Problems and Prospects of MIS in Bangladesh Essay

Dear Sir, I would like to thank you for assigning us this subject to prepare the report. This task has given me the opportunity to explore one of the most important aspects of the MIS field which is its use in the SME activities. The topic of our assignment is â€Å"Problems and Prospects of MIS in Bangladesh† which contains a comprehensive study on the small and medium enterprise activities in BRAC Bank, Dhaka Bank and Mercantile Bank Limited. It was a great pleasure for me to work on the above-mentioned subject. I tried my best to put meticulous effort for the preparation of this assignment. Any shortcomings or flaw may arise as I am very much novice in this aspect. I would be grateful if you consider those from excusable manner. I will wholeheartedly welcome any clarification and suggestion about any view and conception disseminated in my assignment. Sincerely yours, Acknowledgement All praises to almighty Allah who has created us and has given us opportunities and strength to work with people. This report might never have been completed without the necessary practical knowledge, assistance of many books, articles, websites, and primary data. It enhanced our knowledge on SME activities of different banks as well as the problems of implementing MIS in those banks. Thanks to all those persons, who have assisted me, providing me co-operation, books and articles. I would like to express my special gratitude to our Sir, Rahimullah Miah for his supervision, co-operation and advises. The members of BRAC Bank, Dhaka Bank and Mercantile Bank management were very co-operative and helpful. They helped me through providing various data, guidance and direction. I am also grateful to all other employees of SME Reconciliation Department for their support and assistance. I would like to express my gratitude to all the people that were involved both directly and indirectly in the preparation of this report. I apologize to the people whose names that I have not mentioned, and their contribution is highly appreciated by me. Objectives of the study: The broad objective of this study includes the following: * To have a clear understanding about the concept of SME (Small & Medium Enterprises) * To know how SMEs work and operate in Bangladesh * To highlight the use and implementation of MIS (Management Information Systems) in the field of SME * To know and compare how different banks operate SME banking operation around the country though their extensive networks * To articulate major problems and challenges for implementing MIS in the SME sector Limitations of the study: The study has suffered from a number of limitations – * Limited time is a big constraint for this research. The topic of this report is vast in compared to the given time * More relevant data and information could not be collected due to non-availability of sufficient books and journals. Information in websites of banks is also insufficient. * Current and detail information about various SME sectors could not be found * Data from different banks is highly confidential for the outside people and access to software is not provided * Being females, we found many difficulties to gather necessary data and to prepare this report Methodology: Methodology is the process or system through which a study is being carried out for the purpose of collection of information that is required for reaching a conclusion on that study. In our study, information has been collected by using multiple tools. Much necessary information has been collected by from the personal observation and one to one discussion with the relevant officials. A questionnaire was designed to collect information on the use of SME loans, access to SME credit facilities and revenue-expenditure of the enterprises. Focus Group Discussions (FGD) were used to get a broader view of the business environment for SMEs, their major drawbacks, labor market mechanisms, demand for other complimentary services, the strengths and weaknesses of SME services of different banks and a comparison with other players providing similar services. Complimentary information on indirect employment generation, governance problems and the costs of operation for SMEs was put together from in dividual case studies conducted at the branch offices of different banks that offer only SME credit services. Three practical banks, named BRAC Bank, Dhaka Bank and Mercantile Bank Ltd were selected as sample banks purposively considering the amount of loan size, interest rate, loan processing fees, period of loans, mode of finance and management. Policies relating to SME financing such as fiscal policy, monetary policy and internal policies of these banks were examined thoroughly with a view to find out the influence of existing policies on SME financing. Trend and pattern of bank financing to SME was analyzed by classifying the financing in terms of areas, rate of interest, types, category, and banks. The total methodology of the report is shown below for better clarity and easier understanding through flowchart construction. Figure 1: The Flow chart construction Primary data collection: Primary data of this assignment has been collected from: Branch Manager & Second Officer of different banks. Face to face conversation with SME department employees and staffs of different banks. Face to face conversation with clients of SME loans. Secondary data collection: Secondary data of this assignment has been collected from: Annual Reports and published financial statements of BRAC Bank, Standard Chartered Bank and Shahjalal Islamic Bank Limited. Various prescribed forms of bank investment in SME Different Research Paper regarding SMEs, Different Publications on SMEs of different banks Different text books, brochures, leaflets, files, research papers & materials. Official website of the three banks Data Analysis: The whole report is being prepared with the help of different computer applications such as MS Word, MS Excel, MS Access and MS PowerPoint. Data Compilation: The data required for this study were collected from both primary and secondary sources; however, majority of the information was collected from secondary sources. These two methods are discussed below- Chapter One 1.1 Introduction: Today it is widely recognized that information systems knowledge is essential for managers as most organizations need information systems to survive and prosper. An information system has many applications, MIS is one of them. Management information systems (MIS) is a specific category of information system that provides the required information to the management on a regular basis. It can be defined as collecting and processing of raw data into useful information and its dissemination to the user in the required format. In fact a full MIS includes all the systems that are designed to furnish management with information to assist in making decisions and to manage organizations efficiently and effectively. Today, the term MIS is used broadly in a number of contexts and includes decision support systems, resource and people management applications, enterprise resource planning (ERP), enterprise performance management (EPM), supply chain management (SCM), customer relationship managemen t (CRM), project management and database retrieval applications. In Bangladesh, the use of MIS in different organizations can be evidently found. However we will give our special focus on the small and medium enterprises. First of all, we need to know what is meant by an SME. An SME is defined as, â€Å"A firm managed in a personalized way by its owners or partners, which has only a small share of its market and is not sufficiently large to have access to the stock exchange for raising capital†. SMEs ordinarily have few accesses to formal channels of finance and depend  primarily upon savings of their owners, their families & friends. Consequently, most SMEs are sole proprietorships & partnerships. SMEs can be defined against various criteria. The three parameters that are generally applied by the Government of Bangladesh to define SMEs are: Capital investment in plant and machinery ï€  Number of workers employed ï€  Volume of production or turnover of business Again, according to the industrial Policy 1999 (IP- 1999), â€Å"Small Industries† are defined as industrial enterprises employing less than 50 workers and/or having a fixed capital investment of less than Tk.100 million. â€Å"Medium industry† covers enterprises employing between 50 and 99 workers and/or having a fixed capital investment between Tk. 100 and 300 million. â€Å"Cottage Industry† covers household-based industrial units operated mainly with family labour Role of SMEs in Bangladesh: SMEs are recognized as engines of economic growth and employment generation for sustainable industrialization in both developed and developing countries of the world. In context of Bangladesh, there is no alternative of small and medium enterprises for rapid industrialization and national economic growth through lower capital investment and employment generation. The commonly perceived merits often emphasized for their promotion especially in a developing country like Bangladesh include their relatively high labour intensity, dependence on indigenous skills and technology, contributions to entrepreneurship development and innovativeness and growth of industrial linkages. The case for fostering SME growth in Bangladesh is irrefutable as these industries offer bright prospects for creating large-scale employment and income earning opportunities at relatively low cost for the un-and unemployed especially in the rural areas strengthening the efforts towards achieving high and sustained economic growth which are critically important  prerequisites for triggering an exit from endemic poverty and socio-economic deprivation. SMEs in the economy of Bangladesh: In Bangladesh about 90% of the manufacturing and service industries are fallen under SMEs category. SMEs account for about 45% of manufacturing value addition in Bangladesh. They account for about 80% of industrial employment, about 90% of total industrial units and about 25% of total labour force. Its total contribution to export earnings varies from 75- 80% based on the Economic Census 2001-2003 (The New Nation, 2008). According to the