Professional Documents
Culture Documents
Letter of transmittal
Date: 27/12/2009
Shabnaz, Samia
Entrepreneurship development
Banani, Dhaka.
Dear Madam,
It is a great pleasure for me to submitting the report to you entitled by “Policies of different
financial institution in the light of entrepreneurship development of Bangladesh” as The
Compensation System is an essential part of banks all over the world. The Compensation System
is used in a bank to increase the performance and efficiency of the individuals and the bank as a
whole. It has been a great pleasure for me to work on this report as it provides many
opportunities to gain insights about the Policies of BRAC Bank ltd.
I am grateful to you for your continuous guidance in preparing this project. Finally, I also believe
that this report will satisfy you.
Sincerely yours,
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Acknowledgement
By the cordial mercy of Allah, now I am able to submit my report to our honorable madam Samia
Shabnaz. I strongly believe that it would not be possible for me to prepare such a report without
Almighty’s grace.
Now I would like to thank our honorable madam Samia Shabnaz for her keen efforts and invaluable
guidance, helped me to understand, what the policies of different financial institution in the light of
entrepreneurship development of Bangladesh, and impact on organization which facilitated the
successful completion of the report.
This acknowledgment will remain incomplete if I don’t thanks to those people who helped and being
corporate with us Md. Mohiuddin Ahmed, General Manager (Development), Gulshan branch,
Dhaka, for helping me to find necessary information regarding this report.
I would also like to express gratitude to my university faculty members. They should be remembered
because they produced the platform of our knowledge.
Finally I am really grateful to the other employees and officers of BRAC bank Ltd for their help and
valuable advice. Again, I would like to thank our honorable teacher for giving us such a chance in
completion of the report
Finally, I would like to say that, I have prepared this report from my own experience. I am ready to accept
my unwilling errors and omission which belong to me.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Executive summery
An entrepreneur is one who creates a new business in the face of risk and uncertainty for the
purpose of achieving profit and growth by identifying opportunities & assembling the necessary
resources to capitalize on them. To capitalize on resources he needs capital to fulfill his vision
and mission. In Bangladesh there are many financial institutions that help entrepreneurs in very
well such as they give loan with low interest, provide training, free consultancy, observation on
their work and be of assistance as well. The study will work on BRAC Bank Limited that Term
loans to industries especially to small-scale enterprises.
BRAC Bank started its journey in 2001 and just in 8 years proved to country’s fastest growing
bank. Today the bank has more than 100 outlets (branch and service centers), 175 ATMs and 429
SME Unit Offices across the country. It has disbursed over BDT1000cores of SME loan and has
over 500000 individual customers who access online banking facilities through their cards. Its
services cuts across all strata of clientele are it corporate, retail or SME.We see this as a start-a
new start for the dream Bangladesh we all have put our trust on.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Table of content
1. Introduction of the organization
2. Organizational overview
3. Introduction of the study
4. Scope of the study
5. Methodology
6. Limitations
7. Analysis & discussion
8. Findings
9. Recommendation
10. Conclusion
11. Bibliography
12. Appendix
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
• BRAC Bank Limited registered under the Companies Act 1913 on the year 2000, started
its operations from the 21st of January, 2001. BRAC Bank Limited, with institutional
shareholdings by BRAC, International Finance Corporation (IFC) and Shore cap International,
has been the fastest growing Bank in 2004 and 2005. BRAC Bank has been rated as one of the
four most successful and sustainable SME Banks in the world. It also has been recognized for
“ICMAB Best Corporate Award 2007’. It had been rated as “A” in Long Term and ST-2 in short
term.
A fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored market
niches in the Small and Medium Enterprise Business, which hitherto has remained largely
untapped within the country. In the last five years of operation, the Bank has disbursed over BDT
1500 crores in loans to nearly 50,000 small and medium entrepreneurs. The management of the
Bank believes that this sector of the economy can contribute the most to the rapid generation of
employment in Bangladesh. BRAC went public following an initial public offer (IPO) and got
listed on Dhaka Stock Exchange (DSE) in 2006. The Company, after approval from SEC, issued
50mn shares at Tk. 170 per share including Tk.70 premium. By the end of 2007, a major portion
of the Company’s shares were held by the institutions and general public, which accounted for
47.11%.
