an evaluation of sme loan distribution of idlc finance ltd. in bangladesh part 2

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CHAPTER ONE

1.0 Introduction

1.1 Background of The Study

Small & Medium Enterprise (SME) plays a pivotal role in the economic growth and development of a

country. Actually, SME works as the platform for job creation, income generation, and development

of forward and backward industrial linkages and fulfillment of local social needs. SMEs occupy a

unique position in the economy of Bangladesh. Mainly private sector development depends on them.

The books say a lot about the financial institutions but the real life scenario is quite different from

what is written in the book. The basic purpose of the study was to relate the real life scenario and

awareness about the various financial institutions concepts. Throughout the study and making of this

internship report we have come across various situations and conditions of business which was very

much different from what we learn in the classroom.

1.2 Statement Of The Problem

To make the consequence more specific we have focused different sectors.

Those are:

What is the most important segment for SME business in Bangladesh?

In which sector does a financial institution provide more loans?

To evaluate the overall SME portfolio of IDLC

Functions and use of SME loans in IDLC

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1.3 Objective Of The Study

The objective of the study primarily is to explore the knowledge of how the financial institutes disburse

their SME loans and if there is any tendency of lending money more to any specific sector or segment.

Also, the information will lead to draw the conclusion for IDLC Financing Ltd in the context of

Bangladesh.

Some of the other objectives were:

To evaluating real life business & traditional management methods.

To analyzing their efficiency.

To suggestion regarding the problems.

1.4 Significance Of The Study

This internship report about SME business loans of IDLC Financing Limited helped me to know more

about the behavior of both employee and employer in an organization. This internship report gave us a

chance to see in which sector the financial institutions are more interested to provide SME business

loans in Bangladesh and to study on them. In Business disciplines internship report writing is very

important; it simulates the process of report writing in internship. I have to research the problems of the

internship report and present the results in a proper way

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1.5 Design Of The Study

The research is basically an exploratory one as it mainly explores the SME financing in’s and out’s of

Bangladesh from a financier’s perspective. The research has been conducted from the 3 perspective

of IDLC Finance Ltd., the largest non-banking financial institute in Bangladesh. Besides, a

comparative study in brief format has been given regarding their practices in the same market

segment

1.5.1 Data Collection

Generally we use two sourcesfor data collection a. Primary source, and b. secondary source. I use

both source to collectdata. The primary data for the study was collected from taking face to face viva

& the IDLC’s database.

And the secondary source, other background information of IDLC Financing Limited was collected

from website, PDF files and brochures of IDLC Financing Limited and from other sources. Also,

some particular information was gathered from some journals fromBangladesh Bank and of course

the internet.

1.5.2 Data Analysis

The data analysis of this study was mostly represented on qualitative manner. It has been mentioned

earlier that the data collected was through internal source of IDLC Financing Ltd so most of the

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analysis will be qualitative. However, there will be a few quantitative solutions. For efficient analysis

and proper presentation of data, application software like Microsoft Office 2007 (Microsoft Word,

Microsoft Excel) was used.

1.6 Organization Of The Study

The internship report is organized in the following method:

Chapter 1 of this study introduced the background, problem, objective, significance, design and

organization of the Study.

Chapter 2 of this study presents the overview of the organization, which includes brief history, nature

of the organization, product lines and business volume.

Chapter 3 presents a review of literature and relevant research associated with the problem addressed

in this study.

Chapter 4 contains an analysis of the data and presentation of the results.

Chapter 5My learning’s from this internship, experience and Worksheet

Chapter 6 offers a summary and discussion of the researcher's findings, conclusion and

recommendations for future research.

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CHAPTER TWO

2.0 Overview Of The Organization

2.1 Brief History

IDLC was initially established in Bangladesh in 1985 through the collaboration of International

Finance Corporation (IFC) of the World Bank, German Investment and Development Company

(DEG), Kookmin Bank and Korean Development Leasing Corporation of South Korea, the Aga Khan

Fund for Economic Development, the City Bank Limited, IPDC of Bangladesh Limited, and

SadharanBima Corporation. As the company evolved, initial foreign shareholding of 49% was

gradually withdrawn and the last foreign shareholding was bought out by local sponsors in 2009. Over

the years, IDLC has attained a significant presence in the corporate sector of Bangladesh. IDLC is

highly respected by our clients, peers, employees and regulators for our strong corporate governance,

statutory compliance, high ethical standards, a progressive and enabling working environment, and

strong commitment to environmental and social development. IDLC continues to play a pioneering

role in introducing and popularizing a variety of financial instruments suiting ever-changing

requirements of its fast-growing clients. The organization is continuously expanding the presence to

ensure the best quality of service to our clients at all times

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2.2 Vision, Mission and Strategic Objectives

Vision

We will be the best financial brand in the country.

Mission

We will focus on quality growth, superior customer experience and sustainable business practices.

