Bangladesh Institute of Bank Management

Mirpur-2, Dhaka

Certified Expert in Credit Management (CECM)

(11th Intake_2nd Batch: Online Module)

Assignment-III
A Summary of ‘All the Ten Documents’

Name of Participant : Ruksana Afroj

Participant’s Serial No. : 27
Participant’s ID No. : CECM231125
Name of Affiliated Institute : Trust Bank Limited
Cell Phone Number : 01737533655
Email Address (personal) : [email protected]

Date of Submission: March 20, 2023

 SME CREDIT RISK MODEL

CECM 11th Intake, 2nd Batch, Assignment-II

Small and medium-sized enterprises (SMEs) are important contributors to economic growth and
job creation. However, SMEs often face difficulties in obtaining credit, as they may lack the
collateral, credit history, or financial stability required to qualify for traditional bank loans. This
makes SME credit risk assessment a crucial task for lenders.

There are several factors that lenders consider when assessing SME credit risk, including:

1. Financial ratios: Lenders may evaluate SMEs' financial health by analyzing their
financial ratios, such as debt-to-equity, current ratio, and net profit margin.

2. Credit history: Lenders will review the SME's credit history, including any previous loans
or credit lines, to assess their ability to repay debts.

3. Collateral: SMEs may need to provide collateral to secure a loan. Lenders will evaluate
the value and quality of the collateral offered to determine the amount of credit risk.

4. Industry and market factors: Lenders will evaluate the SME's industry and market to
assess the potential for growth and profitability, as well as the level of competition and
regulatory environment.

5. Management team: Lenders will assess the SME's management team to evaluate their
experience, qualifications, and track record.

Overall, lenders must balance the potential for profit against the potential for losses when
assessing SME credit risk. By carefully analyzing these factors, lenders can make informed
decisions about whether to extend credit to SMEs and at what interest rate.

Small and medium enterprises (SMEs) play a crucial role in the economy of Bangladesh,
accounting for a significant portion of the country's GDP and employment. According to the
SME Foundation of Bangladesh, there are over 7 million SMEs in the country, employing
around 40% of the total workforce and contributing around 25% to the country's GDP.

SMEs in Bangladesh are mainly involved in the manufacturing, trading, and service sectors.
They range from micro-enterprises, which typically have fewer than 10 employees, to small and
medium-sized enterprises, which can have up to 250 employees.

The government of Bangladesh has taken several initiatives to promote SME development in the
country, including providing access to finance, technology, and training. The Bangladesh Bank,

CECM 11th Intake, 2nd Batch, Assignment-II

the central bank of the country, has also introduced various policies and schemes to facilitate
SME financing and support their growth.

Despite these efforts, however, SMEs in Bangladesh still face several challenges, including
limited access to finance, inadequate infrastructure, and lack of skilled labor. To overcome these
challenges, there is a need for continued government support, as well as increased private sector
investment in the SME sector.

Bangladesh has a thriving Small and Medium Enterprise (SME) sector, with many successful
entrepreneurs operating in this space. Here are a few notable SME entrepreneurs from
Bangladesh:

1. Selima Ahmad: She is the founder of the Bangladesh Women Chamber of Commerce and
Industry (BWCCI), which promotes and supports women-led businesses in Bangladesh.
She is also the founder of several successful SMEs, including a garment manufacturing
company and a microfinance institution.

2. Syed Farhad Ahmed: He is the founder and CEO of Ajkerdeal.com, one of the largest e-
commerce platforms in Bangladesh. The company offers a wide range of products, from
electronics to fashion, and has revolutionized the way people shop in Bangladesh.

3. Shameem Ahsan: He is the founder of Akij Online Ltd, an e-commerce platform that
specializes in selling local products from Bangladesh. The company has gained
popularity for its focus on promoting local SMEs and creating a market for their
products.

Prospects of SME businesses

The prospects of SME businesses in Bangladesh are very promising, and the sector has been
growing rapidly in recent years. Here are some of the reasons why SME businesses in
Bangladesh have good prospects:

1. Supportive Government Policies: The government of Bangladesh has taken various

initiatives to promote SMEs in the country, including providing access to finance,
training, and technology. For example, the Bangladesh Bank has launched a refinancing

CECM 11th Intake, 2nd Batch, Assignment-II

 scheme to provide low-cost loans to SMEs, and the government has established several
SME-focused institutions and policies.

2. Large Domestic Market: Bangladesh has a large and growing domestic market, with a
population of over 160 million people. This presents a significant opportunity for SME
businesses to tap into this market and expand their customer base.

3. Low Labor Costs: The cost of labor in Bangladesh is relatively low compared to many
other countries, making it an attractive destination for SMEs that rely on labor-intensive
production processes.

4. Access to Regional Markets: Bangladesh is located in a strategic position, providing

SMEs with access to regional markets such as India, China, and Southeast Asia. The
government has also signed several trade agreements to increase market access for
Bangladeshi SMEs.

5. Innovation and Creativity: Many Bangladeshi SMEs are known for their innovation and
creativity, developing unique products and services that cater to local and international
markets. This has helped them to stand out and compete effectively in the global
marketplace.

Market Analysis of SME Business:

The SME sector in Bangladesh is a vital contributor to the country's economy, and its market
analysis shows significant potential for growth. Here are some key insights on the market
analysis of SME business in Bangladesh:

Market Size: The SME sector in Bangladesh is vast, accounting for over 25% of the country's
GDP and employing around 70% of the labor force. The market size is estimated to be around
$70 billion, and it is expected to continue to grow rapidly in the coming years.

Market Segments: The SME sector in Bangladesh is divided into various segments, including
manufacturing, services, and agriculture. Manufacturing is the most significant segment,
accounting for around 90% of the SMEs in the country, while services and agriculture account
for the remaining 10%.

CECM 11th Intake, 2nd Batch, Assignment-II

Consumer Behavior: The consumer behavior in Bangladesh is rapidly changing, and there is a
growing demand for quality products and services. SMEs that can provide innovative and
affordable solutions are likely to succeed in the market.

Competition: The SME sector in Bangladesh is highly competitive, with many players operating
in the same segments. However, there is also a significant untapped market, and SMEs that can
differentiate themselves through quality, innovation, and customer service can gain a competitive
advantage.

Market Challenges: SMEs in Bangladesh face several challenges, including access to finance,
technology, and skilled labor. The regulatory environment can also be complex and challenging
to navigate, making it difficult for SMEs to operate efficiently. However, the government has
taken various initiatives to address these challenges and create a more conducive environment
for SMEs to thrive.