Organizational Overview
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Basically BRAC Bank Limited performs major four types of functions – Term Loans to Industries,
Full-fledged commercial banking service, Technical Support to Small Scale Industries (SSIs), and
Micro-credit to rural poor.
BRAC Bank Limited is totally strict in its goal and for completing its objectives it has a strong
management system. In this report we have discussed detail about the functions and credit ratings
of BRAC Bank Limited.
Investment summary:
Share price BDT 792 million
Ordinary shares 15.8 million
Free float 50%
Average daily volume (shares) 97838
Market capital BDT 12656.16 million
Reserve & surplus 902.03
12wk high/low (shares) BDT 746.25/1690 million
Organizational goals:
• To employ funds for profitable purposes in various fields with special emphasis on small
scale industries.
• To undertake project promotion on identify profitable areas of investment.
• To search for newer avenues for investment and develop new products to suit such needs.
• To establish linkage with other institutions which are engaged in financing
microenterprises
• To cooperate and collaborate with institutions entrusted with the responsibility of
promoting and aiding SSI sector.
• Building a profitable and socially responsible financial institution focused on
markets and business with great potential,thereby assisting BRAC and
stakeholders build a just enlightened,healthy,democratic and poverty free
Bangladesh.
Functions:
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Organizational structure:
To achieve its organizational goals, the Bank conducts its operations in accordance with the
major policy guidelines laid down by the Board of Directors, the highest policy making body.
The day to day operation of the Bank is looked after by the management.
A. BOARD OF DIRECTORS
As stated earlier the Government holds 100 percent ownership of the Bank. All the
Directors of the Board are appointed by the Government of Bangladesh. The secretary of the
Ministry of Industries is the Chairman of the Bank. Other Directors of the Bank are senior
Government and central Bank executives. The Managing Director is an ex-officio member of the
Board of Directors. There are at present 7 Directors including the Managing Director.
B. MANAGEMENT
The management is headed by the Managing Director. He is assisted by the General Managers
and Departmental Heads in the Head Office. BASIC Bank is different in respect of hierarchical
structure from other banks in that it is much more vertically integrated as far as reporting to the
Chief Executive is concerned. The Branch Managers of the Bank report direct to the Managing
Director and, for functional purposes, to the Heads of Departments. Consequently, quick
decision making in disposal of cases is ensured.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
B. Human resources
BRAC Bank Limited has a well diversified pool of human resources which is composed of
people with high academic background. Also, there is a positive demographic characteristic -
most employees are comparatively young in age yet mature in experience.
As of December 2003 the total employee strength is 523. The strength is 435 excluding the
menial staff. BRAC bank Limited has been investing its resources with a view to developing an
efficient and professional work force. Two approaches are mainly used in this regard.
C. Training
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Like any other financial intermediaries, BRAC Bank Limited is no exception in performing its
core functions viz. Mobilization of fund and utilizing such mobilized fund for profitable
purposes.
A. Mobilization of fund
The main sources of fund for the Bank are:
1. Deposit, and
2. Borrowing
1. Deposit
Deposit is the mainstay of the Bank's sources of funds. Following usual practices, it collects
deposit through:
A. Current Deposit
B. Savings Deposit
C. Term Deposit
2. Borrowing
Apart from deposit, BRAC Bank Limited received funds from:
A. Bangladesh Bank
B. Asian Development Bank (ADB)
C. KFW (kreditanstalt fur Wieder-aufbau Credit Institution for Reconstruction), a German
development bank. All of these funding sources are for relatively longer period. Receiving the
credit lines from ADB and KfW has been a recognizing of the Bank's highly satisfactory
performance.
B. Utilization of Fund
BRAC Bank Limited utilizes its funds in accordance with its organizational goals and corporate
strategy. Main use is for lending to industrial and trade sectors. Maintenance of cash and
statutory liquidity reserve with the Bangladesh Bank covers 20 percent of demand and time .
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Bangladesh is a country with high density of population, low per capita income and agricultural
productivity. A large number of population are unemployed due to weak industrial bases and
lack of employment opportunities .The rapid population growth ,resulting in addition to the
civilian force is posing a great threat to the economic development process of the country.
Entrepreneur is the attempt to create value through recognition of business opportunity, the
management of risk falling appropriated to the opportunity and through communicate and
manage skills to mobilize human financial and material resources necessary to bring a project to
completion benefits of entrepreneurship are:
Making a difference.