Strategic Objectives

Grow and develop our talent pool

Fully leverage new core banking platform

Optimize distribution points

Grow and diversify funding sources

Grow sales and service capabilities in Consumer Division

Aggressively grow SME portfolio

Focus on top-tier clients in Corporate

Consolidate capital market operations and enhance capabilities

Embrace internationally accepted corporate governance and sustainable business practices

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2.3 Key Milestones

May 23, 1985 Industrial Development Leasing Company of Bangladesh Limited is incorporated

February 22,

1986

Commencement of leasing business

May 18, 1986 The first Lease Agreement is signed

October 01,

1990

A branch is established in Chittagong, the main port city of Bangladesh

March 20,

1993

Listed on the Dhaka Stock Exchange

February 07,

1995

Licensed as a Financial Institution under the Financial Institutions Act, 1993

November

25, 1996

Listed on the Chittagong Stock Exchange

May 27, 1997 Commencement of Home Finance and Short Term Finance operations

January 22,

1998

Licensed as a Merchant Banker by the Securities and Exchange Commission

January 15,

1999

Commencement of Corporate Finance and Merchant Banking operations

January 29, First retail-focused branch is opened at Dhanmondi

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2004

June 29, 2004 Gulshan Branch is opened

November

22, 2004

Investment Management Services "Cap Invest" is launched

February 7,

2005

Securitized Zero Coupon Bonds are issued by IDLC Securitisation Trust 2005

February 27,

2005

An MoU for strategic alliance is signed between IDLC and SBI Capital Markets

Limited, India

September

18, 2005

Local Enterprise Investment Centre (LEIC) is launched with the objective of SME

development, with contribution from the Canadian International Development

Agency (CIDA) of the Government of Canada

January 02,

2006

SME-focused branch is opened at Bogra

April 06,

2006

Uttara branch is opened

May 18, 2006 Merchant Banking branch is opened in the port city of Chittagong

July 01, 2006 Company's Registered and Corporate Head Office is relocated at its own premises

at 57, Gulshan Avenue, Dhaka-1212

September

18, 2006

IDLC Securities Limited, a wholly-owned subsidiary of IDLC, commences

operations

March 14,

2007

Discretionary Portfolio Management Services "Managed Cap Invest" is launched

August 05, Company name is changed to IDLC Finance Limited from the previous Industrial

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2007 Development Leasing Company of Bangladesh Limited

December

03, 2007

Chittagong Branch of IDLC Securities Limited commences operations

December

18, 2007

IDLC Securities Limited DOHS Dhaka Branch is opened

August 18,

2008

Dilkusha Branch is relocated at Eunoos Trade Centre, Level 13, 52-53 Dilkusha

Commercial Area, Dhaka-1000

November

23, 2008

Dhanmondi Branch is relocated at House No. 39 A, Road No. 14 A, Dhanmondi,

Dhaka 1209

January 6,

2009

IDLC Finance Limited and IDLC Securities Limited open branches in Sylhet

August 26,

2009

Gazipur SME Booth is opened

September

09, 2009

Imamgonj SME Booth is opened

February 03,

2010

Narayangonj Branch is opened

February 24,

2010

Savar Branch is opened

July 08, 2010 Merchant banking Division is relocated at Eunoos Trade Centre, Level 21, 52-53

Dilkusha Commercial Area, Dhaka-1000

August 08,

2010

Nandankanon Branch is opened

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October 27,

2010

Comilla Branch is opened

December

2010

Narshingdi Branch is opened

December

2010

Keraniganj Branch is opened

June 15, 2011 Opening of branch at Mirpur

August 09,

2011

Opening of branch at Tongi

August 16,

2011

IDLC Investments Limited, a wholly-owned subsidiary of IDLC, commences

operations

January 18,

2012

Opening of branch at Jessore

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2.4 SHAREHOLDING COMPOSITION OF IDLC FINANCE LIMITED

Sl.No. Name Of Shareholders No.Of Shares AS A % OF

TOTAL

01. Sponsors/Directors

The City Bank Limited 60,854,056 24.21

Transcom Group 33,515,443 13.33

- Eskayef Bangladesh Limited 20,109,375 8.00

- Transcraft Limited 10,088,022 4.01

- Bangladesh Lamps Limited 3,318,046 1.32

SadharanBima Corporation 19,151,663 7.62

Mercantile Bank Limited 18,852,538 7.50

Reliance Insurance Co. Limited 17,595,702 7.00

Sub-Total 149,969,402 59.66

02. General

Institutions

Bangladesh Fund 8,040,750 3.20

ICB 5,773,612 2.30

LR Global 2,873,900 1.14

Other Institutions 33,671,332 13.40

Sub-Total 50,359,594 20.03

Individuals

General Public (Individuals) 51,038,191 20.30

Sub-Total 51,038,191 20.30

Total Holdings 251,367,187 100.00

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2.5 Nature Of The Organization

Although IDLC initially started with Lease Financing as their core product, IDLC has grown to

become the largest multi-product Non-Bank Financial Institution of Bangladesh, with almost equal

focus in Corporate, Retail and SME sectors. Moreover, IDLC has a significant presence in the Capital

Markets. Our merchant banking arm, IDLC Investments Limited, a wholly-owned subsidiary of IDLC

is a premier brand for investment banking in the country. IDLC stock brokerage arm, IDLC Securities

Limited, another wholly-owned subsidiary of IDLC is also amongst the top five brokers in the country.