Like any business, SMEs in Bangladesh face several risk factors that can impact their operations
and success. Here are some of the main risk factors that SME businesses in Bangladesh should
be aware of:

Access to Finance: Access to finance is a critical factor for the success of SMEs, but many small
businesses in Bangladesh struggle to secure funding due to a lack of collateral, low credit scores,
and high-interest rates. This can lead to cash flow problems and hinder growth.

Political and Economic Instability: Bangladesh has experienced political and economic
instability in the past, which can disrupt business operations and create uncertainty. SMEs need
to be aware of the risks associated with operating in an unstable environment and have
contingency plans in place to manage such risks.

Human Resource Management: SMEs in Bangladesh face challenges in attracting and retaining
skilled labor due to competition from larger firms and a limited talent pool. The shortage of
skilled workers can lead to productivity issues, which can impact the business's profitability.

Regulatory Compliance: Compliance with regulations and obtaining necessary licenses and
permits can be a complex and time-consuming process in Bangladesh. SMEs must ensure they
comply with all relevant regulations to avoid penalties and legal issues.

CECM 11th Intake, 2nd Batch, Assignment-II

Natural Disasters: Bangladesh is prone to natural disasters such as cyclones, floods, and
earthquakes, which can cause significant damage to SMEs. Businesses must have contingency
plans in place to manage the risks associated with natural disasters.

Future of SME business in Bangladesh

The future of SME businesses in Bangladesh is very promising, and the sector is expected to
continue to grow and evolve in the coming years. Here are some key factors that indicate a bright
future for SMEs in Bangladesh:

Growing Domestic Market: The domestic market in Bangladesh is rapidly growing, and SMEs
are well-positioned to cater to the increasing demand for quality products and services. With a
large population of over 160 million people, there is significant potential for SMEs to tap into
this market and expand their customer base.

Technology Adoption: Technology adoption in Bangladesh is on the rise, and SMEs that can
leverage technology to improve their operations, reach customers, and access new markets are
likely to succeed. The government has also launched several initiatives to promote technology
adoption among SMEs.

Access to Finance: Access to finance is crucial for the growth and success of SMEs, and the
government of Bangladesh has taken several initiatives to increase access to finance for SMEs.
This includes launching refinancing schemes, establishing credit guarantee funds, and providing
training on financial management.

Government Support: The government of Bangladesh has been actively promoting and
supporting SMEs in the country, with several policies and initiatives aimed at creating a more
conducive environment for SMEs to thrive. This includes providing access to training,
technology, and infrastructure.

Innovation and Creativity: SMEs in Bangladesh are known for their innovation and creativity,
developing unique products and services that cater to local and international markets. As
competition in the global marketplace increases, SMEs that can differentiate themselves through
quality, innovation, and customer service are likely to succeed.

CECM 11th Intake, 2nd Batch, Assignment-II

Overall, the future of SMEs in Bangladesh looks bright, with significant potential for growth and
expansion. With the right support and strategy, SMEs in Bangladesh can become major
contributors to the country's economy and create new opportunities for themselves and their
communities.

CECM 11th Intake, 2nd Batch, Assignment-II

Non-Legal Measures for Loan Recovery
in the Banking Sector of Bangladesh

CECM 11th Intake, 2nd Batch, Assignment-II

As of September 2021, the non-performing loan (NPL) ratio in Bangladesh stood at 8.85%,
according to the Bangladesh Bank, the country's central bank. This indicates a slight
improvement from the previous year's ratio of 9.31%.

Despite the improvement in the NPL ratio, the amount of non-performing loans in Bangladesh
remains high, with a total of Tk 1.03 trillion (approximately $12 billion) of outstanding bad loans
as of September 2021. The COVID-19 pandemic has contributed to the increase in NPLs, as it
has affected the financial health of many borrowers.

To address the issue of NPLs, the Bangladesh Bank has implemented various measures,
including strengthening loan recovery efforts, increasing supervision of banks, and introducing a
loan classification and provisioning system to encourage banks to properly identify and address
NPLs. The government has also established a "bad bank" to take over and manage the bad loans
of banks, which is expected to help reduce the burden of NPLs on the banking sector.

Bank loan recovery is a major part of banking operations at present time. Loan is given by a
financial institution to a client with anticipations that the pay back conditions and conditions will
be met by the counter party. But credit becomes infrequent when the borrower is not able to pay
back the financing within the specified interval. A non-performing loan is one which continues
to be late for such an interval or more as described by the country’s regulatory body excepting
some unique situations. Non-performing loan mainly consist of three categories of loan- sub-
standard, uncertain and bad loss, all of which are measured on the basis of uniform requirements
recommended by Bangladesh Bank.

CECM 11th Intake, 2nd Batch, Assignment-II

Since restoration through lawsuit is very costly, difficult and an awkward process, it is always
much better settle the situations peacefully instead of starting litigation process. Therefore
lenders should follow some non-legal measures to convince the borrowers as well as to put stress
on them to reach at an friendly settlement. Conceptually, agreement of bad loan by discussing
with the client before processing fit on rough outside judge agreement procedure even after
getting lawsuit is a better approach to ensure restoration of loan. All the efforts or measures
taken by financial institution to recover non-performing loan other than agreement through the
judgment of a legal judge may be termed as non-legal measures for loan restoration. Included in
this are debts for value exchange, debt restructuring company constructing, entertaining ‘win-
win’ attention based discussion, motivating restoration employees through purpose key
performance signs, detecting problems in initial phase, loan closing, conviction and/or
developing stress through relatives, guarantors, work affiliates, employing exterior restoration
agents, etc. Various potential non-legal measures for restoration of bad loan are Communication,
Persuasion, Motivating Credit score Collection Staff, Recovery Campaign, Alternative Argument
Quality (ADR), Appointment of Recovery Agent, Loan Restructuring, Corporate Reorientation
of the Customer’s Business, Preparation and Flow of Record of Defaulters, Waiver of Interest,
Rescheduling With/ Without Interest Waiving. Below are the steps or procedures of Non-Legal
measures of loan recovery:

1. Establishing fulfilling banker-customer relationship

2. Creating attention for appropriate repayment
3. Making and finalization of loan sanctioning and payment procedure in existence of all
related parties
4. Constant persuasion
5. Strengthening beginning aware program in credit operation
6. Understanding the actual reasons for default
7. Personal as well as group check out to debtors and guarantor’s workplace & residence
8. Creating stress through family members members& relatives
9. Creating stress through significant regional individuals e.g. trade organizations, employer

