Role of Prime Bank Ltd on encouraging entrepreneurs

Abstract

This report aims toward providing an overview on the functions of SME Divisions of Prime Bank Ltd. on encouraging entrepreneurs. While preparing this report, it has been attempted to disclose the insights of the overall operation of the bank. In addition, a few recommendations and suggestions were also prescribed based on the observation and findings. Prime Bank Ltd. is a private commercial bank which is operated by the Banking Companies Act 1991. It was established in April 17, 1995 with a view to providing financial assistance including all kinds of banking facilities to accelerate the pace of economic development of Bangladesh. 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 Prime Bank Ltd introduced SME Banking Division in 2009. Prime Bank MSME division was set up to create socio-economic impact in the country. For the inheriting business risk, SME sector is facing several constrains in terms of growth. Policy level complexity, financial constraints, legal bindings and industry structure are hindering financial institutions to support SME sector. Lack of SME supporters, poor infrastructure of the country, lack of entrepreneur’s skills, lender-borrower gap, huge market competitions are the major drawbacks for both borrowers and lenders. Again SME sector has tremendously contributed in the economy. Today it has been considered as the engine of country’s economy. Business risk, high interest rate, high defaulter rate, certain government policy change etc. are the major challenges of encouraging entrepreneurs facing by Prime Bank. The recommendation part of the report strived to find out some steps could be initiated by Prime Bank in order to overcome existing weakness. A more effective loan approval system, strong monitoring activities, and entrepreneurs meeting arrangement could improve Prime bank’s performance.