2.6 Product Lines

IDLC is the largest financial institution (non-banking) and one of the leading investment and merchant

banks of Bangladesh. IDLC offers a wide array of financial solutions to both corporate and retail

customers. IDLC has the largest multi-product Non-Bank Financial Institution of Bangladesh; with

almost equal focus in Corporate, Consumer, SME sectors and Capital Market.

Small and Medium Enterprise (SME) ► Small Enterprise Finance

Small Enterprise Loan/ Lease

Seasonal Loan

Women Entrepreneur Loan

SME Shachal Loan

SME Surakkha

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SME Deposit ► Medium Enterprise Finance

Medium Enterprise Lease/ Loan

Commercial Vehicle Finance

Machinery Lease

Healthcare Finance

Revolving Short Term Loan

SME Deposit ► Supplier & Distributor Finance

Factoring of Accounts Receivable

Bill/Invoice Discounting

Work Order Financing

Distributor Financing

Consumer finance

HomeLoan

Flexible Term Deposit Package

Car Loan

Regular Earner Package

Personal Loan

Loan Against Deposit

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Corporate Division ► Corporate finance

Lease Financing

Term Loan Financing

Working Capital Arrangement

Project Financing Appraisal

Specialized Products ► Structured finance solutions

Loan/ Lease Syndication Private Placement of Equity

Preference Shares

Project/ Infrastructure Finance

Bond

Foreign Currency Loan

Refinancing of Special Funds

Mergers & Acquisitions

Joint Venture Matchmaking

Balance Sheet Restructuring

Feasibility Study

Securitization of Assets

Structured Solutions

Capital markets ► IDLC Securities Limited

Brokerage Service

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CDBL Service ► IDLC Investments Limited

Margin Loan Operations (Cap Invest)

Discretionary Portfolio Management

Corporate Advisory

Issue Management

Underwriting

Research

2.7 Business Volume

IDLC has emerged as a pioneering multi-product NBFI in Bangladesh with 31 branches& Booths and

over 742 team members. Particularly, as IDLC transformed the Company from the year ago period,

the organization recorded a respectable 32% growth in term deposits and 26% growth in advances,

kept our NPL (non-performing loans) tightly under control to 1.63% of the overall advances and, most

importantly, built on our market-leading capabilities to serve our clients’ and customers’ core financial

services needs, hence reporting a healthy 29.26% growth in our operating income to BDT 3326.

Moreover, IDLC tightened our cost structures in our bid to create a culture of ‘more and more from

less and less’ with the result that our operating profit increased to BDT 1154 million, a significant

achievement in a challenging economic scenario.

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Chapter Three

3.0 Review Of Literature

The role of Small and Medium Enterprises (SMEs) is indispensable for overall economic development

of a country particularly for developing countries like Bangladesh. According to Fourastié, countries

with a low per capita income are in an early stage of development; the main part of their national

income is achieved through engenderment in the trading sector. Countries in a more advanced state of

development, with a medium national income, engender their income mostly in the manufacturing

sector. In highly developed countries with a high income, the service sector dominates the total output

of the economy. However, as a developing country Bangladesh mostly generate their income in trading

sector not in manufacturing sector as Fourastié stated that a developing country should invest more in

that sector. Bangladesh invest the second highest amount on manufacturing sector and the country

invest the least on service industry as the industry is not that much established. The central bank

reported that the Small & Medium Enterprise (SME) loan amounting of BDT 853.23 billion was given

out to 744,228 SME entrepreneurs in the year 2013. Approximately, out of the total loans disbursed

BDT 567,040 million or 66.45% was lent to the trading sector last year, manufacturing sector received

only BDT 240,160 million or 28.16% as production was hampered due to political unrest, while the

services sector received less than 5.39% or BDT 46,030 million in 2013. As Mahmood and Rahman

stated that, SME are the backbone of the economy in countries like Bangladesh. SMEs suffer from

mundane constraints such as lack of capital, difficulties in procuring raw materials, lack of access to

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relevant business information, low technological capabilities, quandaries caused by cumbersome and

costly bureaucratic procedures, and policies and regulations that engender market distortions. However,

with felicitous domestic policy support from the regime, and an ocular perceiver towards global market

trends, SMEs can build capacity and reap the rewards of globalization.