CECM 11th Intake, 2nd Batch, Assignment-II

 10. Co-opting affiliates from municipal community in ADR meeting
11. Motivating restoration staff
12. Recovery campaign
13. Debt restructuring
14. Corporate restructuring
15. Disclosing listing of defaulters in Local Newspaper/Union parishad
16. Arranging conference, symposium, against standard loan/ defaulters

The scale of buildup of standard loan, among other things, relies upon an the current legal
measures for loan restoration, A strong and effective legal program boosts the potential for
restoration of bad loan. Regulating reactions or changes in our financial industry took certain
shape as regards to the cash self-discipline mainly in 90’s through the enactment of Cash Loan
Court Act. Several legal measures along with the Cash Loan Court Act are in place that allows
financial institutions to go for lawsuit against the late client. Several changes in Cash Loan Court
Act have also been made at different with regards to lenders’ options that dominates in the
financial industry of Bangladesh is certainly extensive one. Traditionally, the problem can be
found rather with the administration of rules in appropriate manner.

It is generally indicated out by they that our judiciary program is complicated, and influx of the
fit registered in a legal judge is also accountable for the buildup of unsettled difficult. Inadequate
legal capacity with regards to variety of most judges with regards to situations in various legal
courts, Taking legal activities to get better loan is costly, time-consuming and unsightly, these
are the most severe ways to get better loan and that’s why should be used as the final option. The
legal program allows defaulters to delay lenders’ options procedure consistently.

CECM 11th Intake, 2nd Batch, Assignment-II

Large Loan Financing by Banks in
Bangladesh: Implications and
Challenges

CECM 11th Intake, 2nd Batch, Assignment-II

Large loan financing by banks in Bangladesh typically involves borrowing a significant amount
of money to fund major projects, such as infrastructure development, industrial expansion, and
real estate ventures. Banks in Bangladesh offer a range of financing options to meet the diverse
needs of businesses and individuals.

The process of obtaining a large loan in Bangladesh typically involves submitting a detailed
business plan or project proposal, along with relevant financial documents and collateral. The
bank will evaluate the proposal and assess the creditworthiness of the borrower before deciding
whether to approve the loan.

The interest rates and repayment terms of large loans in Bangladesh can vary depending on the
specific type of loan and the borrower's creditworthiness. Some common types of large loans
offered by banks in Bangladesh include term loans, working capital loans, project finance, and
export finance.

It's worth noting that obtaining large loans in Bangladesh can be a complex and time-consuming
process, and borrowers are advised to seek professional advice to ensure they meet all the
necessary requirements and qualifications. Additionally, borrowers should carefully consider the
risks and costs associated with large loans before making any decisions.

The loan pricing methodology of a bank can vary depending on a range of factors such as the
type of loan, the creditworthiness of the borrower, the prevailing market conditions, and the
bank's own internal policies and strategies. However, some common methods used by banks to
price loans include:

Interest rate benchmark: Banks may use a benchmark interest rate, such as the prime rate or
LIBOR, as a starting point for pricing a loan. They may then add a margin to the benchmark rate,

CECM 11th Intake, 2nd Batch, Assignment-II

which reflects the perceived risk of the borrower and other factors such as the loan amount and
duration.

Credit risk assessment: Banks also evaluate the creditworthiness of the borrower by analyzing
their credit score, financial history, income, and other factors. The perceived credit risk may then
be used to determine the interest rate or margin charged for the loan.

Cost of funds: The bank's cost of funds, or the interest rate it pays to borrow money, is another
factor that may influence loan pricing. If the bank's cost of funds is high, it may charge a higher
interest rate on loans to maintain its profitability.

Competition: The competitive landscape can also influence loan pricing. If other banks in the
market are offering lower rates, a bank may need to adjust its pricing strategy to remain
competitive.

Profitability goals: Banks may have specific profitability goals they need to meet, and loan
pricing may be adjusted accordingly to achieve these goals.

IMPACT OF LARGE LOAN IN ECONOMY

The impact of a large loan on an economy can vary depending on a number of factors such as the
purpose of the loan, the borrower, and the current economic conditions of the country.

In general, a large loan can have both positive and negative impacts on the economy. Let's take a
closer look:

Positive impacts:

Boosts economic growth: Large loans can be used to fund projects that create jobs, increase
productivity and stimulate economic growth.

Increases consumer spending: Borrowers may use the funds to purchase goods and services,
which can help increase consumer spending and stimulate demand in the economy.

Attracts foreign investment: Large loans can be used to finance infrastructure projects that may
attract foreign investors to invest in the country.

CECM 11th Intake, 2nd Batch, Assignment-II

Increases national debt: A large loan can lead to an increase in the national debt, which can affect
the country's credit rating and future borrowing capacity.

Creates a burden for future generations: Borrowing large amounts of money can put a burden on
future generations who will have to pay off the debt.

Raises interest rates: If the government or the borrower is unable to pay back the loan, it can lead
to higher interest rates, which can have a negative impact on the economy.

Overall, the impact of a large loan on an economy depends on how the funds are used, and
whether the borrower is able to pay back the loan on time. If used appropriately, a large loan can
stimulate economic growth and development, but if not, it can have negative consequences on
the economy.

CECM 11th Intake, 2nd Batch, Assignment-II

Financing Public-Private Partnership
(PPP) Projects in Bangladesh: An
Assessment for Future Strategy

CECM 11th Intake, 2nd Batch, Assignment-II

Public-private investment in Bangladesh refers to a collaborative effort between the government
and private sector to invest in various sectors of the economy, such as infrastructure, energy,
agriculture, and manufacturing.

In recent years, Bangladesh has seen a significant increase in public-private investment. The
government has initiated various policies and projects to attract private investment in the
country, such as the Public-Private Partnership (PPP) program, which aims to promote private
sector investment in infrastructure development.

One of the major areas of public-private investment in Bangladesh is infrastructure development,

including transport, energy, and telecommunications. The government has launched various
projects, such as the Padma Bridge project and the Dhaka metro rail project, in collaboration
with private investors.

The energy sector is another area of focus for public-private investment in Bangladesh. The
government has set a target to achieve 100% electricity coverage by 2021 and has encouraged
private investment in the sector to achieve this goal. Private investment is also being encouraged
in the renewable energy sector to reduce the country's dependence on fossil fuels.