Bangladesh Bureau of Statistics, SME’s provide about 44 percent employment of the country. It contributes Tk 14,940 crore (149.40 billion) to the GDP during the fiscal year 2006-07. In another statistics we find that the total number of SMEs is estimated at 79754 establishments, of which 93.6% are small and 6.4% are medium. The 2003 Private Sector Survey estimated that about 6 million micro, small, and medium enterprises defined as enterprises with fewer than 100 employees, contributed around 20-25% of GDP (The New Nation, 2008). On the above statistics it is evident that the small business enterprises are very strong in terms of the number and their contributions, thus the overall development of Bangladesh’s SMEs are depending largely on the development of small scale enterprises. Higher growth of the SMEs can help eradicate poverty to a satisfactory level by removing various prejudices against labor intensive approach and creating jobs for the skilled manpower. Uses of MIS in SME: MIS can offer small and medium businesses a number of advantages. Today, leading companies and organizations are using information technology as a competitive tool to develop new products and services, forge new relationships with suppliers, edge out competitors, and radically change their internal operations and organizations. For example, using MIS strategically can help a company to become a market innovator. By providing  a unique product or service to meet the needs of customers, a company can raise the cost of market entry for potential competitors and thus gain a competitive advantage. Another strategic use of MIS involves forging electronic linkages to customers and suppliers. This can help companies to lock in business and increase switching costs. Finally, it is possible to use MIS to change the overall basis of competition in an industry. For example, in an industry characterized by price wars, a business with a new means of processing customer data may be able to create unique product features that change the basis of competition to differentiation. The successful MIS supports a business’s long range plans, providing reports based upon performance analysis in areas critical to those plans, with feedback loops that allow for titivation of every aspect of the enterprise, including recruitment and training regimens. MIS not only indicate how things are going, but why and where performance is failing to meet the plan. These reports include near-real-time performance of cost centers and projects with detail sufficient for individual accountability. Although SMEs have the potentials, at the rapidly increasing age of internet, to utilize the newly emerged technology dependent communication and information mediums, in acquiring their competitiveness, the slow rate of adoption is evident. Great opportunities can be cre ated in the SME sector through the operation and usage of different connected technologies, such as computer, internet and other information and communication technologies. In Bangladesh, the development of effective Management Information Systems holds a number of challenges for small and medium businesses. It is not exercised in these businesses although the technology is existent and the Government of the Peoples Republic of Bangladesh has declared the information and communication technology as one of the thirst sectors of the country and taken diversified initiatives to motivate different enterprises to be connected and start operation of the technology. The newly elected government of the Peoples Republic of Bangladesh has declared their mission to develop the digital Bangladesh by 2021. On the abovementioned context it is evident that small businesses of our country are slow to apply technology to improve their competitiveness as they are affected by their sheer small size and limited resources Problems of implementing MIS in the SME sector: In a developing country like Bangladesh, building, operating, and maintaining appropriate Management information systems are challenging for a number of reasons. For example, some information cannot be captured and put into a system. Computers often cannot be programmed to take into account competitor responses to marketing tactics or changes in economic conditions, among other things. In addition, the value of information erodes over time, and rapid changes in technology can make systems become obsolete very quickly. Finally, many companies find systems development to be problematic because the services of skilled programmers are at a premium. However, considering the situation of our country, we can summarize these problems in the following points: 1) It is not easy to use workable information systems in the small and medium enterprises and to keep the flow of information system in the right way 2) The body of knowledge in MIS is relatively recent and scarce. Many of the terms used in MIS environments are unpractical, imprecise and controversial. 3) MIS problems often are not easy to define or structure 4) MIS implementation and installation can be very expensive for small size companies looking to manage their operations more effectively. 