Small and Median Enterprises (SME)

Prepared bySohag Ahmed

INTRODUCTION One of the most familiar words in Developing

country like Bangladesh.

Play a crucial role in promoting economic development as well as industrial production.

DEFINITION OF SME Definition of SME in Bangladesh: Ministry

of Industry and Bangladesh Bank define SME by through criteria-

Small Enterprise-

Medium Enterprise-

Serial No. Sector Fixed Asset other than Land and Building (Tk.)

Employed Manpower (not above)

01. Service 50,000-50,00,000 25

02. Business 50,000-50,00,000 25

03. Industrial 50,000-1,50,00,000 50

Serial No. Sector Fixed Asset other than Land and Building (Tk.)

Employed Manpower (not above)

01. Service 50,00,000-10,00,00,000 50

02. Business 50,00,000-10,00,00,000 50

03. Industrial 1,50,00,000-20,00,00,000 150

ROLE OF SME In the national economy of Bangladesh

In the export economy

SME SECTORSSectors of SME

Upazila wise District wise Division wise Regional wise

PROCESS OF SME LOAN Submission of application form and other

required documents Assessment and approval of facilities

requested Insurance of letter of offering / rejection to

customer. Customer comply to legal requirements and

pre-disbursement conditions Disbursement of Credit facilities

SOURCES OF FUNDS FOR SME

Personal funds-saved or inherited of their own capital, Loans from relatives and friends- It may be able to obtain some

money at low or no interest from  relative(s) or friend(s), Trade credit, Loans of credit from equipment sellers, Mortgage loans, Commercial Bank loans, Bangladesh Small and Cottage Industries Corporations (BSCIC)

loans, Enterprises Growth and Bank Modernization program (EGBMP), Small and Medium Enterprises Development Project (SMEDP), Taking partners, Selling capital stock, Miscellaneous sources (Life Insurance policies, Amortized loans

etc).

DOCUMENTS NEEDED FOR SME FINANCING BY

BANKS Personal guarantee Business plan Appraisal of assets to be financed Purchase agreement Cash flow statement Personal financial statement Formal application for financing Business financial statement Tin certificate Bank solvency certificate Vat certificate Export license

SECTOR WISE LOAN DISBURSEMENT IN SME

Banks/NBFIs

2010 2011Total

Disbursement% to service

sector% to trading

sectors% Mfg sector Total

Disbursement% to service

sector% to trading

sectors% Mfg sector

SOB 7523.98 3.05 61.50 35.45 2107.98 3.37 55.24 41.39

SB 2694.66 1.65 49.86 48.49 1225.89 2.04 52.16 45.79

FB 1133.93 12.81 47.93 39.27 592.12 12.05 49.22 38.73

PCB 40494.57 5.11 69.59 25.30 21302.00 6.08 66.12 27.80

Total Banks 51847.14 4.94 67.35 27.72 25227.99 5.80 64.13 30.07

NBFIS 1696.79 24.07 47.92 28.01 935.35 21.12 46.80 32.07

Total Banks & NBFIs

53543.93 5.59 66.69 27.73 26163.34 6.35 63.51 30.14

TARGET GIVEN BY BANGLADESH BANK AND

ACHIEVEMENT

Sonali Bank Janata Bank Basic Bank Jamuna Bank Pubali Bank Standard Charted Bank

0

500

1000

1500

2000

2500

3000

3500

4000

Yearly Achievement of Target Given by Bangladesh Bank-2011

Tk in

cro

re

TARGET GIVEN BY BANGLADESH BANK AND

ACHIEVEMENT

Sonali Bank Janata Bank Basic Bank Jamuna Bank Pubali Bank Standard Charted Bank

0

500

1000

1500

2000

2500

3000

3500

Yearly Achievement of Target Given by Bangladesh-2012(up to june)

Tk in

cro

re

TARGET GIVEN BY BANGLADESH BANK AND

ACHIEVEMENT

LOAN DISBURSEMENT OF GOVERNMENT BANK

Year 2010 Year 2011 Year 20120

500

1000

1500

2000

2500

3000

3500

4000

Time Series Analysis of loan disbursment of Government Bank

Tk o

n cr

ore

LOAN DISBURSEMENT OF PRIVET BANK

Year 2010 Year 2011 Year 20120

500

1000

1500

2000

2500

Time Series Analysis of loan disbusement of Privet Banks

Tk in

cro

re

SECTOR WISE LOAN DISBURSEMENT IN SME

IBBL BRAC UCBL EXIM ASIA BANK

UTTARA PRIME DBBL NBBA AL ARAFA0

20

40

60

80

100

120

Outstanding Loan amount (tkbn)

WOMEN ENTREPRENEURSHIP

Factors of women entrepreneurship in Bangladesh:

ReligionAgeMarital StatusEducational QualificationsSectors of InvestmentTypes of InvestmentsSource of Inspiration to Start a BusinessReceived TrainingInitial InvestmentSource of Capital

INVESTMENT OF WOMEN ENTREPRENEURSHIP

30%

30%5%

5%

5%

10%

5%5% 5%

Sector of Investment

Beauty ParlorTailoringCNG RepairingElectrical Device Selling & RepairingShopCloth ShopSewing Machine Selling & RepairingRestaurantStudio

PROBLEMS OF SME SECTOR IN BANGLADESH

Scarcity of raw materials Limitation of skilled employees Scarcity of raw materials Inability to comply with the bank’s collateral

requirements Insufficient technologies Insufficient supply of necessary utilities Conservative attitude towards risk, lack of vision,

ability to make plan Female entrepreneurs are treated discriminately Expensiveness of owing a retail space Absence of an effective and transparent legal system