The result in the study support the hypothesis as SME plays a pivotal role in the economic

magnification and development of a country. Genuinely, SME works as the platform for job

engenderment, income generation, and development of forward and rearward industrial linkages and

fulfillment of local gregarious needs. SMEs occupy a unique position in the economy of Bangladesh.

Mainly private sector development depends on them. The World Bank states in its Bangladesh Country

Strategy document that the Government’s first priority must be to raise investment by giving the private

sector the reform confidence necessary to invest in export oriented manufacturing activities. The

Government’s second priority should be to make the deregulation of the private sector much more

effective, while third priority should be to enter into long term arrangements with domestic and

overseas investors. The World Bank emphasizes completion of the long delayed privatization program.

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CHAPTER FOUR

4.1 Analysis And Findings

4.2 In The Year 2014

In 2014, IDLC disbursed more than BDT 11581.52 million in SME loans distribution. Almost, out of

the total SME loans disbursed more than BDT5152.86million or 44.49% was lent to the trading sector,

followed by the service sector which received 25.31% or 2910.06 million and BDT 3518.59 million or

30.38% of the total amount was lent to the manufacturing sector.

Segment Wise Disbursement 2014

Business Type Disburse Amount Percentage

Manufacturing 3518594428 30.38%

Service 2910067658 25.13%

Trading 5152863372 44.49%

Grand Total 11581525458 100%

Table 1: Segment-Wise Disbursement 2014

Figure 1: Segment-Wise Exposure

SectorWise Disbursement

Sector

Agro Based Industries

Apparels & Accessories

Building & Construction Materials

5152863372

Segment

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Exposure 2014

Disbursement 2014

Disburse Amount

1062112000

1042968000

Building & Construction Materials 485150000

Manufacturing30%

Service2910067658

25%

Trading5152863372

45%

Segment-wise Exposure 2014

Percentage

9.17%

9.01%

4.19%

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Chemicals 49100000 0.42%

Construction 95864000 0.83%

Education 15200000 0.13%

Engineering 255300000 2.20%

Food & Beverage 1606790000 13.87%

Furniture & Related products 319850000 2.76%

Healthcare Service 177350000 1.53%

Home Appliances and House Hold Items 988554000 8.54%

Hospitality & Leisure Services 146400000 1.26%

Housing & Real Estate 1653250000 14.27%

Information Technology 101796000 0.88%

Iron & Steel 293194372 2.53%

Leather & Leather Products 50500000 0.44%

Packaging 230271428 1.99%

Paper & Paper products 92800000 0.80%

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Pharmaceutical & Healthcare products 295166000 2.55%

Power & Energy 127892000 1.10%

Professional Services 18300000 0.16%

Service Others 676896500 5.84%

Telecommunication 17300000 0.15%

Textile (Export) 118100000 1.02%

Textile (Local) 734349200 6.34%

Transport 927071958 8.00%

Grand Total 11581525458 100.00%

Table 2: SectorWise Disbursement 2014

In 2014, IDLC disbursed more than BDT 11581.52 million in SME loans distribution. Approximately,

the highest amount was lent to the Housing & Real Estate sector which was 14.27%or BDT 1653.25

million; subsequently Food & Beverage sector received the second highest amount of BDT 1606.75

million or 13.87% and the third highest amount went to Agro Based Industries which was BDT

1062.11million or 19.17% of the total amount of SME loans in the year .

Figure 2: Sector Wise Exposure

Housing & Real Estate14%

Information Technology

1%

Iron & Steel3%

Leather & Leather Products

0%

Packaging2%

Paper & Paper products

1%

Pharmaceutical & Healthcare products

3%

Power & Energy

1%

Professional Services0%

Service Others6%

Telecommunication0%

Textile (Export)

Textile (Local)6%

Sectorial Exposure Of SME Financing Of IDLC In

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Figure 2: Sector Wise Exposure Of SME Financing Of IDLC In 2014

Agro Based Industries9%

Apparels & Accessories9%

Food & Beverage

Furniture & Related products

Home Appliances and House Hold Items

9%

Hospitality & Leisure Services

1%



Textile (Export)1%

Textile (Local)6%

Transport8%

Sectorial Exposure Of SME Financing Of IDLC In 2014



4%

Chemicals0%

Construction1%

Education0%

Enginering2%

Food & Beverage14%


3%

Healthcare Service2%



Business Type

Manufacturing

Service

Trading

Grand Total

Table 3: Segment-Wise Disbursement

In 2013, IDLC disbursed more than BDT 674 million in SME loans distribution. Nearly, out of the total

SME loans disbursed more than BDT 404.9 million or 60% was lent to the trading sector, followed by

the manufacturing sector which received 21% or 139.85 million and BDT 129.55 mi

total amount was lent to the service sector.

