CHAPTER ONE: INTRODUCTION

1.1 Rationale for selecting the report:

As I am a undergraduate student so I have to complete my internship with an organization by which I can learn how the corporate world looks like and how we have to manage our office work with facing many kinds of difficulties. So that I choose Mercantile Bank Ltd and like to complete my internship report on SME products of this bank. The report will covers the over view of SME loan, identification of problems regarding SME loan, types of SME and sector of SME allocation of Mercantile Bank Ltd. I choose this topic because here I can express my real life work experience along with my educational earnings, which I gather from my different core and major courses. This may give me the opportunity to serve the organization as a representative of AIUB and I may create a good relationship between these two organization which will help them to create any sort of events like sponsorship, seminar etc, in the long run. Here I also get the opportunity to express my ideas about MBL; this plays an important role of their marketing activities. They also can get some fresh ideas about their lacking which I will found from my report and these ideas can help them to create new strategies by those they can resolve their occurring problems. By doing my internship in MBL I can create an exposable bridge between this organization which may help them to establish a great future prospect for both of them.

1.2 Background (Description of the organization):

Mercantile Bank Ltd was incorporated in Bangladesh as a public limited company under the Bank Company Act, 1991, on May 20, 1999. After obtaining license from Bangladesh Bank to start banking business, the bank commenced its operation on June 2, 1999 with an authorized capital of 800tk million divided into 8 million ordinary shares of 100tk each. On 31 December 2001, its paid up capital was 596.5tk million Mercantile Bank Ltd went for public issue of shares on October 21, 2003. Mercantile Bank Ltd was incorporated on May 20, 1999 in

Dhaka, Bangladesh as a public limited company with the permission of the Bangladesh Bank; Mercantile Bank Ltd commenced formal commercial banking operation from the June 02, 1999. The bank stood 75 branches all over the country up to 2011(please see appendix 1, 2) and they have their 56 ATM centers (please see appendix 3) all over the country. Mercantile Bank limited emerged as a new commercial bank to provide efficient banking services with a view to improving the socio economic development of the country. The philosophy of Mercantile Bank Ltd is not to carry coal to the new castle'. The main target is to make credits available to the poor people and their activities are aimed at comprehensive growth where people from all economic strata will enjoy the benefits of better living standard, dignity of labor and self worth. The Bank determined to build a long-term customer relationship with its corporate & general clients. As a part of this, Mercantile Bank ltd. is trying to expand their business with the market leaders of each sector of business. Mercantile Bank ltd. emphasizes not only on customer satisfaction but also emphasizes general banking and credit management system. Therefore, that customer can get better service from every side of overall banking. Mercantile Bank Ltd is always ready to maintain the highest quality services by upgrading Banking technology, well management system and applying high standard of business ethics through its established commitment and heritage and is representing itself with true concept as Banglar Bank. 1.2.1 Vision: Would make finest corporate citizen. 1.2.2 Mission Will become most caring, focused for equitable growth based on diversified deployment of resources, and nevertheless would remain healthy and gainfully profitable Bank. 1.2.3 Company Objectives Strategic objectives # To achieve positive Economic Value Added (EVA) each year. # To be market leader in product innovation.

# To be one of the top three Financial Institutions in Bangladesh in terms of cost efficiency. # To be one of the top five Financial Institutions in Bangladesh in terms of market share in all significant market segments we serve. 1.2.4 Core values For the customers: Providing with caring services by being innovative in the development of new banking products and services. For the shareholders: Maximizing wealth of the Bank For the employees: Respecting worth and dignity of individual employees devoting their energies for the progress of the Bank. For the community: Strengthening the corporate values and taking environment and social risks and reward into account. New technology: Adopting the state-of-the art technology in banking operations

1.2.5 Products marketed by Mercantile Bank: Deposit Schemes of MBL

Current Deposit Account (CD A/C) Savings Bank Account (SB A/C) Special Noticed Deposit Account (SND A/C) Fixed Deposit Account (FDR A/C)] Double Benefit Deposit Scheme (DBDS)

Family Maintenance Deposit (FMD) Mashik Sanchaya Prokalpa (MSK) or Monthly Savings Scheme (MSS) Quarterly Benefit Deposit Scheme 1.5 Times Benefit Deposit Scheme Advance Benefit Deposit Scheme (ABDS) or Agrim Munafa Amanat Prokolpo (AMAP) Special Savings Scheme