Agriculture is another sector where public-private investment can play a significant role. The
government has launched various initiatives to promote private investment in agriculture,
including providing incentives for agro-based industries, developing agro-processing zones, and
improving irrigation facilities.

In conclusion, public-private investment in Bangladesh has great potential to drive economic

growth and development in the country. The government has taken various steps to encourage
private investment in different sectors of the economy, and this trend is likely to continue in the
future.

Public private project in SAARC countries

The South Asian Association for Regional Cooperation (SAARC) is a regional

intergovernmental organization that comprises eight countries in South Asia, namely,
Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Public-

CECM 11th Intake, 2nd Batch, Assignment-II

private projects are increasingly becoming popular in the SAARC countries to promote
economic growth and development.

Here are some examples of public-private projects in SAARC countries:

1. Afghanistan: The Afghanistan Railway Authority has launched a public-private

partnership project to build a railway line from Turkmenistan to Afghanistan. The project
aims to improve trade and transportation links between the two countries and create
employment opportunities.

2. Bangladesh: The Bangladesh Bridge Authority has initiated a public-private partnership

project to construct the Padma Multipurpose Bridge, which will connect the southwest
region of the country to the capital city, Dhaka. The project aims to improve
transportation links and promote economic development in the region.

3. Bhutan: The Bhutan Power Corporation has launched a public-private partnership project
to build the Punatsangchhu Hydroelectric Project, which aims to increase the country's
electricity supply and reduce its dependence on imported energy.

4. India: The Indian government has launched various public-private partnership projects in
sectors such as infrastructure, energy, and healthcare. For example, the National
Highways Authority of India has initiated a project to develop a 1,360 km highway
between Delhi and Mumbai in collaboration with private investors.

5. Maldives: The Maldives government has launched a public-private partnership project to

develop a new airport in the country. The project aims to improve the country's tourism
industry and create employment opportunities.

6. Nepal: The Nepal government has launched a public-private partnership project to build a
76 km expressway between Kathmandu and Nijgadh. The project aims to improve
transportation links and promote economic development in the region.

7. Pakistan: The Pakistan government has launched various public-private partnership

projects in sectors such as energy, transportation, and telecommunications. For example,
the Lahore-Sialkot Motorway project aims to improve transportation links and promote
economic development in the region.

CECM 11th Intake, 2nd Batch, Assignment-II

 8. Sri Lanka: The Sri Lanka government has launched various public-private partnership
projects in sectors such as infrastructure, energy, and healthcare. For example, the
Colombo Port City project aims to create a new city and business hub in Sri Lanka
through private investment.

he sectoral distribution of PPP projects in SAARC countries varies from country to country,
depending on their respective priorities and needs. However, some of the common sectors that
have seen significant PPP activity across the SAARC region include:

Energy: The energy sector, including power generation, transmission, and distribution, has been
a major focus of PPP projects in SAARC countries. Many countries in the region have large
energy deficits and are heavily dependent on imports. PPP projects in this sector have aimed to
improve energy security and access, increase efficiency, and promote the use of renewable
energy sources.

Transport: Transport infrastructure, including roads, highways, railways, ports, and airports, has
also seen a significant number of PPP projects in SAARC countries. These projects aim to
improve connectivity, reduce transport costs, and enhance trade and economic integration within
the region.

Water and sanitation: PPP projects in the water and sanitation sector aim to improve access to
clean water and sanitation facilities, particularly in rural areas. These projects have focused on
the construction and management of water supply and sewage treatment facilities.

Health: PPP projects in the health sector have aimed to improve the quality and accessibility of
healthcare services, particularly in rural areas. These projects have focused on the construction
and management of hospitals, clinics, and other healthcare facilities.

Education: PPP projects in the education sector have aimed to improve access to quality
education, particularly at the primary and secondary levels. These projects have focused on the
construction and management of schools, as well as the provision of educational materials and
teacher training programs.

Overall, PPP projects have played an important role in promoting economic growth and
development in SAARC countries, particularly in sectors where public investment alone may not
be sufficient to meet the needs and demands of the population.

CECM 11th Intake, 2nd Batch, Assignment-II

Financial and Non-Financial Issues in
Implementing PPP in Bangladesh

CECM 11th Intake, 2nd Batch, Assignment-II

Public-Private Partnership (PPP) is an important approach for Bangladesh's infrastructure
development. However, implementing PPP in Bangladesh comes with several financial and non-
financial issues, including:

Financial issues:

a. Lack of funding: The government's inability to provide sufficient funding is one of the main
financial issues in implementing PPP in Bangladesh.

b. Risk allocation: The allocation of risks between the public and private sector is another
financial issue that needs to be addressed. Private investors may not be willing to bear certain
risks that could potentially lead to financial losses.

c. Pricing: In some cases, the pricing of PPP projects may be too high, which could discourage
private investors from participating in the project.

Non-Financial issues:

CECM 11th Intake, 2nd Batch, Assignment-II

a. Regulatory environment: The regulatory environment in Bangladesh is complex and often
challenging for private investors. This could lead to delays in the implementation of PPP
projects.

b. Political instability: Political instability is another non-financial issue that could affect the
implementation of PPP projects. Investors may be hesitant to invest in a country that is
politically unstable.

c. Lack of transparency: Transparency in the procurement process is crucial to ensure fairness

and attract private investors. The lack of transparency in the procurement process could
discourage private investors from participating in PPP projects.

In conclusion, implementing PPP in Bangladesh requires addressing financial and non-financial

issues. Improving the regulatory environment, ensuring transparency in the procurement process,
and creating a stable political environment are crucial to attracting private investors and
implementing successful PPP projects.

CECM 11th Intake, 2nd Batch, Assignment-II

Centralized banking and decentralized
banking are two distinct models of
financial systems.

CECM 11th Intake, 2nd Batch, Assignment-II

Centralized banking is the traditional model where a central authority, usually a government or a
central bank, controls the banking system. This central authority has the power to regulate
monetary policy, issue currency, and supervise financial institutions. The centralized banking
system is highly regulated and typically offers a high degree of security and stability to
depositors.

On the other hand, decentralized banking, often referred to as "decentralized finance" or "DeFi,"
is a more recent model that operates without the need for intermediaries like banks.
Decentralized banking systems are based on blockchain technology, which allows for secure,
transparent, and decentralized transactions without the need for a central authority. In a
decentralized banking system, users have direct control over their funds and can transact with
others without the need for a trusted third party.