5) Properly trained employees are a critical part of an MIS. New employee hiring or employee training related to the MIS function adds to the implementation costs. 6) The online services of MIS are absent in the small and medium enterprises. For example, there is no scope for transferring accounts online or through ATM booth. 7) A lack of rapport often exists between MIS personnel and management and also between MIS personnel and users of an organization 8) Once an MIS is created and installed in a company, it may prove to be an inflexible system. Making changes quickly to reflect fluctuating business operations may not be possible depending on the MIS style and functionality. 9) Major business changes will require major changes to the MIS, leading to increased costs and downtime of information reporting. 10) The biggest flaw an MIS can have is pulling incorrect or inadequate information for management. This problem results in wasted time and money for the small and medium enterprises. SME in banking: Most SME ventures in Bangladesh depend on personal savings, family or other informal credit sources. In recognition of this failure of the financial market, attempts have recently been made to cater to it. Financial and development assistance designed specially for small and medium enterprises in Bangladesh is a new and upcoming trend. After the surge of micro-finance in the last two decades, small and medium enterprises have come to the limelight in the financial sector on account of their contribution to economy and yet limited access to finance. It was not until 2010 that the government and policymakers recognized the importance of providing extensive credit facilities to small and medium sector entrepreneurs to promote various initiatives, especially start-up enterprises as well as ones looking to scale up. The banks and other financial institutions, however, have been providing loans to such enterprises for long, though not in the nomenclature of SME Financing. Both micro-financ e institutions and banks are beginning to realize the potential of this market and designing new financial products for it. Now a days the Small and Medium Enterprise (SME) Financing has become an important area for Commercial Banks in Bangladesh. To align its corporate policy with the regulation of Central Bank, banks have become more concerned about SME and opened windows to conduct business in this particular area. Today, almost all banks and non-bank financial institutions (NBFI) in the country are providing loans to the sector, under different governmental schemes as well as through their own product portfolios. Some specialized financial organizations such as Basic Bank are also providing financial services to the SME sector. Since this segment of the market is relatively underserved, a number of formal financial institutions (e.g. Exim Bank, Islami Bank, NCC Bank) are gradually scaling down and designing financial products for them. In the financial sector reform program of Government of Bangladesh, increased financing for SMEs by banks is a major component. Bangladesh Bank, the national bank, has introduced $16 million  refinancing scheme to promote lending to SMEs by banks and financial institutions. In January 2005 , the bank had agreement with six banks and eight financial institutions and about 2,000 SMEs have benefited from the scheme upto the end of January (Bangladesh Bank). ‘Small and Medium Enterprise Sector Development Programme’, a $30 million project of Government of Bangladesh and ADB, is also in progress. However, these initiatives are still quite inadequate. Moreover, being an overlooked market for long, there is lack of knowledge about the clients and their needs reflecting in absence of appropriate lending methodology. Chapter Two Literature review: * In Bangladesh about 90% of the manufacturing and service industries are fallen under SMEs category. SMEs account for about 45% of manufacturing value addition in Bangladesh. They account for about 80% of industrial employment, about 90% of total industrial units and about 25% of total labour force. Its total contribution to export earnings varies from 75- 80% based on the Economic Census 2001-2003. (The New Nation, 2008). * According to the Bangladesh Bureau of Statistics, SME’s provide about 44 percent employment of the country. It contributes Tk 14,940 crore (149.40 billion) to the GDP during the fiscal year 2006-07. In another statistics we find that the total number of SMEs is estimated at 79754 establishments, of which 93.6% are small and 6.4% are medium. The 2003 Private Sector Survey estimated that about 6 million micro, small, and medium enterprises defined as enterprises with fewer than 100 employees, contributed around 20-25% of GDP – (The New Nation, 2008). * Today, the term MIS is used broadly in a number of contexts and includes decision support systems, resource and people management applications, enterprise resource planning (ERP), enterprise performance management (EPM), supply chain management (SCM), customer relationship management (CRM), project management and database retrieval applications. –Kenneth C. Laudon & Jane P. Laudon. Now in this part, we will discuss about the SME services of three different banks that operate within our country. 