Loan products of Mercantile bank Limited:

Consumers Credit Scheme Doctors Credit Scheme Education Loan Rural Development Scheme Lease Financing Any Purpose Loan Car Loan Home Loan House Furnishing Loan Cottage Loan Overseas Employment Loan E T P / Bio-Gas / Solar Energy Loan Krishi / Polli Loan SME - Chaka (Term Loan) SME - ANANYA (Women Entrepreneurs Loan) SME - CHALTI MULDHAN (Continuous Loan) SME - SINGLE PAYMENT LOAN (Short Term Seasonal Loan)

1.2.6 Board of Directors Board of Directors, the apex body of the Bank, formulates policy guidelines, provides strategic planning and supervises business and performance of management while the Board remains accountable to the company and its shareholders. The Executive Committee and Audit Committee assist the board. Name and positions of Board of Directors Chairman: Md. Abdul Jalil, M.P, Vice Chairman: Al-Haj Akram Hussain (Humayun), A. S. M. Feroz Alam,

Directors: A. K. M. Shaheed Reza Md. Anwarul Haque Dr. Toufique Rahman Chowdhury Engr. Mohd. Monsuruzzaman Subrota Narayan Roy M. S. Ahsan Bilkis Begum Md. Tabibul Huq M. Amanullah Mohd. Selim Managing Director & CEO

S. M. Shafiqul Islam (Mamun) Md. Nasiruddin Choudhury Md. Shahabuddin Alam Syed Muhammed Abbdul Mannan, M.P Al-Haj Mosharref Hossain Israt Jahan M. A. Khan Belal Mr. Saber Hossain Chowdhury M.P A.K.M. Shahidul Haque

Company Secretary

A.K.M. Shahidul Haque

S.Q. Bazlur Rashid

1.1.7 History of Mercantile Bank Limited: Mercantile Bank Limited was incorporated in Bangladesh as a public limited company under the Bank Company Act, 1991, on May 20, 1999. After obtaining license from Bangladesh Bank to start banking business, the bank commenced its operation on June 2, 1999 with an authorized capital of 800tk million divided into 8 million ordinary shares of 100tk each. On 31 December 2001, its paid up capital was 596.5tk million Mercantile Bank Limited went for public issue of shares on October 21, 2003. Mercantile Bank Limited was incorporated on May 20, 1999 in Dhaka, Bangladesh as a public limited company with the permission of the Bangladesh Bank; MBL commenced formal commercial banking operation from the June 02, 1999. The bank stood 75 branches all over the country up to 2011.

1.2.8 Hierarchy of Organization:

Chairman Board of Directors

Managing Director Deputy Managing Directors GSD, CAD, A&I, GB, D&M Company Secretary Senior Executive Vice President Executive Vice President Senior Vice President Deputy Managing Directors ID, IT, Credit, R&D

Chief Advisor

Vice President

First Vice President

Assistant Vice President

Principle Officer

Senior Executive Officer

Executive Officer

Officer

Assistant Officer

Trainee Asst: Officer

1.3 Objectives:
1.3.1 Broad Objective: To identify the real condition about the importance of SME in our country 1.3.2 Specific Objectives: To determine the overall market situation of SME loan. The target segments of SME financing. Illustrate MBLs communication, relationship & customer satisfaction level Showing the comparison of interest rate with others Terms, conditions & eligibility for applying SME. Analyzing SME network Of MBL. Evaluate the performance of MBL with others regarding SME. Show existing problems and limitations of MBL. Providing suggestions and recommendation

CHAPTER TWO: ACTIVITIES UNDERTAKEN

2.1 Work Related

I was worked at Mercantile Bank Ltd Banani branch during my internship period. There I was learned so many things about the bank, about their services, the way of completion one specific job. Usually I worked for accounts department but they generally did not allow interns to their cash division. Therefore, there I was sorted out the vouchers that every day comes from the different customers after sorting I was matched them with the supplementary sheet to ensure that whether the posting was right or wrong. I worked with accounts department because of no new interns are came in that session and the brunch does not have enough space in the departments. However, I worked with a very shorter form task although I have observed the following tasks of Accounts department: Deposit collection against regular account: People who have their accounts in the bank they came in a regular basis to deposit different amount of money in their particular accounts. Deposit collection Pay order: Bank also gives pay order to its clients in against the deposit. Pay order taken place for the security purpose. One can give money anyone, anywhere through pay order. Deposit collection for FDR and other long term scheme: Clients who have their FDR and other long term savings accounts in the bank they also deposit cash to their accounts through accounts departments cash section. Tuition fees collection: Bank collects different universitys semester tuition fees during their registration time. They basically collects tuition fees from four or five universities. They are American International University-Bangladesh, South East University, Northern university Utilities bill collection: Bank also collects different types of utility bills, such as electricity bill-Desco, telephone bill-BTCL

