EFFECTIVENESS OF SME LOAN PROVIDED BY BDBL AT SYLHET CITY CORPORATION AREA IN BANGLADESH

Abstract

This study was concerned with the effectiveness of SME loan of BDBL at Sylhet city corporation area in Bangladesh. Socioeconomics studies, adequacy, utilization and repayment of credit, profitability of SMEs and effectiveness of loan among the borrowers constituted the objective of the study. Sixty SME borrowers of the bank were randomly selected in which 20 were from each of tailoring, handy crafts and petty business. Both tabular and econometric techniques were used to analyze the collected data. The study revealed that the respondents were capable of keeping small family size and maximum of them were of active age group being conscious about negative effect of population growth. The literacy rate was found to be more or less satisfactory in the area compared to the present literacy condition of the country. SME business was main occupation for most of the borrowers, also some of them partially depended on remittance and some other occupations in the study area. The petty business owner‟s income, expenditure and saving position was more satisfactory compared to other SMEs in the study area because of good earning ability. It was also found that value of financial asset constitutes the highest for petty business. The adequacy and time requirement for getting loan were satisfactory in the present context of Bangladesh which reflected BDBL‟s urge and sincerity to work in favor of small and medium entrepreneurs of the country. There identified six components of cost to obtain loan from the bank and petty business‟s cost was the largest while it was the lowest for tailoring because of different factors. SME borrowers were found to be conscious about purposive utilization of loan money and their repayment performance was highly satisfactory. Family income, loan amount, purposive utilization of loan and profit from SMEs were the most significant factors for repayment of loan. All the SMEs under BDBL were profitable but petty business was more profitable than others in study area. Considering all SMEs together, effectiveness of SME loan on family income was ranked the highest in the study area according to borrowers‟ perception, as well as family expenditure was also risen after getting loan from BDBL.