1) BRAC Bank: BRAC Bank, being the youngest bank, took a step to break away from usual tradition and tapped into the true suburb entrepreneurial initiatives. Today, with over 14,500 crores of loans disbursed till date, BRAC Bank is country’s largest SME financier that has made more than 320,000 dreams come true. SME Products of BRAC Bank: Name of Bank Product Loan size BRAC Bank Prapti account Any institution can open this account in the name of the Institution Opening balance only BDT. 10,000.00 & BDT. 5000 Anonno Rin From BDT 3 lac to BDT 9.5 lac Prothoma Rin From minimum BDT 3 lac up to maximum of BDT 9.5 lac Digoon Rin Minimum of 5 lac to maximum of 30 lac BDT Apurbo Rin Starting from BDT 8 lac to maximum of BDT 30 lac Pathshala Rin Minimum BDT 3 lac to maximum BDT 30 lac Aroggo Rin Minimum of 3 lac to maximum of 30 lac Anonno Rin: This is a small scale loan designed to finance small scale trading, manufacturing and service ventures, especially to aid the purchase of fixed assets and to finance working capital. Eligibility Entrepreneurs aged between 18 to 60 years Entrepreneurs with minimum 2 years experience in the same line of business A business which must be a going-concern with more than 1 year in operation Maximum Amount From minimum BDT 3 lac up to maximum of BDT 8 lac Features Loan without mortgage For excellent borrowers who have paid or paying in due times, we offer discounted rates Quick, quality banking throughout the country Potential women entrepreneurs will also get the facilities of this loan Apurbo Rin: In order to help our SME borrowers for financing working capital or to purchase fixed assets, BRAC Bank offers APURBO. It caters to the need of entrepreneurs who are operating in trading, manufacturing, service, agriculture, non-farm activities, agro- based industries and other sectors of our economy. Eligibility Entrepreneurs having a minimum of 3 years of some business activities A business which must be a going concern for 3 years Age minimum 25 years and maximum up to 60 years Maximum Amount Starting from BDT 8 lac to maximum of BDT 30 lac Features Without mortgage loan below 10 lac Simple loan processing for expanding your business Quick disbursement Disbursement in one or two installment Flexible monthly repayment loan Pathshala Rin: This is a loan designed to meet the needs of small and medium sized private educational institutions, such as kindergartens, schools and colleges etc. Eligibility A small & medium educational institute that is in operation for minimum 3 years The institution should be sole proprietorship, partnership, private limited company or society The educational institute must be a profit making concern Maximum Amount Minimum BDT 3 lac to maximum BDT 30 lac Features Without mortgage for loan below 10 lac Laon for fixed assets purchase & civil construction Loan repayment can be spread up to 4 years Minimum documentation Monthly repayment loan Quick disbursement Flexible interest rate based on security Aroggo Rin: This loan is suitable for private clinics, diagnostics centers and doctors’ chambers to purchase fixed assets under equated monthly installments. Eligibility Institutions with at least 2 years in operation & profit making concern Doctors having 5 years of experience Maximum Amount Minimum of 3 lac to maximum of 30 lac Features Loan without mortgage up to 8 lac Easy loan processing Loan repayment schedule is spread up to 3 years 1% loan processing fee Flexible interest rate based on security Digoon Rin: It is a loan facility for Small and Medium enterprise. This product’s main objective is to help various Small and Medium entrepreneurs to meet their short-study cash flow shortages or bridge the fund-flow gaps. Eligibility Entrepreneur having minimum 2 years of business activities he business which must be going concern for 2 years Aged between 18 years to 55 years Maximum Amount Minimum of 5 lac to maximum of 30 lac BDT Features Double amount of loan on your deposit Attractive return against the deposit Flexible repayment plan monthly installment and single installments Quick disbursement Highlights of SME Banking Division of BRAC Bank Number of Unit offices 429 Number of Staff 2,104 No of Loan disbursed (cumulative) 202,101 Cumulative Disbursement (in million BDT) 84,170.31 No. of outstanding Account 120,685 Portfolio in amount (in million BDT) 32,996.18 Amount of Deposit (in million BDT) 3,352.6 No of SME Sales & service Center 30 Sector wise Distribution of SMEs 2) Dhaka Bank Ltd: Since inception, the Dhaka Bank has held socio-economic development in high esteem and was among the first to recognize the potentials of SMEs. Dhaka Bank’s Involvement: Recognizing the SME segment’s value additions and employment generation capabilities quite early, the Bank has pioneered SME financing in Bangladesh in 2003, focusing on stimulating the manufacturing sector and actively promoting trading and service businesses. Story of a successful Branch in SME Financing: The Bank started branch operations at Belkuchi Sirajgonj in April 2003. Prior to the Bank’s intervention, the