Figure 3: Segment-Wise Exposure

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DisburseAmount

3398633580

2135501515

4544748886

10078883981

Disbursement 2013

more than BDT 674 million in SME loans distribution. Nearly, out of the total


the manufacturing sector which received 21% or 139.85 million and BDT 129.55 mi


Exposure 2013

TotalManufacturing

339863358034%

Service2135501515

21%

Trading4544748886

45%


Percentage

33.72%

21.19%

45.09%

100.00%

more than BDT 674 million in SME loans distribution. Nearly, out of the total


the manufacturing sector which received 21% or 139.85 million and BDT 129.55 million or 19% of the

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Sector Wise Disbursement 2013

SectorwiseDisbursement DisburseAmount Percentage

Agro Based Industries 728180000 7.22%

Apparels & Accessories 1009650000 10.02%

Building & Construction Materials 720771965 7.15%

Chemicals 128850000 1.28%

Construction 76885000 0.76%

Education 5200000 0.05%

Engineering 341350000 3.39%

Food & Beverage 1046600000 10.38%

Furniture & Related products 298018415 2.96%

Healthcare Service 157100000 1.56%

Home Appliances and House Hold Items 695821500 6.90%

Hospitality & Leisure Services 88600000 0.88%

Housing & Real Estate 1184998000 11.76%

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Information Technology 160635886 1.59%

Iron & Steel 588500000 5.84%

Leather & Leather Products 68450000 0.68%

Packaging 183099500 1.82%

Paper & Paper products 117000000 1.16%

Pharmaceutical & Healthcare products 164005000 1.63%

Power & Energy 76973000 0.76%

Professional Services 6300000 0.06%

Service Others 493800000 4.90%

Telecommunication 43150000 0.43%

Textile (Export) 52300000 0.52%

Textile (Local) 691127200 6.86%

Transport 951518515 9.44%

Grand Total 10078883981 100.00%

Table 4: SectorWiseDisbursement 2013

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In 2013, IDLC disbursed more than BDT 674 million in SME loans distribution. Roughly, the highest

amount was lent to the Housing & Real Estate sector which was 16.96% or BDT 114.35 million; after

that Food & Beverage sector received the second highest amount of BDT 66.55 million or 9.87% and

the third highest amount went to Textile (export and local) sector which was BDT 65.2 million or

9.67% of the total amount of SME loans in the year.

Figure 4: SectorwiseExposure of SME Financing of IDLC


2%


1%

Packaging2%

Paper & Paper products1%


2%

Power & Energy1%

Professional Services0%

Service Others5%

Telecommunication0%

Textile (Export)


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Figure 4: SectorwiseExposure of SME Financing of IDLC in 2013



10%

Food & Beverage10%


Healthcare ServiceHome Appliances and House Hold Items

7%


1%



2%

Iron & Steel6%

Textile (Export)1%

Textile (Local)7%

Transport9%

Sectorial Exposure Of SME Financing Of IDLC In 2013



7%

Chemicals1%

Construction1%

Education0%

Enginering3%

Food & Beverage


3%

Healthcare Service2%



Segment-Wise Disbursement 2012

Business Type

Manufacturing

Service

Trading

Grand Total

Table 5: Segment-Wise Disbursement

In 2012, IDLC disbursed more than BDT

3913.13million or 51% out of the total SME loans disbursed was lent to the trading sector, afterward

was the manufacturing sector which received 28

21% of the total amount was lent to the service sector

Figure 5:Segment-WiseExposure

Trading51%

Segment

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2012

Disburse Amount Percentage

2116354851 28%

1572242162 21%

3913128523 51%

7601725536 100%

Disbursement 2012

, IDLC disbursed more than BDT 7601.72 million in SME loans distribution. Just about BDT

% out of the total SME loans disbursed was lent to the trading sector, afterward

sector which received 28% or 2116.35 million and BDT


Exposure 2012

Manufacturing28%

Service21%


Manufacturing

Service

Trading

million in SME loans distribution. Just about BDT

% out of the total SME loans disbursed was lent to the trading sector, afterward

million and BDT 1572.24 million or

Manufacturing

Service

Trading

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Sector Wise Disbursement 2012

Sectors DisburseAmount Percentage

Agro Based Industries 251595723 3%

Apparels & Accessories 701192600 9%

Building & Construction Materials 686636546 9%

Chemicals 94072000 1%

Construction 86585462 1%

Education 30500000 0%

Engineering 387720000 5%

Financial Services 2000000 0%

Food & Beverage 768700000 10%

Furniture & Related products 147500000 2%

Healthcare Service 200050000 3%

Home Appliances and House Hold Items 487420000 6%

Hospitality & Leisure Services 114550000 2%

Housing & Real Estate 695130000 9%

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Information Technology 137244505 2%

Iron & Steel 361300000 5%

Leather & Leather Products 41900000 1%

Packaging 111965000 1%

Paper & Paper products 76700000 1%

Pharmaceutical & Healthcare products 103258200 1%

Power & Energy 143050000 2%

Professional Services 22600000 0%

Service Others 281839700 4%

Telecommunication 20500000 0%

Textile (Export) 34200000 0%

Textile (Local) 743040800 10%

Transport 870475000 11%

Grand Total 7601725536 100%

Table 6: Sector wise Disbursement March 2014

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In 2014, IDLC disbursed more than BDT 7601.72 million in SME loans distribution. Approximately,

the highest amount was lent to the Transport sector which was 11% or BDT 870.47 million; after that

Food & Beverage sector received the second highest amount of BDT 768.7 million or 10% and the

third highest amount went to Textiles sector which was BDT 743.04 million or 10.% of the total

amount of SME loans .