While centralized banking offers a high degree of security and stability, it also comes with
drawbacks such as high fees, limited access, and potential for corruption or political interference.

CECM 11th Intake, 2nd Batch, Assignment-II

Decentralized banking, on the other hand, offers more freedom and transparency, but can also be
more complex and less user-friendly for the average consumer.

Both centralized and decentralized banking systems have their own advantages and
disadvantages, and the choice between them depends on individual preferences and priorities.

An Assessment of On-site Supervision of

Bangladesh Bank

CECM 11th Intake, 2nd Batch, Assignment-II

Bangladesh Bank is the central bank of Bangladesh and it regulates the country's monetary and
financial system. It supervises and regulates all scheduled banks in the country, as well as non-
bank financial institutions.

Bangladesh Bank, as the apex of banking sector in Bangladesh, is entrusted with the supervision
of activities commercial banks/FIs by article 7(A) f of the Bangladesh BankOrder-
1972(Amendments up to 10 March, 2003). Section 44 of the Bank Companies Act-1991 and
section 20 of Financial Act-1993 empowers Bangladesh Bank to examine the books of accounts
& related documents/records of the banks/FLs with a primary view to as certain their financial
soundness & quality of their portfolios so that banks/FIs operation cannot be detrimental to
depositors’ interest. The reason of supervision is to promote & maintain soundness, solvency and
systemic stability of the financial sector as well as to protect depositors’ interest

Onsite supervision by the Bangladesh Bank involves regular inspections and monitoring of the
operations of financial institutions to ensure that they are operating in compliance with the rules
and regulations set by the central bank. This includes reviewing financial statements, evaluating
risk management practices, and assessing the overall health of the institution.

The aim of onsite supervision is to identify potential problems or risks early on, and to work with
the institution to address them before they become more serious. The Bangladesh Bank also has
the power to take corrective measures or impose penalties if necessary, to protect the interests of
depositors and maintain the stability of the financial system.

Supervision System

CECM 11th Intake, 2nd Batch, Assignment-II

Supervision is the on-going monitoring of credit union’s financial and operational condition.
Examiners monitor their assigned credit unions as needed through on-site supervision,
supervisory contacts and off-site through submitted regulatory reports and financial statements
and periodic trend analysis of selected ratios. In credit union with more serious financial
problems, supervision may also include follow up examination and monthly monitoring financial
trends and ratios. There are two supervision system of Bangladesh Bank such as:

On-site supervision

On-site supervision refers to supervision of parent contact at a facility that is under the
management of the provider.

Off-site supervision:

Off-site supervision is the supervision of parent contact that occurs away from a facility thatis
under the management of the provider.

CAMEL ratings It's a tool for determining a bank's financial stability. This is a widely known
rating system that uses six criteria to assess banks. On a scale of one to five, with one being the
best and five being the worst, each bank is given a score ranging from one to five.

Capital Adequacy

When it comes to a bank's overall capital, the phrase "capital adequacy" is used to describe it. It

ensures that depositors are safeguarded from the bank's potential losses. Financial managers

guarantee that the company's capitalization is adequate by sticking to it. It's an important factor
for keeping proper capitalization levels.

Asset Quality

A financial institution's capacity to resist the drop in value in its resources is determined by the
quality of its assets. Across all commercial banks, there is a noticeable concentration of loans as
a percentage of overall assets. It's clear that assets are at danger from default risk because of the
heavy concentration of loans as well as the high rate of non-performing assets.

Management Soundness

CECM 11th Intake, 2nd Batch, Assignment-II

Capital sufficiency, quality of assets, long-term planning, profits, liquidity, and reaction to
market fluctuations are among the factors considered when evaluating a financial institution's
management. In accordance with established norms, planning capacity, ability to respond to
changing circumstances, technical expertise, leadership, and administrative quality were all
factors. The most critical prerequisite for any financial institution's strength and growth is sound
management.

Earnings & Profitability

Financial institutions' primary sources of capital expansion are earnings and profitability. The
ability of a bank to fund current and future activities is reflected in its profits and profitability
profile. Increased profits ensure that the company has enough capital to withstand any losses and
pay adequate dividends to shareholders.

Liquidity

A financial organization is in a good liquidity position if it can quickly and cheaply extend
commitments or transform assets. Access to assets and liabilities is available. For example, a
proportion of total liabilities is used as a measure of liquidity. In this context, it denotes a bank's
demand & time obligations as a percentage of its liquid funds.

CECM 11th Intake, 2nd Batch, Assignment-II

 Handling Credit Risk of Banks in
Bangladesh: Demand, Supply and
Regulatory Perspective

CECM 11th Intake, 2nd Batch, Assignment-II

Risks are an inevitable part of banking operations, but that doesn’t mean they can’t be mitigated.
Commercial banks and private lenders are constantly taking efforts to reduce the risk of fraud
and cybersecurity threats to protect the financial information of their clients, but also need to
protect their own treasury from unreliable borrowers.

When a borrower misses a monthly payment, or worse, defaults on a loan altogether, the lending
party at a loss. Even if collateral is taken, the time and money spent to turn it into funds can still
leave the lender with a negative return. That’s why it’s incredibly important for financial
institutions to thoroughly evaluate each borrower’s credit risk, and as you will see, their own
reserves and environmental factors before signing off on a loan.

Managing credit risk in Bangladesh involves identifying, measuring, monitoring, and controlling the
potential losses from borrowers' defaults. Here are some measures that can help mitigate credit risk in
Bangladesh:

1. Credit Scoring: Banks can use credit scoring models to assess borrowers'
creditworthiness based on their credit history, income, collateral, and other relevant
factors. By using these models, banks can identify high-risk borrowers and adjust their
lending terms accordingly.

CECM 11th Intake, 2nd Batch, Assignment-II

2. Loan Documentation: Banks must ensure that all loan documentation is complete and
accurate. Proper documentation can help banks identify borrowers' financial standing,
creditworthiness, and capacity to repay loans.

3. Collateral: Banks should consider requiring collateral from borrowers to reduce their
credit risk exposure. In Bangladesh, banks often take collateral in the form of real estate,
gold, or other valuable assets.

4. Diversification: Banks should diversify their loan portfolios by lending to borrowers from
different industries and sectors. This can help reduce the overall risk exposure of the bank
and prevent significant losses if one sector experiences a downturn.