weaving community did not have the financial strength to stock their products till â€Å"Eid ul Fitr† when the annual sale takes place. Traders were taking advantage to the situation by buying up entire productions at low prices and liquidating stocks just before â€Å"Eid†. With financial services from Dhaka Bank Limited, the weavers have converted to power looms, significantly increased profitability and reduced the involvement of middlemen. The bank is now working on institutionalizing the learnings and applying them in other areas across Bangladesh, particularly in textiles, light engineering and other manufacturing clusters. Already it has identified several clusters and is working on improving access to finance within these clusters. Experience & Learnings A problem behind the lower end of the SME sector of Dhaka Bank is that it is unable to fully understand its needs. Even if these needs are understood, they are seldom met with the right product mix. Small business owners are unable to provide banks with required information of the right type and quality. This has created a gap between the borrower and the banks and has served to limit the outreach of SME financial products. In order to overcome this obstacle, Dhaka Bank SME Unit provides comprehensive support to prospective clients in evaluating their business and preparing the required documents in acceptable formats. In this regard, the Dhaka Bank SME Unit has been working in close collaboration with the USAID, the South Asia Enterprise Development Facility (SEDF) an International Finance Corporation (IFC) managed multidonor facility and the World Bank. The bank has recently been provided technical assistance by the World Bank and is also working with other development agencies and donors for continuous improvements in the products and services it offers. SME Transactions of Dhaka Bank: Product Cash Credit Eligibility All SME businesses where the key personnel have 2 years experience in the line of business. Satisfactory credit report Method of Appraisal The clients business experience, expertise, business volumes and monthly cash flow are used in the assessment process. Margins (indicative) The quality of receivables would be of importance in fixing margins up to which working capital is made available. Tenor Maximum 12 months (renewable) Pricing Risk based pricing strategy, in line with the market rates. Security Primary: †¢ Charge on the inventory and receivables. †¢ Charge on other current assets †¢ Personal guarantee of proprietor /partners/ directors. †¢ Charge on fixed assets. Secondary: †¢ Collateral security on a case-to-case basis. Interest Fixed Rate, typically for 12 months. Review Facility terms & pricing are both reviewed at least annually Processing fee Processing fee of 1% is generally charged on small loans. Actual fee charged is determined on a case-to-case basis. 3) Mercantile Bank Ltd : Mercantile Bank Limited provides 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. A special credit scheme under the name and style â€Å"Small and Medium Enterprise (SME) Scheme† has been introduced to extend credit facilities to the small and medium entrepreneurs of the country. It’s SME products are: CHAKA (Term Loan). ANANYA (Women Entrepreneur’s Loan). CHALTI MULDHAN (Continuous Loan). SINGLE PAYMENT LOAN (Short Term Seasonal Loan) Subject SME Products CHAKA ANANYA CHALTI MULDHAN SINGLE PAYMENT LOAN Size Tk 0.50 -50.00 lac for SE Tk 0.50 -50.00 lac for SE Tk 0.50 -50.00 lac for SE Tk 0.50 -50.00 lac for SE & ME Tk 0.50 -500.00 lac for ME Tk 0.50 -500.00 lac for ME Segment SE & ME SE SE & ME SE & ME Tenure 1 – 5 years 1 – 5 years 1 year Maximum 9 months Grace period Maximum 6 months Maximum 6 months for term loan Nil N/A Interest rate 13%-15% p.a applicable as per mode of financing. 10% p.a 13% p.a 15% p.a Penal interest 1 % higher on overdue amount 1 % higher over the usual rate on overdue amount. 2 % higher on overdue amount. 1 % higher on overdue amount. Repayment EMI or at lum sum on or before expiry as applicable EMI or at lum sum on or before expiry as applicable At lum sum on or before expiry At lum sum on or before expiry Security PG, Cheques plus others as applicable PG, Cheques plus others as applicable PG, Cheques plus others as applicable PG, Cheques plus others as applicable Ù ­SME = Small & Medium Enterprise Ù ­SE=Small Enterprise Ù ­ME=Medium Enterprise Ù ­EMI=Equal Monthly Installment Ù ­ PG = Personal Guarantee Repayment of Loan: 1. Term Loan: Maximum 60 installments. 2. Working Capital: Maximum 12 installments, 40% of the loan amount should be recovered within 1st 6 months and remaining 60% should be recovered within next 6 months. At maturity the loan will be fully adjusted. After repayment of 75% of the loan the customer may apply for new credit facility. Selection of Borrower: 1. Small and medium enterprise financing, like other credit facilities must be subject to the Bank’s management process setup for this particular business. The process may include, identifying source of repayment and assessing customer’s ability to repay, expected future cash flows, his/her past dealings with the bank, the net worth and information from CIB. The bank must identify the key drivers of their borrowers business, the key risks to their business. 