A Study into the “Non-Formal & Voluntary Banking Services” of SIBL
Chapter-One: Background of the Study
1.0 Introduction
The word “Bank” refers to the financial institution deals with money.
Commercial banks are the primary contributor to the economy of the country.
They are borrowing money from the locals and lending the same to the
business as loans and advances. So the people and the government are very
much dependent on these banks as the financial intermediary. Moreover,
banks are profit -earning concern, as they collect deposits at the lowest
possible cost and provide loans and advances at higher cost. The differences
between two are the profit for the bank. SIBL is a new generation bank which
focuses on the reduction of poverty and working together for long
development. SIBL is a three sector bank which started its journey with
Micro-Credit, Micro-Enterprise, and SMEs and at the end Corporate Banking.
Bangladesh is a country where supply of raw materials, cheap labor and a
large domestic market is abandon. Huge amount of raw materials and human
resources can create a big market for the Small and Medium Enterprises
(SMEs) in Bangladesh. Thus this sector has a big prospect and can contribute
further to ensure sustainable growth of the economy. For the past few
decades substantial interest has been developed regarding SMEs all over the
world. Although the economic uniqueness of the small enterprises has been
acknowledged globally, in Bangladesh this sector began to get some
momentum during 1990s. Since then the government of Bangladesh started
devising policy instruments to guard the sector from any sort of undue
intervention. This shift in prioritization of different sectors of the economy by
the government did not come all of a sudden, such a discernible move was
rather imminent due to the facts that on the one hand agriculture sector, the
mainstay of the economy, has long been suffering from low productivity
problem and was employing some 60 percent of the labor force to produce a
meager one–third of the national income (McIntire, 1998). On the other hand,
the modern large-scale industries sector of Bangladesh, besides its tiny size,
suffers from high capital intensity, low and unstable growth and productive
inefficiencies. Although many small firms have been developed over the years
in many developing countries but in most of the cases the institutions
responsible to support the SMEs failed to reach and assisted a fairly small
1 of 132
A Study into the “Non-Formal & Voluntary Banking Services” of SIBL
number of firms, leaving a vast majority of the firms’ untouched .Over and
above, Bangladesh has approximately 27,000 medium-sized enterprises and
150,000 small-sized enterprises (defined by the government of Bangladesh as
registered enterprises). SMEs account for about 82 percent of the total
industrial workforce and 23 percent of the total workforce equivalent to 5
million people. Bangladesh lack sufficient liquidity to invest in heady
industries, but has huge number of cheap laborer which made the SME sector
very urgent and promising sector for Bangladesh. Trading based SMEs face
less problems in comparison to the manufacture based SMEs. Trading has
limited risks and ensures the return of the capital within short span of time.
Therefore, in Bangladesh majority of the business people like to be involved in
trading than manufacturing. But the manufacturing sector can create
sustainable jobs at a faster rate than the population growth; promote
competition and lower prices, supply vital agricultural inputs, and process
primary agricultural products. Every year many small firms are established in
Bangladesh, though unfortunately many of them disappear abandoning the
potential role they could have played in economic development. To combat
this undesirable failure and to accelerate rapid growth, it is necessary to
understand clearly the problems faced by the manufacture based SME sector.
This study thus aimed to explore the major constraints of manufacture based
SME development in Bangladesh.
1.1Origin of the Report
Internship is the last part of my BBA Program. Being a BBA student internship
and report of internship submission is essential for me. Without completion of
internship and report of internship, I can’t be able to complete my BBA course.
This report is submitted to my internship supervisor, Dr. A R khan, Professor,
Department of Banking, University of Dhaka. To complete the internship
program I have done internship in SOCIAL ISLAMI BANK LIMITED,
PRINCIPAL BRANCH, MOTIJHEEL, DHAKA.
I have assigned a topic “Non-Formal and Voluntary Banking Services of
SOCIAL ISLAMI BANK LIMITED’’ and the authority of SOCIAL ISLAMI
BANK gave me the opportunity to work at the principal Branch for three
months on this topic.
2 of 132
A Study into the “Non-Formal & Voluntary Banking Services” of SIBL
1.2 Objective of the Study
The main objective is to prepare the partial Internship Report for the
completion of Bachelors of Business Administration (BBA) Program. Other
specific objectives are as follows-----------
To familiar with the concept of Family Empowerment Micro-Credit
Program, Micro-Enterprise Program, SME, Cash Waqf Certificate
Account, Corporate Social Responsibility and its operation procedure
To identify the problems and prospectus of Family Empowerment
Micro-Credit, Micro-Enterprise, SME, Cash Waqf Certificate Account
and Corporate Social Responsibility in Bangladesh
To familiar with banking environment, clients, working hours, values,
customer satisfaction conditions and way of increasing customer
satisfaction through providing quality products and quality services.
1.3 Rational of the Study
To know the actual and practical application of the banking there is very need
of study of banking services. And Family Empowerment Micro-Credit and
Micro-Enterprise Program is an important arena of banking through this
program poverty could be alleviated and wealth can be well-distributed. Small
and Medium Enterprise (SME) is a timely banking through which poverty
alleviation and employment creation is significantly possible. Cash Waqf
Certificate A/Cs and Corporate Social Responsibility (CSR) are the most
important area of banking services provided by Islamic Bank which is
imperative for the society as well as country. And these are to known by study
and research, and also this chance of internship program has helped me lot
about these.
1.4 Scope of the Report
There are certain boundaries to cover this report. To achieve the objectives of
the report, i.e. through knowledge about the organizational functions and its
management, it is not possible to cover each and every activities performed in
the organization within a short period of time. The report has covered Non-
Formal and Voluntary Banking Services provided by Social Islami Bank
Limited.
3 of 132
A Study into the “Non-Formal & Voluntary Banking Services” of SIBL
1.5 Methodology of the Study
This report has been prepared on the basis of experience gathered during the
period of internship. For preparing this report, I have held group discussions
and interviewed officers and clients of the bank. To carry out the study, both
primary and secondary data were used. The methods are as follows----
(i) Primary data:-
Discussion with the reactive organizations officials
Face to face conversation with the officer
Work experience in the Principal Branch as an intern
Direct observations
(ii) Secondary data-
For the completion of the study, secondary data has been collected.
The main sources of secondary data are:-
Annual reports of the Bank (Year-200-2010)
Various files and documents of Non-Formal & Voluntary
banking services division of Social Islami Bank Ltd.
Articles related to SME management in different journals and
magazines
Data from published reports of Bangladesh Bank
Different Books, journals, Periodicals, Monthly News letter of
Social Islami Bank Ltd, News papers etc.
Social Islami Bank’s website.
1.6 Limitation of the Study
This report has some limitations. These are given below:
1. Time constraint was a major drawback in this study.
2. Another limitation of this report is unavailability of latest data
3. Some personnel of Bank are not proactive, friendly and exposure
4. Most of the employees of the Bank are not familiar with the
activities, terms and concepts of Banking
4 of 132