Figure 6: Sector wise Exposure of SME Financing of IDLC in

Information Technology2%

Iron & Steel5%


1%

Packaging1%


1%


1%

Power & Energy2%

Professional Services

0% Service Others4%

Telecommunication0%

Textile (Export)0%

Textile (Local)10%

Sector Wise Exposure of SME Financing of IDLC in 2012

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Exposure of SME Financing of IDLC in 2012


Apparels & Accessories9%


9%

Food & Beverage

Healthcare Service


6%


2%



Iron & Steel

Service Others

Textile (Local)

Transport11%




9%

Chemicals1%

Construction1%

Education0%

Enginering5%

Financial Services

0%Food & Beverage

10%


2%Healthcare Service

3%



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4.5 ComparisonBetweenThe Year 2014 And The Year 2013

Segment- wise 2014 2013 % Change

Manufacturing 3518594428 3398633580 3.53%

Service 2910067658 2135501515 36.27%

Trading 5152863372 4544748886 13.38%

Total 11581525458 10078883981 53.18%

Table 7: Segment wise Disbursement BetweenYear 2014 and Year 2013

In the year 2014, IDLC had some positive changes in providing loans segment-wise compared to the

year of 2013 .IDLC increased the amount of SME loans portfolio. In 2014, IDLC disbursed more than

BDT 11581.52 million in SME loans distribution compared to BDT 10078.88 million in 2013. Within

the trading sector IDLC distributed more than BDT 5152.86 million in 2014 which was 13.38% more

compared to BDT 4544.74 million in the last year. In the manufacturing sector, IDLC increased the

loans disbursement by 3.53%, which was 3518.59 million in 2014. Ultimately, the service sector

elevated the most by 36.27%, as in last year it was BDT 2135.50 million and enlarged to 2910.06

million.

Figure 7: Yearly Segment-Wise

Sectors




Chemicals

Construction

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

% Change

3.53%

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Wise Exposure

2013 2014

728180000 1062112000

1009650000 1042968000

Building & Construction Materials 720771965 485150000

128850000 49100000

76885000 95864000

% Change

36.27%

,13.38%

Manufacturing

Service

Trading

% Change

1062112000 45.86%

1042968000 3.30%

485150000 -32.69%

49100000 -61.89%

95864000 24.68%

Manufacturing

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Education 5200000 15200000 192.31%

Engineering 341350000 255300000 -25.21%

Food & Beverage 1046600000 1606790000 53.52%

Furniture & Related products 298018415 319850000 7.33%

Healthcare Service 157100000 177350000 12.89%

Home Appliances and House Hold Items 695821500 988554000 42.07%

Hospitality & Leisure Services 88600000 146400000 65.24%

Housing & Real Estate 1184998000 1653250000 39.52%

Information Technology 160635886 101796000 -36.63%

Iron & Steel 588500000 293194372 -50.18%

Leather & Leather Products 68450000 50500000 -26.22%

Packaging 183099500 230271428 25.76%

Paper & Paper products 117000000 92800000 -20.68%

Pharmaceutical & Healthcare products 164005000 295166000 79.97%

Power & Energy 76973000 127892000 66.15%

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Professional Services 6300000 18300000 190.48%

Service Others 493800000 676896500 37.08%

Telecommunication 43150000 17300000 -59.91%

Textile (Export) 52300000 118100000 125.81%

Textile (Local) 691127200 734349200 6.25%

Transport 951518515 927071958 -2.57%

Grand Total 10078883981 11581525458 14.91%

Table 8: Sector Wise Disbursement Year-Wise

In year 2014, IDLC disbursed more than BDT 10078.88 million in SME loans distribution compared to

BDT 11581.52 million in Year 2013. IDLC mostly increased the SME loan disbursement by investing

more in Education (192.41%), Pharmaceutical (566.13%), Professional Services(190.48%) and Textile

(Export)(125.81%). Generally, IDLC decreased the SME loan disbursement by investing less in

Chemicals (-61.89%), Telecommunication (- 59.91%), Iron & Steel (-50.18)Information Technology (-

36.63), Building & Construction Materials (-32.69%) and Leather & Leather Products (- 26.22%).

