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, 1985Industrial Development Leasing Company of Bangladesh Limited is incorporated
February 22,
1986
Commencement of leasing business
May 18, 1986The 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, 1997Commencement 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, 2004Gulshan 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, 2006Merchant 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, 2011Opening 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
19. 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
Manufacturing
30%
Service
2910067658
25%
Trading
5152863372
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 .
22. Figure 2: Sector Wise Exposure
Housing & Real Estate
14%
Information
Technology
1%
Iron & Steel
3%
Leather & Leather
Products
0%
Packaging
2%
Paper & Paper
products
1%
Pharmaceutical &
Healthcare
products
3%
Power &
Energy
1%
Professional Services
0%
Service Others
6%
Telecommunication
0%
Textile (Export)
Textile (Local)
6%
Sectorial Exposure Of SME Financing Of IDLC In
P a g e |22
Figure 2: Sector Wise Exposure Of SME Financing Of IDLC In 2014
Agro Based Industries
9%
Apparels & Accessories
9%
Food & Beverage
Furniture &
Related products
Home Appliances and
House Hold Items
9%
Hospitality & Leisure
Services
1%
Housing & Real Estate
14%
Information
Technology
Textile (Export)
1%
Textile (Local)
6%
Transport
8%
Sectorial Exposure Of SME Financing Of IDLC In
2014
Apparels & Accessories
Building &
Construction Materials
4%
Chemicals
0%
Construction
1%
Education
0%
Enginering
2%
Food & Beverage
14%
Furniture &
Related products
3%
Healthcare Service
2%
Sectorial Exposure Of SME Financing Of IDLC In
23. 4.3 In The Year 2013
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
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.
Exposure 2013
Total
Manufacturing
3398633580
34%
Service
2135501515
21%
Trading
4544748886
45%
Segment-wise Exposure 2013
Percentage
33.72%
21.19%
45.09%
100.00%
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 million or 19% of the
24. P a g e |24
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%
25. P a g e |25
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.
27. Figure 4: SectorwiseExposure of SME Financing of IDLC
Information
Technology
2%
Leather & Leather
Products
1%
Packaging
2%
Paper & Paper products
1%
Pharmaceutical &
Healthcare products
2%
Power & Energy
1%
Professional Services
0%
Service Others
5%
Telecommunication
0%
Textile (Export)
Sectorial Exposure Of SME Financing Of IDLC In
P a g e |27
Figure 4: SectorwiseExposure of SME Financing of IDLC in 2013
Agro Based Industries
7%
Apparels &
Accessories
10%
Food & Beverage
10%
Furniture &
Related products
Healthcare ServiceHome Appliances and
House Hold Items
7%
Hospitality &
Leisure Services
1%
Housing & Real
Estate
12%
Information
Technology
2%
Iron & Steel
6%
Textile (Export)
1%
Textile (Local)
7%
Transport
9%
Sectorial Exposure Of SME Financing Of IDLC In
2013
Agro Based Industries
Building & Construction
Materials
7%
Chemicals
1%
Construction
1%
Education
0%
Enginering
3%
Food & Beverage
Furniture &
Related products
3%
Healthcare Service
2%
Sectorial Exposure Of SME Financing Of IDLC In
28. 4.4 In The Year 2012
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
Trading
51%
Segment
P a g e |28
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
total amount was lent to the service sector.
Exposure 2012
Manufacturing
28%
Service
21%
Segment-wise Exposure 2012
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
29. P a g e |29
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%
30. P a g e |30
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
31. P a g e |31
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 .
32. Figure 6: Sector wise Exposure of SME Financing of IDLC in
Information Technology
2%
Iron & Steel
5%
Leather & Leather
Products
1%
Packaging
1%
Paper & Paper
products
1%
Pharmaceutical &
Healthcare products
1%
Power & Energy
2%
Professional
Services
0% Service Others
4%
Telecommunication
0%
Textile (Export)
0%
Textile (Local)
10%
Sector Wise Exposure of SME Financing of IDLC in 2012
P a g e |32
Exposure of SME Financing of IDLC in 2012
Agro Based Industries
3%
Apparels & Accessories
9%
Building & Construction
Materials
9%
Food & Beverage
Healthcare Service
Home Appliances and
House Hold Items
6%
Hospitality &
Leisure Services
2%
Housing & Real Estate
9%
Information Technology
Iron & Steel
Service Others
Textile (Local)
Transport
11%
Sector Wise Exposure of SME Financing of IDLC in 2012
Apparels & Accessories
Building & Construction
Materials
9%
Chemicals
1%
Construction
1%
Education
0%
Enginering
5%
Financial
Services
0%
Food & Beverage
10%
Furniture & Related
products
2%
Healthcare Service
3%
Home Appliances and
House Hold Items
Sector Wise Exposure of SME Financing of IDLC in 2012
33. P a g e |33
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.
34. Figure 7: Yearly Segment-Wise
Sectors
Agro Based Industries
Apparels & Accessories
Building & Construction Materials
Chemicals
Construction
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
% Change
3.53%
P a g e |34
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
35. P a g e |35
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%
36. P a g e |36
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%).
37. 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%
Agro Based Industries
Apparels & Accessories
Building & Construction Materials
Chemicals
Construction
Education
Enginering
Food & Beverage
Furniture & Related products
Healthcare Service
Home Appliances and House Hold Items
Hospitality & Leisure Services
Housing & Real Estate
Information Technology
Iron & Steel
Leather & Leather Products
Packaging
Paper & Paper products
Pharmaceutical & Healthcare products
Power & Energy
Professional Services
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%
Agro Based Industries
Apparels & Accessories
Building & Construction Materials
Chemicals
Construction
Education
Enginering
Food & Beverage
Furniture & Related products
Healthcare Service
Home Appliances and House Hold Items
Hospitality & Leisure Services
Housing & Real Estate
Information Technology
Iron & Steel
Leather & Leather Products
Packaging
Paper & Paper products
Pharmaceutical & Healthcare products
Power & Energy
Professional Services
Service Others
Telecommunication
Textile (Export)
Textile (Local)
Transport
Grand Total
Yearly
Change 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
38. 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.
39. 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.
43. 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.
44. P a g e |44
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.
45. P a g e |45
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.
46. P a g e |46
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
