Factors hindering loan acceptance, a case on BRAC Bank Limited

Abstract

Advanced expansion of the Small and Medium Enterprises (SMEs) can help to cut poverty to a satisfactory level by eliminating various prejudices against labor intensive industry and creating jobs for the skilled manpower in the SME sector. However, the access to financing is still recognized as the leading obstacle to SME growth in Bangladesh, alike most other developing and under-developed countries. Small and medium entrepreneurship have a tremendous potential in empowering potential entrepreneurs and transforming society. To target this sector with huge potentiality BRAC Bank Ltd introduced SME Banking Division in 2001. Tish report consists of three parts those are the organization overview, my job description and project part. Being the fastest growing bank of the country currently BRAC Bank is operating all over the country having 157 Branches and Krishi Branches, 22 SME Sales and Service Centres, 300+ ATMs, 405 SME Unit offices. This fastest growing bank works on 3P- People, Planet and Profit; ensures sustainable growth and largely focuses on SME financing sector. BRAC Bank SME division was set up to capture “Missing Middle” and to create socio-economic impact in the country. Within 11 years of establishing it has proved its success through becoming country’s largest SME finance provider and 4th large SME provider in the world in terms of lending volume. In my job experience I appoint as intern in SME division under new business. Here I have several job responsibility such as data entry, CIB search and convince customer over phone. Under CIB search I search customer CIB state report from Bangladesh Bank website. Being country’s largest SME provider, BRAC Bank is facing several hinder factors which are identified in analytical part of the report. High interest Rate, high processing fee, business experience, monthly fixed income and quick repayment schedule etc. are the major hinder facing by BRAC Bank. At the same time BRAC Bank has increase SME client at a decreasing rate. In order to reduce credit risk BRAC Bank follows consistent monitoring system upon borrower’s activities. Again if someone turns in to defaulter special wing called SAM works to enforce law. The recommendation part of the report tried to find out some steps could be initiated by BRAC Bank in order to overcome existing hinder factors in the time of taking loan. Competitive interest rate, reasonable processing fees, quick processing time, and practicable experiencecould improve BRAC bank’s performance.