 Cheque encashment: Hare people also get the cash against cheque for both personal and organizational cheque. Payment against vouchers: Accounts also gave cash payment against any different sort of vouchers. Payment against Loan disbursement: When anyone sanctioned loan from the bank they also collects their money from the accounts department. All kinds of data posting: After collecting all the cheque and DPS slips they pass it to the IT department for posting. There every cheque and slip posted towards its respective accounts. Apart from that, I choose SME for my internship report topic. So I collects some information about SME from the credit department through passing some time with that department. Since the regular task of accounts was not interesting to me, particularly I tried to collect and know information about their SME business and those are as follows: 2.1.1 Some terms and conditions for SME Loan REGULATION -1: Source and capacity of repayment and cash flow backed lending REGULATION -2: Personal Guarantees REGULATION -3: Per party exposure limit. REGULATION -4: Aggregate exposure of MBL on small enterprise sector. REGULATION -5 Limit on clean facilities.

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REGULATION - 6 Securities REGULATION - 7 Loan documentation REGULATION -8 Margin Requirements REGULATION -9 Credit Information Bureau (CIB) Clearance. REGULATION -10 Minimum Conditions for Taking Exposure. REGULATION -11 Proper Utilization of Loan. REGULATION -12 Restriction on Facilities to Related Parties. REGULATION -13 Classification and Provisioning For Assets Loans Advances.

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2.1.2 Target Segments for SME Financing S.L. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Hospitals and Clinics It related business Agricultural and Agricultural Development items Fishing and fishing business promotion Transportation and Communication Forestry and furniture Construction business and housing development Leather marketing and leather goods knitwear and readymade garments Plastic and other synthetics Entertainment Photography Hotel and tourism Warehouse and container services Printing and packaging Gunning and Bailing Pathological Laboratories Cold Storage Horticulture- Flower growing and Marketing Food and oil processing plants Higher education and expertise knowledge society Telecommunication Sector

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2.1.3 Loan Size Prime Bank Limited Dhaka Bank Limited Eastern Bank Limited
1 lac- 300 lac

Mercantile bank Limited

2lac 50 lac

DutchBangla Bank Limited

3lac 50 lac

BRAC Bank Limited

3lac 30 lac

1 lac 75 lac

1 lac- 50 lac

Among the Banks Eastern bank Limited offer the highest loan amount to customer where as BRAC Bank offer the lowest loan to its customer. 2.1.4 Rate of Interest Prime Bank Limited 18% Dhaka Bank Limited 17% Eastern Bank Limited 18% Mercantile bank Limited 15% DutchBangla Bank Limited 15%- 17% BRAC Bank Limited 15%

In terms of interest rate Mercantile bank and BRAC bank offer the lowest rate of interest to its customers. The highest rate is charged by Prime bank limited. Mercantile bank is the only bank that offer fixed rate for any loan customer. 2.1.5 Loan Processing Fee Prime Bank Limited Dhaka Bank Limited Free Eastern Bank Limited Mercantile bank Limited TK 500.00 DutchBangla Bank Limited BRAC Bank Limited 0.50% of the loan amount

.50% of the loan amount

All the bank does not provide detail about loan processing fees to their customers. The prime bank limited and BRAC Bank limited only charges .50% as loan processing. And Mercantile bank Charge TK. 500 for loan processing.

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2.1.6 Period of Loan Prime bank Limited Dhaka Bank Limited Eastern Bank Limited Mercantile bank Limited DutchBangla Bank Limited 1 year to 5 years 1 year to 3 Years Up to 1 years Up to 2-5 Years 1.5 year to 5 years 1 year to 3 years BRAC Bank Limited

Among the bank Dutch-Bangla Bank Limited and Mercantile Bank offer the lowest maturity period offer the highest loan maturity date

2.1.7 Mode of Finance Prime Bank Limited Term loan and working capital loan Dhaka Bank Limited Term loan and working capital loan Eastern Bank Limited working capital loan Mercantile Bank Limited Only Term Loa n DutchBangla Bank Limited Only Term loan BRAC Bank Limited Only Term Loan

All the banks provide SME financing facilities do not provide long-term loan to its customers. Among the banks, Prime bank and Dhaka bank both provide term loan and working capital loan to their customer. Other banks provide either term loan or working capital loan to its customers.

