Sme Financing of FSIBL

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Transcript of Sme Financing of FSIBL

CHAPTER 1 introduction

1.1 WHAT IS INTERNSHIP?Internship is a field project for a student of Business Administration of final year that gives the student a chance to apply business theory practically in any organizational environment. The objectives of internship are: 1. Practical fulfillment of MBA program. 2. Application of theoretical knowledge into practice. 3. Gaining work experiences. 4. Having an exposure for searching a good job in future. 5. Knowing/understanding gap between theoretical knowledge and practical situation. Parts of Internship Report: There are two parts of internship report. They are: Part A: Organization Part. Part-B: Project Part.

Prepared By- Md. Alamgir

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1.2 Origin of the reportOne of the most important factors for industrialization and economic development of a country is the availability of the credit facility. The continuing crisis of accumulation banking remains in loans the has main emerged of as nonmost performing and of the serious default banking

constraint in the path of economic development of Bangladesh as intermediary of a healthy vehicles capital are in harnessing market. But capital for accelerating the growth of the productive sectors in Bangladesh providing their the absence without at think the it loans and I proper appraisal even more go of beyond the credit Security fulfill the

dangerous as the depositors are put into great risk of losing money So, end, the crisis is very the critical by is might to analysis the First to overcome. approval First important gather

technical know-how

regarding

procedure Islami

practiced Bank Limited

Islami bank ltd. By preparing this report. This internship report on Security prepared partial requirement of the internship program as full credit subject of the BBA program of The University. In Bangladesh today financial secto r is one of the most established areas in the macroeconomic sector. Economy aspects private country. For this reason I prepared my internship report on First Security Islami Bank Limited. and of finance is carrier of the country. sector So for must the be economic development, banking

reformed. In the process of forming a good economic system, banks are paling an important role compare to the government banks in the

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1.3 Objective of the Study To fulfill the partial requirement of the internship program as a full credit subject of the BBA program. To know about the sector of SME of FSIBL To get an overall idea about the SME Banking in Bangladesh. To know the operation of SME to develop the entrepreneur. To describe the service of SME Banking of FSIBL To analyze the barriers faced by the banks for SME Financing. To know about the contribution of SME in economic development of country. To know how the entrepreneur benefited from SME. To find out the sectors of SME in which such types of problems exist. To identify whether all process of SME are perfectly and effectively practiced or not.

To suggest a supportive role in the progress of SME banking system in financial sector.

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1.4 Scope of the StudyThis study covered the overall SME banking system of First Security Islami Bank Limited and also includes the relationship of the credit management with the bank as well as principle covered by the bank as SME banking system.

1.5 Limitation of the StudyIt is an uphill task to study the on the management so the report was completed under certain constrains which were: Difficulty in gaining accesses to financial sector. Non-availability of the most recent statistical data about the SME. As I am student it is not possible for me to collect all the necessary in formation from entrepreneur. I had to complete this report within a very short span of time that wa s not sufficient for investigation. Lake of Experience about SME financing.

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1.6 Methodology of the studyThis report is based mainly on observations that I experienced during the internship period. Data required for this report were collected from the annual report of First Security Islami Bank. Apart form these; helpful information was collected from online resources.

1.7 Source of DataThe data sources used to prepare this report delineated as follows:

1. Primary Source:a) Practical deskwork. b) Face to face conversation with the officers and executives. c) Face to face conversation with the clients. 2. Secondary Source: a) Annual report of First Security Islami Bank Limited. b) Prospectus of First Security Islami Bank Limited. c) Banks financial statement. d) Banks quarterly statement. e) Banks daily affairs. f) Broachers etc.

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CHAPTER 2 ABOUTTHE

FIRST SECURITY ISLAMI BANK LIMITED

2.1 Definition of Bank:We can define A bank as an institution, usually incorporated with power to issue its promissory notes intended to circulate as money (known as bank notes); or to receive the money of others on general deposit, to form a joint fund that shall be used by the institution, for its own benefit, for one or more of the purposes of making temporary loans and discounts; of dealing in notes, foreign and domestic bills of exchange, coin, bullion, credits, and the remission of money; or with both these powers, and with the privileges, in addition to these basic powers, of receiving special deposits and making collections for the holders of negotiable paper, if the institution sees fit to engage in such business." Generally there are two main way of operating commercial bank. They are conventional banking and Islamic banking system.

2.2 Islamic Banking:The Islamic banking has been defined in a number of ways. The definition that is given approved by Organization of Islamic Conference is most popular. According to The OIC, The Islamic bank is a financial institution whose status, rules, and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of receipt and payment of interest on any of its operations. It appears from the definition that Islamic banking is a system of financial intermediation that avoids receipt and payment of interest in its transactions and conducts its operation in a way that it helps

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achieve the objectives of an Islamic economy. And also it is operated on the basis of Mudaraba theory. According to Mudaraba theory, the relationship between bank and clients is not debtors-creditors, it is a relationship of trusteeship. The difference between Conventional and Islamic Banking are shown

in terms of a box diagram as shown below:

Conventional Banks 1 The functions and operating modes of conventional banks are based on manmade principles. The investor is assured of a predetermined rate of interest. It aims at maximizing profit without any restriction. It does not deal with Zakat. 1

Islamic Banks The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah. In contrast, it promotes risk sharing between provider of capital and the user of funds. It also aims at maximizing profit but subject to Shariah restrictions. In the modern Islamic banking systems, it has become one of the serviceoriented functions of the Islamic banks to collect an distribute Zakat. Participation in partnership business is the fundamental function of the Islamic banks. The Islamic banks have no provision to charge any extra money from the defaulters. For the Islamic banks, it is comparatively difficult to borrow money from the money market. The Islamic banks, on the 7

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Leading money and getting it back with interest is the fundamental function of the conventional banks. It can charge additional money in case of defaulters. For interest-based commercial banks, borrowing from the money market is relatively easier. The conventional banks give

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Prepared By- Md. Alamgir

greater emphasis on creditworthiness of the clients. 9 1 0 1 1 A conventional bank has to guarantee its deposits. The status of a conventional bank, in relation to its clients, is that of creditor and debtors. The conventional Banking system has the recycling system. They charge interest on interest. 9 1 0 1 1

other hand, give greater emphasis on the viability of the projects. Strictly speaking and Islamic bank cannot do it. The status of Islamic bank in relation to its clients is that of partners, investors and trader. In Islami Banking system, there is no recycling of interest. There is markup/rebate system.

2.3 History of the First Security Islami BankFirst Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. The Bank went for public issue on 20 July 2008 and its shares are listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).The Bank carries banking activities through its Ninety two (92) branches in the country. The Bank converted its banking operation into Islamic Banking based on Islamic Shariah from traditional banking operation on 01 January 2009 after obtaining approval from High Court, Finance Ministry and Bangladesh Bank. The commercial banking activities of the bank encompass a wide range of services including mobilizing deposits, providing investment facilities, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, a