Besides benefits there are some draw backs also. Such as:
Uncertainty of income.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Complete responsibility.
Discouragement.
Financial institutions play an important role in this regard. Most of the time entrepreneurs
borrow resources for the setting up of their entrepreneurs to set up an industry. Financial
institutions and banks provide facilities in the form of finance, Purchase of land, liability of fixed
asset, plant and machinery and hire purses in statements etc.
Various types of financial institution provide financial investment to the entrepreneur provide
bonus govt. owned commercial banks like BASIC Bank, Bangladesh development Bank etc.
Provide various types of loan cataloging them in to the different groups for different types of
entrepreneurs. On Bank Financial institution Like IDLC, IPDC, lanka Bangla Finance, Midas etc
are also providing different incentives to the entrepreneurs. Microcredit organizations like
BRAC ,Grameen bank, Proshika, ASA and etc are working for the rural development by giving
micro credit loan to the rural people and achieving them to name of full utilization of it.
Different financial institution hold different types of polices have an impact on the
entrepreneurial growth in Bangladesh. There is a scope to review the Polices of different
financial institution from different perspectives that is why having select this topic for our term
project.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
At the same time, whatever secondary data is collected they are sometimes not
appropriate to the relative subject matter.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
of their sale proceeds in trust for the bank, until the loan allowed against the Trust Receipt is
fully Paid.
Terrm loan:
This facility will support the long-term growth of business type of loan is Primarily used for
fixed asset financing, such as the acquisition of capital machinery, equipment and vehicles.
B.Commercial Credit:
The Bank also supports development of trade, business and other commercial activities in the
country. It covers the full range of services to the exporters and importers extending various
facilities such as cash credit, export cash credit, packing credit, short term loans, local and
foreign bills purchase facilities. As on December 31, 2005 total outstanding commercial loans
stood at Taka 5,013.55 million compared to Taka 4,024.70 million in 2004.
C.SME banking:
Loan products:
Anonno rin|:
Anonno is a term loan for small scaled business
Product Type
Equated Monthly Installment & Single Installment
Loan Ceiling
BDT 3 lac to below 10 lac
Tenure
EMI-12 to 36 months Single Installment- 3 to 9 months
Loan amount
Required loan amount + up front installment(if any)+ all fees and charges with applicable VAT
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Interest Rate
17.8% for New Loan
Apurbo rin:
Product Type
Equated Monthly Instalments
Loan Ceiling
BDT 8 lac to 30 lac
Tenure
12 to 36 months
Interest Rate
17.00%
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
12 to 48 months
1% of loan amount+ VAT for new loan
0.75% of loan amount + VAT for Ist time repeat (if applicable)
0.50% of loan amount + VAT for 2nd time repeat & so on (if applicable)
For 3 lac to below 10 lac- Required loan amount + up front installment+ all fees and charges with
applicable VAT
For 10 lac to 30 lac- Required loan amount
Security
Registry Mortgage of land property, Hypothecation on present & future assets, two personal
guarantors & post dated cheques
Aroggo rin:
Product Type
Loan Ceiling
Tenure
Loan amount
Interest Rate
For 3 lac to below 10 lac- 17.25% for new loan &
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Security
For 3 lac to below 10 lac -Hypothecation on present & future assets, two personal guarantors &
post dated cheques
For 10 lac to 30 lac-Registry Mortgage of land property, Hypothecation on present & future assets,
two personal guarantors & post dated cheques
Double loan
Double loan on your deposit for small & medium size business
Product
Type
Equated Monthly Installment & Single Installment
Loan Ceiling
BDT 5 lac to 30 lac
Tenure
EMI-12 to 36 months
Interest Rate
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BDT 3 lac to below 10 lac
EMI-12 to 36
EMI- 17% & months
Single Installment
Installment-- 17.8%
3 to 9 months
Security
BRAC Bank FDR (50% of the loan amount), Hypothecation on present & future assets, two
personal guarantors & post dated cheques
Prothoma:
Prothoma is a term loan for small scaled business operated by women entrepreneur
Product Type
Loan Ceiling
Tenure
Loan amount
Required loan amount + up front installment(if any)+ all fees and charges with applicable VAT
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Interest Rate
15%
Security
Hypothecation on present & future assets, two personal guarantors & post dated cheques
Proshar:
Proshar is a term loan for small & medium size Manufacturing business
Product Type
Equated Monthly Installment
Loan Ceiling
BDT 3 lac to 30 lac
Tenure
For 3 lac to below 10 lac -12 to 36 months For 10 lac to 15 lac-12 to 48 months
Loan amount
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
For 3 lac to below 10 lac- Required loan amount + up front installment+ all fees and charges with
applicable VAT
For 10 lac to 30 lac- Required loan amount
Interest Rate
For 3 lac to below 10 lac- 17.25% for new loan & 17% for 1st repeat & so on (if applicable)
Security
For 3 lac to below 10 lac -Hypothecation on present & future assets, two personal guarantors &
post dated cheques
Supplier & Distributor Loan a loan for various suppliers & distributors to expand their businesses
Product Type
Loan Ceiling
Tenure
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
EMI-12 to 36 months
Loan amount
Required loan amount + up front installment(if any)+ all fees and charges with applicable VAT
Interest Rate
17.25% for New Loan
Deposit products
Prapti current accont is an interest bearing current account. This account ensures the profitable and easy
transaction facilities for Businesses.