Figure 8: Yearly Change InSector

-32.69%

-61.89%

-25.21%

-36.63%

-50.18%

-26.22%

-20.68%

-59.91%

-2.57%

-100.00% -50.00%




Chemicals

Construction

Education

Enginering

Food & Beverage


Healthcare Service



Housing & Real Estate


Iron & Steel


Packaging



Power & Energy


Service Others

Telecommunication

Textile (Export)

Textile (Local)

Transport

Grand Total

Change In Sector Wise Exposure Between 2014 And 2013

P a g e |37

Sector Wise Exposure Of SME Financing Of IDLC

45.86%

3.30%

24.68%

192.31%

53.52%

7.33%

12.89%

42.07%

65.24%

39.52%

25.76%

79.97%

66.15%

190.48%

37.08%

125.81%

6.25%

2.57%

14.91%

0.00% 50.00% 100.00% 150.00% 200.00%




Chemicals

Construction

Education

Enginering

Food & Beverage


Healthcare Service



Housing & Real Estate


Iron & Steel


Packaging



Power & Energy


Service Others

Telecommunication

Textile (Export)

Textile (Local)

Transport

Grand Total

YearlyChange In Sector Wise Exposure Between 2014 And 2013

IDLC

192.31%

190.48%

200.00% 250.00%

Change In Sector Wise Exposure Between 2014 And 2013

% Change

P a g e |38

CHAPTER FIVE

5.0 LESSONS LEARNED IN THE INTERNSHIP PROGRAM

5.1 LESSON LEARNED

Internship program is the pre-requisite for the graduation in BBA. Classroom discussion alone cannot

make a student perfect in handling the real business situations. Therefore, It is an opportunity for the

students to know about the real life situation through this program. The last few months were quite

intriguing to do my internship at IDLC Finance limited, in corporate branch. I found out about the

nature of actually working in a professional environment.

I have learned how to make different types of appraisal letter.

How to loan origination.

How to LOM status update.

How to sanction status update.

How to Disbursement Summary SEF &MEF update.

How to SME Bangladesh Bank Database Worksheet update.

How to take customer feedback & PG feedback.

How to communicate with supervisor, subordinate and others in corporate life.

How to use different kind of software in banking sectors.

How manager is operates his branch.

How the staff manages their own task.

How department operate by staff and coordinate with other department.

P a g e |39

How to behave with customer and how to behave with boss and colleague.

I have learned about corporate dress code and culture.

Act with integrity, competence, dignity and in an ethical manner when dealing with customers,

colleagues, prospects, agencies and public

Encourage others to behave in a professional and ethical manner that will reflect positively

employees, their profession and IDLC at large; Use reasonable care and exercise independent

professional judgment;

Refrain from restraining others in performing their professional obligations;Maintain

knowledge of and comply with all applicable laws, rules and regulations;

Respect the confidentiality and privacy of people, specially customers, with whom they do

business;

Employees have an obligation to know, understand and respect not only the guidance contained

in the Code of Conduct but also the spirit on which it is based.

At the end I want to mention, now I have a clear concept about SME department of IDLC Finance Ltd.

in Dilkusha branch.

P a g e |40

5.2 My Worksheet

DATE Disbursement Summary SEF

Disbursement Summary

MEF

2015_SANCTION_STATUS (SEF)