It was not that much easier for me to collects information cause they dont have any specific department for SME in Banani brunch But I think what I have collected from the bank is sufficient for my report making but not for learning.

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2.2. Organization Wide

2.2.1 General Banking The general banking department does the most important and basic works of the bank. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. MBL provides different types of accounts, locker facilities and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows Deposit section Account opening section Cash section Bills and clearing section Remittance section L o n g t e r m d e p o s i t ( FDR) Accounts section Functions of General Banking Division 1) Account opening. 2) Cheque book issuing 3) Signature Scanning 4) Demand draft issue. 5) Pay order issue 6) Telephonic Transfer 7) Account enquiry 8) Providing Accounts Statements. 9) Solvency certificate issuing 10) Account transfer 11) Account closing

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12) Dispatch 13) Return of Bangladesh Bank and Head office statements 2.2.2 Foreign Exchange Foreign Exchange department facilitate the inflow and outflow of foreign currency exchange by opening export-import L/C. This department also facilitates local L/C. Function of Foreign Exchange department:

Import

Opening of letter of credit Advance bills Bills for collection Import loans and guarantees Export
Pre-shipment advances Purchase of foreign bills Negotiating of foreign bills Export guarantees

Advising/ conforming letters of credit Advance for deferred payment export Advance against bills for collection

Remittances

Issue of D.D, T.T & M.T. Payment of D.D, T.T, M.T Issues and encashment travelers Cheque Sale and encashment of foreign currency notes Non-residence accounts

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2.2.3 On-line banking Service On-line service is now available for all customers of the bank. On-line banking have so far activated with 42 branches. As a result, it saves the time and efforts of the customers. They can easily deposit and withdraw money, transfer money from one place to another place by using online banking facility. On-line banking times: 1. Sunday to Thursday: 9am to 3pm 2. Saturday: 9 am to 12am

Account wise Online Banking Limit (cash withdrawal, deposit and transfer):

1. Minimum deposit limit: TK 500000 per transaction cumulative deposit shall not be more than TK. 1000000 per day 2. Maximum Withdrawal limit: TK 500000 per transaction

2.3. Other relevant activities

2.3.1 NRB Banking of Mercantile Bank Limited Mercantile Bank Limited is one of the fastest growing third generation private commercial Bank started its business operations on June 02, 1999. Presently we have a network of 65 online Branches all over the country. Mercantile Bank Limited (MBL) has achieved a remarkable growth in all the sectors of banking activity including foreign remittance. The inflow of inward foreign remittances of the Bank is increasing day by day steadily. The Bank has given much more emphasis on foreign inward remittance since inception in line with the government policy. Meantime it has established separate NRB Division with a good team of professionals for ensuring better services to the expatriates and their families. We are marching ahead in terms of technology, quality service, efficiency & market value although tough competition exists in the market.

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2.3.2 SWIFT SWIFT is the Society for Worldwide Interbank Financial Telecommunication, a member-owned cooperative through which the financial world conducts its business operations with speed, certainty and confidence. Mercantile Bank enables you to transfer funds to your beneficiaries through the most efficient channels, which are available from the bank. We facilitate quick and easy transfer of your funds by assuring complete security. 2.3.3 Your Bank at your Fingertip As the time goes by, life style changes. To keep up, MBL welcomes you to SMS Banking Service, one of the most modern banking services. MBL SMS banking Service is convenient, safe, low-cost, fast and available round the clock. MBL SMS Banking Service offers: 1. Access to account balance 2. Last 3 transaction inquiry 3. Cheque status inquiry 2.3.4 Cards of Mercantile Bank Limited: Dual Card (two in one): Single Card with double benefits. No hassle to carry two cards (local and international). A single credit card can be used both locally and internationally to withdraw cash from ATM for POS transaction. This is the special feature of MBL Visa card. Debit Card: Visa debit card is mainly tagged with deposit account (CD/SB/STD) that is automatically debited from the A/C having available balance. Debit card can also be used for purchasing goods, services, payment of utility bills etc as well as withdrawal of cash from ATM Pre-Paid Card: Those who have no account with MBL may avail Pre-Paid card facilities. The Pre-Paid cardholders pay first buy later. Pre-Paid card offers the convenience and security of electronic payment in situations where one might otherwise