Eligibility
Any institution can open this account in the name of the Institution
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Features
Interest bearing current account
FREE Smart ATM Card with BDT-100,000 withdrawn facility (per day) from ATM & BDT-
300,000 from POS
D. Micro Credit
Brac Bank launched a Micro Credit Scheme in 2001. Micro Credit Scheme provides for the poor
for generation of employment and income on a sustainable basis particularly in urban and
suburban areas. The Bank follows three systems of credit delivery.
These are-
1. Lending to the NGOs who on-lend to their members. At present there are thousands of NGOS.
2. Lending direct to the targets groups or ultimate borrowers under the Bank’s own management.
3. Lending direct to the member-borrowers and NGOs providing nonfinancial services like group
formation and monitoring and supervision on exchange for a supervision fee. At the end of 2005,
total amount of Taka 338.30 million remained outstanding as against Taka 284.10 million in
2004. Recovery rate during this period remained at a satisfactory level of 100.00 percent.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
E. Other Activities
The Bank provides services for remittance, underwriting, guarantee, public offering of shares etc.
The bank also provides funds to investment and leasing companies. The Bank has recently
created a venture capital fund for equity support to innovative but risky projects
1. Tenure: 84 months
2. Interest Rate:182 days TB+6.50%,Margin(Indicative).At current 182 days TB Rate, the total
interest rate is at 14.50% pap
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
-6th year 10% of issue size@ a price of 3 to 3.5 times of Book Value
-7th year 10% of issue size@ a price of 3 to 3.5 times of Book Value
Starting a small business can be challenging. Entrepreneurs and small business owners are faced
with many hurdles and sometimes don’t have the resources they need to help them make tough
decisions. The Innovation Center at Brack bank has solved this problem by developing an
online Entrepreneur Development Program.
This program services Oklahoma communities and rural areas. The program will take
entrepreneurs through eleven essential areas of small business ownership. No matter what type of
business you are starting or are currently involved in, this program is sure to provide a wealth of
information.
• The non-credit program includes access to the online course as well as virtual business
support through the Innovation Center staff.
• Individuals may enroll in the program at any time and proceed at their own pace. Upon
completion of the program, they will receive a certificate of completion.
• When the program is utilized from beginning to end, participants will be equipped with
an overall knowledge of all areas of entrepreneurship
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Module Topics
The Entrepreneur Development Program consists of eleven learning modules. These modules
have information in regard to entrepreneurship, starting a business, and managing a business to
include:
• Entrepreneurship
• Business Plan Rationale
• Writing a Business Plan
• Sources of Funding
• Entity Selection
• Taxes
• Accounting
• Financial Statements
• Marketing
• Management
• Employment Law
Features
Benefits
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
A course fee of Rs.500/- per participant is charged in metropolitan cities and Rs.200/- per
participant in non-metropolitan cities. 50% fee is charged for SC/ST participants.
BRAC Bank launched a Micro Credit Scheme in 2001 Micro Credit Scheme provides for the
poor for generation of employment and income on a sustainable basis particularly in urban and
suburban areas. The Bank follows three systems of credit delivery. These are:
1. Lending to the NGOs who on-lend to their members. At present there are thousands of
NGOs.
