Required IDEA Solution
Entrepreneurship MGT602
Graded Discussion Board No. 3
Marks: 20 marks
Opening date: 03 January, 2013
Closing date: 04 January, 2013
Topic: Business Plan and Financial Management
Lessons covered: 23-28
Learning objectives
The prime objective of the discussion is to make the students aware of the role of the banks and financial institutions in encouraging SMEs.
Expected learning outcomes
Ø The students will apply their learned concepts in real time cases.
Ø Students will comprehend the hurdles in the way of Pakistani banks to adopt the lending model of Grameen Bank.
Ø Students will also learn how the banks can be helpful in encouraging SMEs in Pakistan.
The case
The banks, before extending loan to the entrepreneur, make sure five Cs of lending which are character (credit ratings, loan history, etc.), capacity (cash flows, sales, etc.), capital (owner's share), collateral (assets of the business i.e. land, building, plant, stocks, etc.), and conditions (industry and market conditions). Grameen Bank (GB) of Bangladesh was started by Dr. M. Yunus to provide credit to the poor people in rural Bangladesh, without any collateral. Its main purpose was to eradicate poverty by encouraging small businesses. The GB gives a unique lending model in which loan is provided to a group of people and one person from each group is responsible to collect the loan amount from other group members after the loan period ends. Only those people are eligible to re-apply for loans that have paid their previous amount. Recovery rate of the bank is more than 90%. The bank has helped millions of depraved people and has turned baggers into small businessmen. The bank and Professor Yunus were awarded noble peace prize in 2006 for their invaluable services for the poor. But, unfortunately in Pakistan SMEs are not facilitated by the banks. Here banks are least interested in financing small entrepreneurs. Loan process itself is very complicated. As a result, the entrepreneurs prefer to get finance from other sources (family, friends, etc.) and avoid contacting commercial banks.
Point of ponder
Keeping in view the remarkable success of Grameen Bank lending model, in your opinion what are the hurdles in the way of Pakistani banks to adopt that model? Produce sufficient number of arguments.
Note:
For acquiring the relevant knowledge, do not rely only on handouts but watch the course video lectures and read additional material available online or in any other mode.
Important Instructions:
· Your discussion must be based on logical facts.
· The GDB will open and close at above specified date and time. Please note that no grace day or extra time will be given for posting comments on GDB.
· Use the font style "Times New Roman" and font size "12".
· Your answer should be relevant to the topic i.e. clear and concise.
· Do not copy or exchange your answer with other students. Two identical / copied comments will be markedZero (0) and may damage your grade in the course.
· Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
· You should post your answer on the Graded Discussion Board (GDB), not on the Moderated Discussion Board (MDB). Both will run parallel to each other during the time specified above. Therefore, due care will be needed.
· Obnoxious or ignoble answer should be strictly avoided.
· You cannot participate in the discussion after the due date via email.
· Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.
· For planning your semester activities in an organized manner, you are advised to view schedule of upcoming Assignments, Quizzes and GDBs in the overview tab of the course website on VU-LMS.
Note related to load shedding: Please be proactive
Dear students!
As you know that Post Mid-Term semester activities have been started and load shedding problem is also prevailing in our country now a days. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.
Good Luck!
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