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use cash, such as birthday gift or a monthly allowance for a young adult. Examples include gift cards and salary payment etc. 2.3.5 Brokerage House Mercantile Bank Limited Brokerage House has been developed to ensure development of sound capital market and to provide higher, better and diversified services to a wide range of customers. MBL is offering high quality products and services at a competitive rate. MBL is dedicated to provide high level of professional and personalized services to its domestic and international clients at a reasonable cost. MBLs services are comprehensive in nature, including brokerage, margin loan, CDBL facilities, and research and custodian needs of customers. 2.3.6 Western Union Money Transfer When you need to send money fast, count on the Western Union Money TransferSM service. Its a convenient and easy way to transfer money. Features:

After approval, your money arrives in minutes. Your receivers can pick up the money right away (depending on the hours their Agent location is open).

Send money from an Agent Location Send money anytime, anywhere from one of our thousands of Western Union Agent locations around the world.

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CHAPTER THREE: CONSTRAINTS/CHALLENGES

3.1 Identified/Observed in organization

Mercantile Bank Ltd actively participate in the growth and expansion of the national economy by providing SME Loan to viable borrowers. While analyzing the SME Loan policies and procedures of the Bank, the following areas were mostly viewable. Lack of sufficient Executives or Officers especially in the Credit Division hampers the Loan Sanctioning Process in time. MBL takes relatively more times in granting loans advances to different parties. It seriously discourages the persons who are inclined to get loan for their urgent purpose. Mode of disbursement, charge documents etc. creates bottleneck in Loan approval process. Head Office takes so longer time in processing and approval of SME Loan. Sometimes the total Sanctioning Process event takes month after month to give the final decision. MBL does not sanction loan to all sectors equally as they require, rather it concentrates its loan and advances within some limited fields and category. Lack of information on loan process required by the SME loan seekers. Absence of an appropriate and clear-cut legal framework 4 enforcing quick recovery. Still follows Traditional Banking Systems. Have no specific department for Marketing and HR at branch level. Have no available brochure for the customers by which they easily gather their needed information. Lack of information on loan application requirement among the SME loan seekers.

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3.2 Academic Preparation

During our academic session we learned that customers are the king. We have to give them first priority but here I found that they did not give that much emphasize on customers. We always heard that to maintain a good customer relation we have to deal with the customers as fast as we can but in the bank I find that service seekers have to wait for a long time for their particular needed service The brunch doesnt have enough space for customers waiting zone so that they have to maintain a long cue for deposit or collection of any sort of things

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CHAPTER FOUR: LEARNINGS FROM INTERNSHIP

4.1 Implication to organization

As I choose MBL and like to complete my internship report on SME products of MBL so I tried to gather some information that is closely related with my topic. Mercantile bank SME & Retail Banking Division has launched in 3rd September 2006 and full-fledged operation of SME started from 7th January 2007. Small and medium enterprise (SME) loan offered by MBL to provide credit facilities to small and medium size entrepreneurs located in the urban and sub-urban areas to encourage new and educated young entrepreneurs to undertake productive ventures, to assist them to take part in the economic activities.

4.1.1 Definition of SME: Small Enterprise: 1. Manufacturing: Organizations having less than 50 employees and total assets of Tk. 50.00 thousand to Tk. 1.50 Crore (excluding land and building).

2. Trading: Organizations having less than 25 employees/ work force and total assets of Tk. 50.00 thousand to Tk. 50.00 lac (excluding land and building). 3. Service: Organizations having less than 25 employees/ work force and total assets of Tk. 50.00 thousand to Tk. 50.00 lac (excluding land building). Medium Enterprise: 1. Manufacturing: Organizations having less than 100 employees and total assets of tk. 1.50 Crore to TK. 20.00 Crore (excluding land and building).

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2. Trading: Organizations having less than 50 employees/ work force and total assets of TK. 50.00 lac to TK.10.00 Crore (excluding land and building). 3. Service: Organizations having less than 50 employees/ work force and total assets of TK. 50.00 lac to TK. 10.00 Crore (excluding land and building).