2. Lending direct to the targets groups or ultimate borrowers under the Bank’s own
management.
3. Lending direct to the member-borrowers and NGOs providing nonfinancial services like group
formation and monitoring and supervision on exchange for a supervision fee.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Financial Performance*
Strength:
• Bracs distribution network of more than 100 branches,350 small and medium
enterprise until offices, and 175 ATM sites span across Bangladesh and reach more
than 40000 borrowers.
• BRAC is currently present in all 64 districts of Bangladesh, with over 7 million
micro-finance group members, 37,500 non-formal primary schools and more than
70,000 health volunteers.
• BRAC is the largest NGO by number of staff employing over 120,000 people, the
majority of whom are women.
• BRAC operates various programs such as those in microfinance and education in
over nine countries across Asia and Africa, reaching more than 110 million people.
The organization is 80% self-funded through a number of commercial enterprises that
include a dairy and food project and a chain of retail handicraft stores called ‘Arong’.
• BRAC maintains offices in 14 countries throughout the world, including BRAC USA
and BRAC UK.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
• BRAC is a few years into their initiative to operate in ten African countries in the
next ten years.
• BRAC Bank's services are specially directed towards promotion and development of
small industries.
• BRAC tackles poverty from a holistic viewpoint, transitioning individuals from being
• Over the years, BRAC has organized the isolated poor and learned to understand
their
needs by piloting, refining and scaling up practical ways to increase their access to
resources, support their entrepreneurship and empower them to become active agents of
change.
• Women and girls have been the central analytical lens of BRAC’s anti-poverty
approach; BRAC recognizes both their vulnerabilities and thirst for change.
• BRAC always strives to find practical and scalable approaches to eradicate poverty
wherever it is.
• Lending direct to the targets groups or ultimate borrowers under the Bank’s own
management.
WEAKNESS:
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Major findings:
Entrepreneur Faces Different Problems of receiving loan:
In Our Country Entrepreneur are facing more trouble for taking the loan for running their
business or establish a new business. The most critical opposition problems are given below:
1. Lack of over Confidence: The Financial institution are not given loan to the Entry level
entrepreneur because they think they have no sufficient evidence to recover the loan.
3. Misrepresentation of bank loan conduct: Sometimes the loan taker gives a wrong data
or misrepresents of asset or document that bank could not utilize at a short time.
4. Ranking Rate Problem: Bank gives loan to the Rank rate person or company. At the
beginning stage it is impossible for the new Entrepreneur. For Para diagram: BEXIMCO,
SQUARE COMPANY, And Any trust person who has Salary ranking rate.
5. Lankness of Experience: They think the loan taker entrepreneur has no previous
knowledge for business those he want to run. So this is one kind of problem.
6. Asset and Liability Problem: Most of the time the bank operating member want to
make the bank asset management and some times make the bank liability management
bank for that reason they could not provide loan the entrepreneur.
7. Interest rate problem: This is a major problem for bank some times interest rate is up
and down so bank could not provide loan at any time so this is a problem for the
entrepreneur.
8. Restriction of the Central Bank: All the financial institution could not provide loan
available because if they give loan without any reason it can increase the money inflation
of the market. So it’s a risk for the country.
9. Need Reliable Introducer: Bank couldn’t sanction any loan without reliable introducer.
If the Entrepreneur have good introducer bank will give the loan or check other bank
account.
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Recommendation
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Policies of different financial institution in the light of entrepreneurship development of Bangladesh
Major findings
a. Problems found
2. Recommendation / suggestion
a. Solution of the problems: These are your suggestions based on the findings of the study for
improvement or sustainability of the organization, strengthening of the systems and procedures,
possible revision of policies, and other relevant suggestions. All suggestions must be based on the
study and not just personal perception, hypothetical or arbitrary
3. Conclusion
a. These are specific and direct answers to the questions in the statement of the problems or
objectives of the study
4. Bibliography
a. Books
b. Website
c. Interview
d. Journal
5. Appendix
Note:
• Font – Time New Roman, size -12, subheading font size 14, heading font size 16
• Spacing – 1.5 lines
• Page number- topic and page number will be given from the cover page and it will be in the top right
corner.
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