5. Risk Management: Banks should establish a comprehensive risk management framework

that includes regular monitoring of borrowers' creditworthiness, assessing loan
performance, and taking corrective action if necessary.

6. Regulatory Compliance: Banks in Bangladesh must comply with regulatory requirements

related to credit risk management. This includes maintaining adequate reserves for
potential loan losses, adhering to lending limits, and reporting loan performance data to
the central bank. Based on the risk management framework and evidences in the context
of Bangladesh, the paper summarized the following general observations related to the
credit risk management and non-performing loans of the banking sector of Bangladesh
and put forward some recommendations and comments. One, Good pre-sanction
assessment is an important precondition for good borrower selection and it is equally
important for maintaining credit quality in banks. If the borrower selection is wrong, it
becomes very difficult for the bank management to maintain a healthy credit quality. The
survey respondents identified the poor pre-sanction assessment and improper borrower
selection as the reason for credit default. Ideally, in the pre-sanction assessment banks
should give more importance on the understanding of the projected cash flows and
sufficiency and appropriateness of the security offered by the prospective borrower.
Moreover, lack of availability of reliable data regarding borrowers’ business hinders
appropriate pre-sanction assessment and good borrower selection. In this age of
globalization, assessing a business considering the national environment and data is not
sufficient, rather today business means international business. Available data in CIB can

CECM 11th Intake, 2nd Batch, Assignment-II

 cater very limited need of the banks. Alongside bank level efforts to gather and assess
data on borrower, a collective effort on the part of banks are essential to ensure
information availability. In this regard, specific job responsibility of the officials engaged
in credit assessment and credit decision making should be established and they should be
held accountable for their actions and decisions. Research Monograph 26 49 Two,
Different forms of credit concentration are observed from the review of the credit
portfolio of banks that must be addressed through establishing appropriate monitoring
and control process. Particularly, large loan concentration, regional concentration, trade
credit concentration, security wise concentration are critical. Such concentration requires
additional capital under second pillar of Basel-III and may cause difficulty for banks.
Moreover, concentration is hardly considered a critical issue in the process of risk
management by banks. Thus banks should make greater effort to identify and limit
concentration risk by setting different types of exposure limits and including new sectors
in their credit portfolios considering correlation factors. Three, Credit monitoring
demands more attention on the part of the bank to handle credit risk effectively. As a
critical problem, survey respondents ranked fund diversion as one of the important reason
behind the recent increase in the classified loans of the banks. Survey respondents also
identified poor monitoring of the end-use of fund at the post sanction stage. Due to over
funding and poor monitoring of the end-use of fund, borrowers are getting the
opportunity to divert fund to unproductive purposes. Consequently, borrowers cannot
repay bank loan as per the schedule of repayment. Intensified onsite and offsite
monitoring at the bank level and transaction level need to be ensured in order to contain
fund diversion led credit risk. Four, Survey respondents opined that incomplete
documentation is a problem on the way to recovery of classified loan as it weakens
banks’ standing in the court of law. Moreover, borrowers’ knowledge on the incomplete
loan documentation indirectly motivates dishonest borrowers to take a strategy not to
pay. Besides, legal process for recovering loan is perceived by the respondent banks as
‘complex and lengthy’. As such, huge amount of written-off loans and bad and loss
category loans are yet to be recovered through the legal process. Banks should seek
strong support from the government agencies to recover defaulted loans. Bank should
also emphasize on flawless credit documentation for reducing credit loss and for

CECM 11th Intake, 2nd Batch, Assignment-II

 recovering classified loans. Five, Unethical and fraudulent credit practices have increased
many times in the recent past. Moreover, internal and external fraud related to credit
operations became a huge concern for banks and the regulatory authorities. Several
frauds related to credit operations of different banks have already been published in the
media. From the analysis of the published frauds cases, unethical and fraudulent behavior
of some bank officials and borrowers are evident. Such increase in unethical and
fraudulent credit practices accentuated credit default of banks. Particularly effective
internal audit function is supposed to detect errors and frauds immediately and reduce
loss. However, recent publicized loan scams reveal the ineffectiveness of the credit
related internal controls and internal audit function of banks. Such gross failure of banks
in maintaining effective internal control increased cases of loan frauds in the banks.
Though in many instances banks cannot avoid responsibility, however, it is more about
the incentive factors that not up to the desired level to ensure expected credit 50 Research
Monograph 26 risk environment. In this regard internal control and internal audit should
be positioned in a manner to be able to work as a line of defense against the above
mentioned credit related operational losses in the bank. Six, External and incentive
factors were critical determinants of ineffective credit risk management in banks in the
country in several instances. Survey respondents opined that banks’ lending criteria is
compromised in many occasions due to the failure of the bank officials to stand before
the reference power of the politically affiliated prospective borrowers. As such, recovery
initiatives are also constrained by the aforesaid reference power. If this continues for a
long, bank credit quality will be badly affected which eventually may lead to bank
failure. Publicized banking scams clearly demonstrated the frequent intervention of the
board members in the day to day credit decisions of the banking companies of the
country. Thus, management was unable to apply professional judgment in all lending
decisions and lending criteria was compromised in many instances particularly in case of
disguised related party lending or advised lending. Initiatives should be undertaken to
empower management to apply professional judgments in all lending decisions
irrespective of the parties involved. Banks should establish and nourish good corporate
culture in order to handle pressure groups professionally and Board should refrain from
interventions. Civil society and media campaign may also important role in this regard.