2. At the time of sanctioning facility under various modes of SME financing, a written declaration shall be obtained from the borrower disclosing details  of various facilities already obtained from other institutions to ensure that the total exposure in relation to the repayment capacity of the customer does not exceed the reasonable limits as laid down in the approved policies of the bank as well as to help avoid exposure having multiple facilities. 3. Age limit: The age of the proprietor / partners / directors must range between 21 years to 60 years. 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 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). ATM Booth and SME Service Centre: The bank serves the customers by providing ATM Booth and SME Service Centre facilities. A number of ATM Booths and SME Service centers have been unlocked at different commercially significant places of the country to serve the customers, to save their time, consequently, to make them free from hassle. Target Segments for SME Financing: 1. Hospitals and Clinics 2. It related business 3.Agricultural and Agricultural Development items 4.Fishing and fishing business promotion 5.Transportation and Communication 6.Forestry and furniture 7.Construction business and housing development 8.Leather marketing and leather goods 9.Knitwear and ready made garments 10.Plastic and other synthetics 11.Entertainment 12.Photography 13.Hotel and tourism 14.Warehouse and container services 15.Printing and packaging 16.Gunning and Bailing 17.Pathological Laboratories 18.Cold Storage 19.Horticulture- Flower growing and Marketing 20.Food and oil processing plants 21.Higher education and expertise knowledge society 22.Telecommunication 3.22. Portfolio of SME Loan Sector Amount % of total disbursement Manufacturing 44,584,784 5.05% Service 57,562,928 6.52% Trading 780,719,288 88.43% Total disbursement 882,867,000 1000% From this above diagram we can say that, of 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. Chapter Three Result and Discussion: In this part, we will make a comparison of the SME activities of the three selected banks as shown below: Comparative analysis of SME loans of three different banks The banks for comparative analysis have been chosen in the basis of the following criterion: * Loan Size: BRAC Bank Limited Dhaka Bank Limited Mercantile bank Limited 3lac – 30 lac 1 lac- 50 lac 2lac – 50 lac Among the banks, Mercantile bank offers the highest loan amount to customer where as BRAC Bank offers the lowest loan to its customer. * Rate of Interest: BRAC Bank Limited Dhaka Bank Limited Mercantile bank Limited 15% 17% 15% In terms of interest rate, Mercantile bank and BRAC bank offer the lower rate of interest to its customers. The highest rate is charged by Dhaka bank limited. * Loan Processing Fee: BRAC Bank Limited Dhaka Bank Limited Mercantile bank Limited 0.50% of the loan amount Free TK 500.00 The BRAC Bank limited only charges .50% as loan processing and Mercantile Bank charges TK. 500 for loan processing. * Period of loan: BRAC Bank Limited Dhaka Bank Limited Mercantile bank Limited 1 year to 3 years 1 year to 3 years Upto 2-5 years Among the banks, the highest loan maturity date is offered by Mercantile bank Limited. * Mode of Finance: BRAC Bank Limited Dhaka Bank Limited Mercantile bank Limited Only Term loan Term loan and working capital loan Only Term loan All the banks provide SME financing facilities but do not provide long term loan to its customers. Among the banks Dhaka bank provides both term loan and working capital loan to their customer. Other banks provide only term loan to its customers. Portfolio size of different banks in SME sector: name of Bank Portfolio Size BRAC Bank Limited 25.72 Dhaka Bank Limited 18.00 Mercantile Bank Limited 16.38 From the table we can see that BRAC bank has the highest investment in the SME sector. Overall Comparison of three banks Particulars BRAC Bank Limited Dhaka Bank Limited Mercantile Bank Limited Loan size 3lac-30lac 1ac-50lac 2lac-50lac Rate of interest 15% p.a 17% p.a 15% p.a Loan processing fee .50% of the loan amount —— TK 500 Risk fund —– 1%-2% of loan amount 1%of loan amount Supervision fee —– 1%-2% of loan amount 1%of loan amount Utilization fee —– 1.5% quarterly —– Period of loan 1yr – 3 yr 1yr – 3 yr Upto 2-5 yrs Mode of finance Term loan Only term loan Term loan as well as working capital Security primary Personal guarantee Personal guarantee Personal guarantee secondary Upto 8 lac collateral free & above 8 lac collateral is mandatory Upto 5 lac collateral free(case to case above 5 lac and collateral mandatory ) Above 10.00 Lac Collateral security mandatory Table: Comparative analysis of SME loan of different bank: Comparative performance analysis of SME loan of different banks: Performance BRAC Bank Limited Dhaka Bank Limited Mercantile Bank Limited Year of operation 2009 2009 2009 Disbursement 950 crore 115.72 crore 127.70 crore Rate of recover 92% 87% 87% From the above analysis and findings of the study, it is obvious that there