBL are students who want to go abroad for
studying and that who are already studying abroad and want to remit foreign currency for
succeeding semesters. The agencies can also refer students to avail our MMBL ERS service.

Review of other relevant study: Small and Medium enterprises of Bangladesh are a
heterogeneous group of industrial sub sectors comprising mainly of handlooms and handicrafts,
small machine shops, printing press, bicycle and rickshaw assembly, agro processing firms,
wood and steel furniture, small metal work and light engineering, electronics, cartwheels,
footwear, plastic products, textile dyeing and block printing (manual), computer software and
information technology, specialized silk weaving, print shops, small grocery stores, waste paper
collection etc.

Existing definition of SME is recommended by Better Business Forum and accepted as a

uniform one by Ministry of Industry and Bangladesh Bank. Criteria of the definition of SME are
given below:

Definition of Small Enterprise: Small Enterprise refers to the firm/business which is not a
public limited company and complies
the following criteria:
Serial

Sector

No.

Fixed Asset other than

Employed Manpower

Land and Building (Tk.)

(not above)

1.

Service

50,000-50,00,000

25

2.

Business

50,000-50,00,000

25

3.

Industrial

50,000-1,50,00,000

50

Definition of Medium Enterprise: Medium Enterprise refers to the establishment/firm which is

not a public limited company and
Complies the following criteria:

Serial
No.
1.
2.
3.

Sector

Fixed Asset other than

Employed Manpower

Service
Business
Industrial

Land and Building (Tk.)

50,00,000-10,00,00,000
50,00,000-10,00,00,000
1,50,00,000-20,00,00,000

(not above)
50
50
150

Again, The Government of Bangladesh has categorized SMEs into two broad classes:

Manufacturing enterprises
Non-Manufacturing activities.

a) Manufacturing enterprises: Manufacturing enterprises can be divided into two categories:

Small enterprises: an enterprise is treated as small if, in current market prices, the replacement
cost of plant, machinery and other parts/components, fixtures, support utility, and associated
technical services by way of capitalized costs (of turn-key consultancy services, for example),
etc excluding land and building, are to up to Tk. 15 million.
Medium enterprises: an enterprise is treated as medium if, in current market prices, the
replacement cost of plant, machinery and other parts/components, fixtures, support utility, and
associated technical services by way of capitalized costs (of turnkey consultancy services, for
example), etc, excluding land and building, are to up to Tk. 100 million
(b) Non-manufacturing activities (such as trading or other services):
Non-manufacturing activities can be divided into two categories;
Small enterprises: An enterprise should be treated as small if it has less than 25 workers, in fulltime equivalents.
Medium enterprises: An enterprise should be treated as small if it has between 25 and 100
employees.
According to Bangladesh Bureau of Statistics different enterprises are defined as;
are defined as:

Enterprises
Micro
Small
Medium
Large

No of employees
0-9
10-49
50-99
Above 99

The Ministry of Industries, Government of Bangladesh has identified the following 11booster
sectors;
I. Electronics and electrical
II. Software-development
III. Light engineering and metal-working
IV. Agro-processing/agro-business/plantation agriculture/ specialist farming/tissue culture
V. Leather-making and leather goods
VI. Knitwear and ready-made garments
VII. Plastics and other synthetics
VIII. Healthcare & diagnostics
IX. Educational services
X. Pharmaceuticals/cosmetics/toiletries
XI. Fashion-rich personal effects, wear and consumption goods.

A over view of SME of MMBL:

Small and medium enterprise (SME) customers strive to grow by dint of their dedicated and hard
work. However, to sustain the business operation and secure a continual growth, they require
financial support, for this reason Modhumoti Bank has introduced some SME programs. Such
as

Modhumoti GOTI
Modhumoti AGROGOTI

A Modhumoti PROGOTI:
Mudhomoti PROGOTI is a loan facility for small and medium entrepreneurs to
meet capital expenditure of business needs up to BDT 5 core against registered mortgages for
FDR.
The key features of it are:

Investment amount up to BDT 50lac for small enterprise and BDT 5 core for medium

enterprise.
Attractive Interest rate.
Suitable EMI method- Maximum 5 years
Loan takeover facility from other banks
Easy and quick loan processing

The eligibility for the loan is:

Any kind of business having valid trade license, which has been operating at
least 2 or more years.
Sole proprietorship and partnership Entrepreneurs
Age: Minimum 21years to Maximum 65 years.

The security for this loan is:

Registry mortgage of land property, hypothecation on present and future assets, two
personal guarantors and postdated cheque.

B Modhumoti Goti:
Small Enterprises customers are spread all over Bangladesh doing their business in
a dignified manner. MudhomotiGoti is a business loan to meet any kind of urgent
business needs for small enterprises, which provides up to BDT 10 Lac.
The key features of it are:

The full amount will be allowed without any collateral security.

Attractive Interest rate.
Suitable EMI method- Maximum 3 years
Loan takeover facility from other banks

Easy and quick loan processing