CECM 11th Intake, 2nd Batch, Assignment-II

 Seven, In the last few years, banks have increased their capital for being Basel compliant
which in turn has increased the owners’ expectation for profit. As such, owners set
unrealistic profit target for the bank management ignoring the economic, political and
infrastructural reality of the country. Subsequently, management ran after the unrealistic
profit target by not considering or compromising credit quality of banks; and by
involving in unhealthy competition. Establishment of new banks added to this effort.
Moreover, banks are facing more competition from non-bank financial institutions in the
recent times as non-banks are also offering almost same credit products. Therefore,
competition in the credit market has increased in the recent times. Due to increase in the
competition, cases of financing a single client by multiple banks leading to over-finance
have increased manifold. In addition, cases of loan take over with enhanced limit by one
bank from other bank have increased. Competition is not bad but unhealthy competition
is disastrous for the credit market. This issue may be discussed at association level and
consensus may be reached among the bankers. Eight, About capital management, for
most banks it is a compliance requirement. Generally the concept of economic capital is
hardly used in banks in maintaining reserves in line with their respective risk exposures.
It is well-known that provision is maintained for covering expected loan loss, and thus if
there is an expected loss situation, banks should maintain provision for that expected loss.
Under provisioning means overstatement of profit. Over statement of profit, on the other
hand, leads to capital erosion. From the secondary data, it is observed that there was a
provision shortfall in the banking industry for an amount of BDT Research Monograph
26 51 42.8 billion in 2015. As a whole this is a concerning figure for the banking sector
in terms of protecting banks from financial difficulty. Bank should realize the importance
of maintaining provision against credit risk and should maintain adequate provision.
Regulatory initiatives for monitoring implementation of related prudential regulations
should be enhanced. Nine, As observed in several instances, faulty product design is one
of the main causes of default. In our banking system, products are rarely designed by the
bank considering the requirement of the borrower. This results in a mismatch between
borrower’s need and bank’s product which is also a major cause of default. Therefore,
greater emphasis should be given on product design based on customers’ requirement,
cash flow and capacity to repay. This might help improve the credit default scenario of

CECM 11th Intake, 2nd Batch, Assignment-II

 banks. Ten, From the exiting regulatory and supervisory environment of the banking
sector, it appears that Bangladesh Bank is not the true regulator of the government
controlled banks. As such, prudential regulations concerning credit risk management is
not fully complied by the aforementioned banks and it is not always possible for the
central bank to apply supervisory norms for all banks equally. As a result, credit risk
management is not that much effective in the government controlled banks. All banks
should be brought under uniform regulatory and supervisory framework to overcome this
situation. The above observations clearly reveal several weaknesses of banks’ operation
in credit risk management in the country and are critical to address immediately.
However, probably these are relatively easy issues or areas that demand attention of the
bankers and the central bank. In regard to some systemic issues, banks and other
stakeholders cannot control but may consider in predicting and assessing prospective
changes. However, it is really difficult to address some incentive factors like political
uncertainty, legal enforcement and corporate culture in banks that have been in the root
of loan default problems in the country in many instances; and these are also equally
important to ensure right kind of environment for effective credit risk management in the
country.

CECM 11th Intake, 2nd Batch, Assignment-II

 SME Finance and Inclusive Growth:
Bangladesh Perspective

CECM 11th Intake, 2nd Batch, Assignment-II

SME finance and inclusive growth are closely linked, and Bangladesh is a country that has been
making efforts to promote both. Here are some ways in which SME finance is contributing to
inclusive growth in Bangladesh:

1. Access to credit: SME finance has helped small business owners in Bangladesh access
credit and finance their operations. This has enabled them to expand their businesses,
create jobs, and contribute to the economy's growth.
2. Financial inclusion: SME finance has helped to promote financial inclusion in
Bangladesh, where many people lack access to formal financial services. By offering
credit to small businesses, financial institutions are helping to bring more people into the
formal financial system.
3. Gender equality: SME finance has helped to promote gender equality in Bangladesh by
providing women entrepreneurs with access to credit. Women-owned businesses have
traditionally faced challenges in accessing finance, but initiatives such as the Women
Entrepreneurship Development Project have helped to address this issue.

CECM 11th Intake, 2nd Batch, Assignment-II

4. Poverty reduction: SME finance has played a significant role in poverty reduction in
Bangladesh. By providing credit to small businesses, financial institutions are helping to
create jobs and increase incomes, which can help to lift people out of poverty.
5. Regional development: SME finance has helped to promote regional development in
Bangladesh by supporting businesses in rural areas. Many SMEs are located outside of
the major urban centers, and by providing credit to these businesses, financial institutions
are helping to promote economic growth in these areas.

1. Access to credit: SME finance has helped small business owners in Bangladesh
access credit and finance their operations. This has enabled them to expand their
businesses, create jobs, and contribute to the economy's growth.

2. Financial inclusion: SME finance has helped to promote financial inclusion in

Bangladesh, where many people lack access to formal financial services. By offering
credit to small businesses, financial institutions are helping to bring more people into the
formal financial system.

3. Gender equality: SME finance has helped to promote gender equality in

Bangladesh by providing women entrepreneurs with access to credit. Women-owned
businesses have traditionally faced challenges in accessing finance, but initiatives such as
the Women Entrepreneurship Development Project have helped to address this issue.

4. Poverty reduction: SME finance has played a significant role in poverty reduction
in Bangladesh. By providing credit to small businesses, financial institutions are helping
to create jobs and increase incomes, which can help to lift people out of poverty.

5. Regional development: SME finance has helped to promote regional development

in Bangladesh by supporting businesses in rural areas. Many SMEs are located outside of
the major urban centers, and by providing credit to these businesses, financial institutions
are helping to promote economic growth in these areas.

CECM 11th Intake, 2nd Batch, Assignment-II

Centralized and Decentralized Banking:
A Study
of the Risk-Return Profile of Banks

CECM 11th Intake, 2nd Batch, Assignment-II

Centralized banking operation is that system of banking where processing of all transactions has
to be carried out from a central location. In this system, bank's presence has to be made through
maintaining sufficient number of branches and staffs. Now banking is done through modern
technology; so all banking operations or processing activities can be carried out from a central
location using appropriate technology. It is not a tough process for banks.

Banks have to maintain their central operation at their head office or some other location which
is treated as part of the head office. For the sake of convenience, better service and business
volume, multiple central processing locations are maintained. Various banking applications or
web-based software are developed and used in carrying out this centralized operational process.
Most of the works in centralized banking system are web and technology based.
Centralization of banking activities is possible through use of CORE (centralized Online Real-
time Exchange) banking software. CORE banking became possible with the advent of computer
and telecommunication technology that allowed information sharing between bank branches
quickly and efficiently. According to a study of the Bangladesh Institute of Bank Management
(BIBM), 88 per cent of the banks in Bangladesh have used centralized CORE banking systems,
which are allowing them to cut cost and provide real-time services online to customers.