Updated

SME_Bank_Database_Worksheet-Bangladesh-v1

6 03122011 LOM OTHE

RS

23 August, 2015

24 August, 2015 25 August, 2015 26 August, 2015 27 August, 2015 28 August, 2015 29 August, 2015 30 August, 2015 7

146 15

5

31 August, 2015 Total 7 0 146 15 0 5

01 September, 2015 02 September, 2015 8

03 September, 2015 13 04 September, 2015


07 September, 2015 16 08 September, 2015 11

1 09 September, 2015 10

4 6

10 September, 2015 15 11 September, 2015


4

14 September, 2015 16

5 15 September,

2015 13

9 16 September, 2015 47

5


13 18 September, 2015


16


17 22 September, 2015 52

3 2

23 September, 2015

P a g e |41



MEF


Updated


6 03122011 LOM OTHE

RS


4


6 30 September, 2015 18 9 503 76 16 Total 464 9 503 76 103 8

01 October, 2015 38

8 02 October, 2015

03 October, 2015 04 October, 2015 5

0 3 1

05 October, 2015 8

0 15 06 October, 2015 14

0 7

07 October, 2015 14

0 14 08 October, 2015 13

0 5

09 October, 2015 10 October, 2015 11 October, 2015 19

0 14

12 October, 2015 7

0 5 13 October, 2015 7 OT

0 1

14 October, 2015 13

0 7 15 October, 2015 14

0


0 3

19 October, 2015 15

0 1 2

20 October, 2015 23

0

4

21 October, 2015 22

0 6 22 October, 2015


0 10

26 October, 2015 14

0 8 3

27 October, 2015 35

0 12 28 October, 2015 50

0 14

29 October, 2015 59

0 29 30 October, 2015

31 October, 2015

521 Total 406 0 521 0 162 10

P a g e |42



MEF


Updated


6 03122011 LOM OTHE

RS

01 November, 2015 11 02 November, 2015 107

23 0 6 03 November, 2015 10

16 0 1 2

04 November, 2015 11

24 0 3 05 November, 2015 13

0

35

06 November, 2015 07 November, 2015 08 November, 2015 11

47 0 7 50


21 10 November, 2015 28

10 10


54

7 7

12 November, 2015 16 November, 2015 17 November, 2015 18 November, 2015 31

21

3 3

19 November, 2015 20 November, 2015 21 November, 2015 22 November, 2015 51

12 20

23 November, 2015

103

8 24 November, 2015

11

Total 312 0 288 0 89 125

Grand Total 1189 9 1458 91 354 1155

Table 9:My Worksheet

P a g e |43

CHAPTER SIX

6.0 Conclusion, Limitation & Recommendations

6.1 Conclusion

The trend of SME loan disbursement in context of IDLC Financing is highest at trading sector,

followed by manufacturing sector and then service sector. The trend of the segmentwise disbursement

is same for IDLC. The tendency of sector wise SME loan disbursement in IDLC is uppermost in

Housing & Real Estate, Food & Beverage, Home Appliances and House Hold Items, and Apparels &

Accessories. IDLC distribute more than half of their SME portfolio in trading industry because

collecting data in the trading sector is easily available and sales verification is simpler than other

sectors. The manufacturing industry receive less than trading as the sector is highly risky and is

basically export oriented, even though, as a developing country manufacturing sector should highly

emphasize in Bangladesh. While, the service industry receive the least amount from the SME portfolio

since the sector is not that much established in our country. From the view point of SMEs’ importance

to the overall economic growth and the opportunities that the financial institutions have in developing

this segment, our central bank, other regulator as well as the policy makers should review the whole

process in holistic approach as it is closely correlated with the economic emancipation of the general

people of the country.

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6.2 Limitation

Strength Limitation adequate efforts have been taken to accomplish the research according to the

objective. But as the study team is consisted of only one member therefore it was not possible to cover

more supplemental areas, which would conspicuously give more preponderant result.

Literature review Limitation Although SME Banking is a relatively established concept to the financial

institutions of Bangladesh, only a handful of scheduled banks and NBFIs seriously taken large

exposure in the segment as of now. As a result, secondary data was fairly unavailable in this connection

due to insufficient research work conducted in this sector.

Information Limitation Moreover, extensive data and practices cannot be shown in this report for the

sake of confidentiality. Moreover, due to confidentiality of the financial institutes, in many instances

updated information or documents could not be quoted in the report.

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6.3 Recommendation

From Financial Institution’s point of view, some major recommendations involved in the SME sector

are described below:

As a developing country, Bangladesh should invest more in export oriented manufacturing activities

rather than the trading industry for better development of the country.

More experienced personnel to eliminate the risk factors substantially and thus make a new ground

for profitable investment.

In terms of huge business opportunity and high recovery rate, the government, central banks should

continue to ease the rules to take loans as SME sector is quite a promising sector for financial

institutions to make the investment profitable.

The amount of SME loans will increase if all the regulatory bodies’ services like registration of the

enterprises, getting trade licenses, certificates of Bangladesh Standards and Testing Institution (BSTI),

patents and trademarks are easily accessible.

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References

Jean Fourastie Analysis; May 4, 2008,‘The Service Sector’ (Cambridge Forecast Group),

Available: cambridgeforecast.wordpress.com/2008/05/04/theservice-sector-jean-fourastie-

analysis/

Fourastié, J.F, March 3, 2014, Jean Committee Fourastié, Available: www.jeanfourastie.org/

SME Activities,2014, Bangladesh Bank Available: www.bb.org.bd/sme/index.php

Small and medium enterprises., April 16, 2014. Wikipedia, the free encyclopedia

Available: en.wikipedia.org/wiki/Small_and_medium_enterprises

Ahmed, M.U., Mannan, M.A., Razzaque, A., and Sinha, A. (2004), Taking Stock and Charting

a Path for SMEs in Bangladesh, Bangladesh Enterprise Institute, Dhaka

Annual Report 2013, IDLC Finance Limited.

Available:http://www.idlc.com/Investor_Relations.php

Annual Report, 2014,IDLC Finance Limited .

Available:http://www.idlc.com/Investor_Relations.php

IDLC Finance Limited, Monthly Business Review. Available:http://www.idlc.com/Monthly-

Business-Review.php

Appendix

LOM request mail

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Completed LOM task

List Of Disbursements clients and below

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and below Collateral Information Checking

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an evaluation of sme loan distribution of idlc finance ltd. in bangladesh part 2

Documents