4.1.2 Limit for Loan Maximum Limit for small enterprises is Tk. 20.00 lac (Term loan and Working Capital) and Medium Enterprises is Tk. 50.00 lac (Term Loan and Working Capital).

4.1.3 Fees and Charges of SME Financing 1. Interest Rate: 15% (for women entrepreneur 10%) 2. Risk Fund: 1% 3. Service charge: 1% 4. Application Fee: Tk. 200.00 5. Loan Processing Fee: Tk. 500.00

4.1.4 Loan Documentation Needed for SME Financing In Bank Criterions for loan selection are similar among financial institution. Most frequently requested document by financial institutions as a part of the loan application process include:

personal guarantee business financial statement tin certificate bank solvency certificate vat certificate personal financial statement

formal application for financing business plan appraisal of asset to be financed purchase agreement cash-flow projection export license

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4.1.5 Flow Chart of Small & Medium Enterprise Loan processing:

Application received from customers (branch or SME team)

SME team/branch collates and scrutinizes the application

Application meets basic PPG criteria

No
Application declined and returned to customers

Yes
SME officer/Manager recommends the loan and sends to Credit Approval

Application is received by SME team and assessed

Credit Approval

No
Application sent back to source

Yes
Application Send to Credit Admin

Documents In order Loan disbursed and application and charge doc lodged in safe custody of branch

No
Application sent back to source

Yes

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4.1.6 Portfolio of SME Loan Sector Manufacturing Service Trading Total disbursement Amount 44,584,784 57,562,928 780,719,288 882,867,000 % of total disbursement 5.05% 6.52% 88.43% 100%

Portfolio of SME loan

Manufacturing

Service

Trading

From this above diagram, we can say that, for SME loan mercantile bank give more preference in trading sector but they can finance over manufacturing and service sector to expand service and Manufacturing sector. Manufacturing sector is very important for a country to improve economic growth and as well as service generation and create employment.

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4.2 Implications to Universitys Internship Program

As I completed my internship with Mercantile Bank Limited as a representative of AIUB, I earn some knowledge from the bank through my working period. Which I expressed on my report and it may help AIUB to create a well-organized future relationship through some sponsorship or arranging any sort of seminar regarding improvement of the students on the job field and AIUB can deliver students to Mercantile Bank Limited for internship purpose. By doing my internship in MBL I can create an exposable bridge between this organization which may help them to establish a great future prospect for both of them. Here I also get the opportunity to express my ideas about MBL, which plays an important role of their marketing activities. They also can get some fresh ideas about their lacking which I will found from my report and these ideas can help them to create new strategies by those they can resolve their occurring problems.

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CHAPTER FIVE: CONCLUDING STATEMENT

5.1. Summary
With the clear mission to provide efficient banking services and to contribute socioeconomic development of the country, Mercantile Bank Ltd emerged as a new commercial bank and inaugurated its operation on June 2, 1999. The bank stood 75 branches all over the country up to 2011. There are 30 sponsors involved in creating Mercantile Bank Limited. The sponsors of the bank have a long heritage of trade, commerce and industry. They are highly regarded for their entrepreneurial competence. The banking philosophy of Mercantile Bank Limited is not to carry coal to the new castle'. The main target is to make credits available to the poor people & their activities are aimed at multifaceted growth where people from all economic strata will enjoy the benefits of better living standard, dignity of labor and self worth. Several factors are used as part of the credit management process to evaluate and qualify a customer for the receipt of some form of commercial credit. This includes gathering data on the potential customers current financial condition, including the current credit score. The current ratio between income and outstanding financial obligations will also be taken into consideration. Competent credit management seeks to not only protect the vendor from possible losses, but also protect the customer from creating more debt obligations that cannot be settled in a timely manner. After establishing the credit limit for a customer, credit management focuses on providing the client with accurate and timely statements or invoices. The invoices must be delivered to the customer in a reasonable amount of time before the due date, thus providing the customer with a reasonable period to comply with the purchase terms. The period between delivery of the invoice and the due date should also allow enough time for the customer to review the invoice and contact the vendor if there are any questions or concerns about a line item on the invoice. This allows all parties concerned time to review the question and come to some type of resolution. As my study topic is Small and Medium Enterprise (SME) loan facilities of Mercantile Bank and Im going to analyze the credit management process. It may come into the mind that what is Small and Medium Enterprise (SME)? Small and medium enterprises or small and medium-sized enterprises (SMEs; also small and medium-sized businesses, SMBs, etc.) are companies whose headcount or turnover falls below certain limits. The abbreviation "SME" occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations, and the WTO. The term "small and medium businesses" or "SMBs" are predominantly used in the USA. In most economies, smaller

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enterprises are much greater in number than large companies. SMEs are often said to be responsible for driving innovation and competition in many economic sectors.