CECM 11th Intake, 2nd Batch, Assignment-II

However, expansion of the branch banking across the country does not represent bank's
decentralisation process in true sense of the term as branches are not delegated full authority to
make decisions at operational level. Except account opening and remittance activity which are
mainly a standard set of work, there is no decision-making authority at branch level. Even many
banks do not allow branch managements to approve loans against cash collateral security which
is known as risk free lending.
Technically, decentralisation of banking operation has, so far, remained out of reach, so no
question should arise about centralisation.
There are many disadvantages of centralised banking. The most notable among them is slow
decision making resulting in delayed customer service. On the other hand, centralised banking
can prevent scams and corruption. It is commonly believed that if banks could strictly maintain
centralised banking system, the banking scams like that of Hall Mark could have been prevented.
Under the centralised banking system, a bank only looks after its day-to-day business activities,
and all operations are rendered from its head office with the aid of technology. As a result, a
traditional branch has become a mere sales and service point.
The main objective of centralised banking is to reduce or eliminate corruption, embezzlement,
fraud, and malpractices of bank officials at the branch level by inappropriately using their
authority. In centralised system, banks can run with less manpower since all vital decisions are
taken and tasks done by the Head Office which leads to minimising the cost.
In the context of Bangladesh, 100 per cent centralisation or decentralisation cannot be
implemented at any bank. Foreign banks operating in the country are also providing services to
their customers following both methods. Experts opine that decentralisation of some services
will improve the quality of banking services. But the initiative should be implemented
considering the potential risks. So, for our country, the system should be developed in such a
way that there must be increased monitoring so that customers get all kinds of services quickly.

CECM 11th Intake, 2nd Batch, Assignment-II

Effects of COVID-19 on CMSE Sector
in Bangladesh

CECM 11th Intake, 2nd Batch, Assignment-II

COVID-19 pandemic has had a significant impact on the CMSE (Cottage, Micro, Small, and
Medium Enterprises) sector in Bangladesh. This sector employs a large number of people in the
country and contributes significantly to the economy. Here are some of the effects of COVID-19
on the CMSE sector in Bangladesh:

1. Disruptions in the supply chain: The lockdowns and restrictions imposed to control the
spread of COVID-19 have led to disruptions in the supply chain, affecting the availability
of raw materials and finished goods. This has affected the production and sales of
CMSEs.

2. Decline in demand: The pandemic has resulted in a decline in demand for goods and
services, particularly for non-essential items. This has affected the sales and revenue of
CMSEs, leading to a decline in their profitability.

3. Cash flow problems: CMSEs have faced cash flow problems due to reduced sales and
delayed payments from customers. This has affected their ability to pay salaries, rent, and
other expenses.

4. Difficulties in accessing finance: CMSEs have faced difficulties in accessing finance due
to the economic slowdown and increased risk perception among lenders. This has
affected their ability to invest in new equipment, technology, and business expansion.

5. Impact on employment: The pandemic has led to job losses and reduced working hours in
the CMSE sector. This has affected the livelihoods of many workers and their families.

6. Government support: The Bangladesh government has introduced several measures to

support the CMSE sector during the pandemic, including loan facilities, tax relief, and
subsidies. However, the effectiveness of these measures has been limited due to
bureaucratic delays and lack of awareness among CMSEs

Before COVID-19:

CECM 11th Intake, 2nd Batch, Assignment-II

 1. Refinancing Scheme: Bangladesh Bank introduced a refinancing scheme to provide low-
cost funding to banks and financial institutions for CMSME financing.

2. Credit Guarantee Scheme: Bangladesh Bank also introduced a credit guarantee scheme to
encourage banks and financial institutions to lend to CMSMEs by providing a guarantee
against loan default.

3. Entrepreneurship Development Fund (EDF): EDF was created to provide long-term

financing to entrepreneurs for establishing and expanding CMSMEs.

4. Financial Inclusion: Bangladesh Bank has been working to increase financial inclusion in
the country by promoting digital financial services and increasing access to formal
financial services for underserved and marginalized communities.

Onward:

1. COVID-19 Stimulus Package: In response to the COVID-19 pandemic, Bangladesh Bank

introduced a stimulus package to provide relief to CMSMEs affected by the pandemic.
The package includes low-interest loans, loan moratoriums, and other forms of financial
assistance.

2. Digital Financial Services: Bangladesh Bank has been promoting the use of digital
financial services to increase access to financial services and facilitate CMSME
financing.

3. Credit Information Bureau (CIB): Bangladesh Bank has established a credit information
bureau to improve the credit information infrastructure in the country and facilitate access
to credit for CMSMEs.

4. Strengthening the CMSME Ecosystem: Bangladesh Bank has been working to strengthen
the CMSME ecosystem by promoting entrepreneurship and innovation, providing
training and capacity-building programs, and improving access to market information and
networks.

CECM 11th Intake, 2nd Batch, Assignment-II

Status of CMSME Financing:

CMSME financing in Bangladesh has been steadily increasing, but there are still challenges to
overcome. Before the COVID-19 pandemic, CMSME financing had grown at a rate of around
20% per year. However, the pandemic has had a significant impact on the CMSME sector, with
many businesses facing financial difficulties and reduced access to credit. In response,
Bangladesh Bank has introduced a range of measures to support CMSME financing, including
the COVID-19 stimulus package and other initiatives aimed at increasing access to credit and
promoting financial inclusion. Despite these challenges, CMSMEs remain a key driver of
economic growth in Bangladesh, and the government and central bank continue to prioritize their
development and support.

The COVID-19 pandemic has had a significant impact on businesses worldwide, including small
and medium-sized enterprises (SMEs) in the construction, manufacturing, services, and energy
(CMSE) sectors. Here are some of the effects of COVID-19 on CMSEs:

Disrupted supply chains: Many CMSEs rely on international suppliers for raw materials and
components. The pandemic caused disruptions in global supply chains, leading to shortages and
delays in delivery, which negatively impacted CMSEs' production and delivery capabilities.

Decreased demand: COVID-19 has led to a decrease in demand for goods and services, as people
have cut back on spending due to job losses, reduced incomes, and uncertainty about the future.
This has affected CMSEs' sales, revenue, and profitability.

CECM 11th Intake, 2nd Batch, Assignment-II

Labor shortages: CMSEs have struggled to maintain their workforces during the pandemic due to
employee illness, quarantine measures, and social distancing guidelines. This has led to labor
shortages, which have affected productivity and output.

Increased costs: The pandemic has led to increased costs for CMSEs, such as the cost of personal
protective equipment (PPE), additional cleaning and sanitization measures, and increased
shipping costs due to supply chain disruptions.

Government support: Governments worldwide have implemented various measures to support

businesses during the pandemic, such as financial assistance programs, tax relief, and regulatory
flexibility. However, accessing these support programs has been challenging for many CMSEs
due to administrative hurdles and eligibility criteria.

The End

CECM 11th Intake, 2nd Batch, Assignment-II