Page |1 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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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