Small enterprise An enterprise where the investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006] is more than Rs.25 lakh but does not exceed Rs.5 crore.

Medium enterprise A medium enterprise is an enterprise where the investment in plant and machinery (original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006) is more than Rs.5 crore but does not exceed Rs.10 crore. The definition of MSMEs under the services sector is as follows: A micro enterprise is an enterprise where the investment in equipment does not exceed Rs.10 lakh; A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs.2 crore; and A medium enterprise is an enterprise where the investment in equipment is more than Rs.2 crore. Mercantile Bank Limited provide Small and Medium Enterprise (SME) loan facilities to experienced and inexperienced entrepreneurs located in the urban and sub-urban areas to encourage new and educated young entrepreneurs to undertake productive ventures, to assist them to take part in the economic activities. To achieving the profit target, Mercantile Bank Ltd is more interested for big and corporate loans than Small and Medium Enterprise (SME) Loan. However, they keep constant persuasion with the Heads of Branches to increase exposure in Small and Medium Enterprise (SME) Loan, but they are always handicapped with shortage of manpower in the branches. Small and Medium Enterprise (SME) is a supervised credit and needs more manpower for constant follow up, monitoring and recovery. And as such, branches ask for posting of additional manpower exclusively for Small and Medium Enterprise (SME). In this situation, it is necessary to increase substantial exposure in Small and Medium Enterprise (SME), open separate desk in the branches with adequate manpower. The bank must make a positive attempt to be outward looking in their goals and aware of what is happening. They should have to emphasize on the domestic scenario more closely and analyze any certain trends and strategies of their competitors. By this way, the Bank will be able to keep on playing its important roles in our economy.

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Credit Management policies and techniques used in this banks is comparable to international standards. The officials follow the policy very strictly. They are choosy and conservative in sanctioning loan. The proposal is thoroughly scrutinized by the loan sanctioning authority. The total function of the credit division is monitored periodically. The banks classified loan to the total Advance is very low. As the advance amount, increasing, classified loan amount is also increasing at a very low increasing rate. Management and others related to the bank is trying to formulate new services and products for the SMEs. As concluding remark, the bank is able to attain a leading role with the 12 years success story but to remain unrivalled among new generation banks, the bank must face new challenges. The bank must make a positive attempt to be more outward looking in their goals and aware of what is happening. They must also emphasize on the domestic scenario more closely and analyze any certain trends and strategies of their competitors. The bank must accept any failures and think of them as an objective to pursue future goals instead of blaming such failures on other factors. In this way, the Bank will be able to keep on playing its important roles in our economy.

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5.2. Recommendations
The following suggestions are put forward for present and future sustainability of the SME of MBL MBL should disburse their SME loans in various sector rather than specific scheme SME Loan sanctioning and disbursement procedure should be easy and flexible being considered the requirements of different classes of people. Amount of loan can be raised in proportion with the existing demand of people in SME loan, SME loan can be popular among the small trader and lower income group people like MBL DPS. MBL credit policies can be revised being considered with the increase demand of telecom, transportation, knit, and packaging and plastic industry. Loan facility parameter should be expanded so that all the people can get loan according to their needs. Business Power for sanctioning loans and advances can be increased at branch level. . The Bank should have more conference in overseas, workshop, symposium, and seminar for expansion of SME loan. More SME service center need to be added to fully take the advantage of the huge potential customer segments. The sectors where the bank is investing should need much concern and need a revision so that investments are not resulting in desired outcome. Should open specific Marketing and HR department at branch level. They must have to manage available brochure for the customers with every possible information.

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REFERENCES
Annual Report (2011) of Mercantile Bank Limited Interview with the Credit section In-charge of Mercantile Bank Limited, Banani Branch, Dhaka. Interview with SME and retail banking In-charge of Mercantile Bank Limited, head office. Circular of Mercantile Bank Limited Brochures and publications of MBL products Brochures of different Bank Bangladesh Bank guidelines for SME loan. Website of Mercantile Bank Limited- www.mblbd.com (last access: 15/4/2012).

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