is a lot of market potential for Mercantile Bank Limited in SME loan. As we came to know from the analysis that BRAC bank is the most dominant player in the market and except BRAC bank other players are more or less similar category. But since the market yields a high growth potential and BRAC bank having basic infrastructure and a larger customer base it is very difficult for the other bank to cope with BRAC bank unless they build some alliances to develop such infrastructure to serve the client at better service. Initially, it will require a huge concentration, but the bank is financially sound to incur such amount of investment in new line of business. Other than the investment Mercantile Bank Limited should improve their credit facilities, customer service, and add attractive features to the product to attract every class of people. Chapter Four Recommendations: Considering the existing situation, the following suggestions are put forward for present and future sustainability of the Management Information Systems in the SME sectors of Bangladesh: * The modern computer technologies should be used appropriately to develop the Small & Medium Enterprises of the country * Information systems designers, whether internal to the company or part of an outside firm should assure the technical quality of the MIS system and the ease of the user interface. * System designers must oversee the process of system design and implementation, assess the impact of the new system on the organization, and develop ways to protect the system from abuse after it is installed. * Small business owners and managers must plan what type of MIS systems to implement and to ensure that the underlying data are accurate and useful. * Selection, acquisition and application of the appropriate technology should be ensured that would enable production of goods of competitive quality and competitive price, maintaining optimum productivity, while environmentally  not injurious. * People of our country should be provided with adequate education, training skill and technical knowledge of the field of MIS so that they are unable to implement it in the SME sector. * Better and improved MIS facilities must be provided in the SME sector * SME Loan sanctioning and disbursement procedure should be easy and flexible being considered the requirements of different classes of people. * Bottlenecks or barriers should be removed by taking advanced steps in mode of disbursement, charge documents and approval process. * Business Power for sanctioning loans and advances can be increased at branch level. * The use of MIS should be extended to the rural areas of our country. * The Government of the country should ensure the use and implementation of MIS technology in order to develop the SME sector * More SME service centers need to be added to fully take the advantage of the huge potential customer segments. Conclusion: In the conclusion, we can state that, SME is the most emerging sector to expand the scientific and technological capabilities of an organization. However such SMEs should be equipped with better computer facilities and implementation strategies like the MIS. The opportunities of using the appropriate Management Information Systems are not sufficient considering the small and medium enterprises of our country. Many small and medium enterprises are using this technology, but the scope  is very limited. It is thus very clear that MIS development should proceed hand in hand with micro enterprise development. It is interesting to observe that the conditions for small industry development that we find today, being at the threshold of total globalization, are very much the same as observed several-decades ago. In spite of the criticism and neglect of the SME sector on the grounds of inefficiency and non-optimal use of productive factors compared to larger industries, SMEs are beginning to be extolled for their greater dependence on labour-intensive production techniques, lower requirements of imported inputs and better geographical dispersion. So, proper initiatives should be taken in order to develop the flow of Management information system it the small and medium enterprises of our country. References: 1. Laudon, K., & Laudon, J. (2010). â€Å"Management Information Systems†- Managing the Digital Firm, 11th Edition. Prentice Hall/CourseSmart, 12/30/2008.) 2. Hossain, N. (1998), â€Å"Constraints to SME development in Bangladesh), Jobs project, USAID 3. Meagher, P (1998), â€Å"Secured Finance for SMEs in Bangladesh†, Jobs project, USAID 4. Ahmed, Z. U. (1999), â€Å"Problems of Access to Credit for Small and Medium Enterprises in Bangladesh†, Jobs project, USAID 5. Baldwin, J. and Picot, G. (1994), â€Å"Employment Generation by Small Producers in Canadian Manufacturing Sector†, Journal for Small Business Economics 6. CPD (2003), â€Å"Industrial Policy, Privatization and SME†, National Policy Review Forum, Centre for Policy Dialogue, Bangladesh 7. SEAF (2004), â€Å"The Development Impact of Small and Medium Enterprises: Lessons Learned from SEAF Investment†, Small Enterprise Assistance Fund, Washington. 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