Problems and Prospects of SME Financing in Bangladesh

1. Contribution Of SME
Sector In Bangladesh
Economy Md. Fayezur Rahman

4. Business Condition In
Bangladesh
In the “Ease of doing
business 2019” ranked
168 out of 190 countries.
“Distance To frontier
(DTF)” score 45.05 which
changes +2.80 from the
previous year.
“Starting a Business”
ranked 131 (Score 82.4
out of 100)

5. 24 million
people directly
and indirectly
linked
97 percent
of all business
Industrial
employment
80 percent
Contribution to
the GDP
25 percent
Export
contribution
75 percent
Total number was
about 79 lakh in
2013

6. Country SMEs as % of all
Enterprises
Contribution to GDP
(%)
Contribution to
Employment %
Bangladesh 97.00 20-25 80.00
India 97.60 30.00 40.00
Pakistan 90.00 55.00 65.00
China 99.00 60.00 82.00
Japan 99.70 41.00 72.00
Hong Kong 98.00 93.4 45.00

7. Impact national
strategic plans :
 Vision 2021
 Vision 2041

8. Seeks to
eliminate
extreme
poverty
Reach the
Upper-
middle-
income
country
status by
2030

9. SMEs In Bangladesh
Small Enterprise
Sector Replacement
cost of fixed
asset
excluding land
& building
Employed
Manpower
(not above)
Employed
Manpower in
International
Manufacturing TK 75 lakh to
15 crore
31 - 120 10 - 49
Service TK 10 lakh to
2 crore
16 - 50

10. SMEs In Bangladesh
Medium Enterprise
Sector Replacement
cost of fixed
asset
excluding land
& building
Employed
Manpower
(not above)
Employed
Manpower in
International
Manufacturing TK 15 crore to
50 crore
121 - 300
(1000 for
garments)
50 - 249
Service TK 2 crore to
30 crore
51 - 120

11. SME Lending Institutions
Internationally, The Global SME Finance Facility, established by the International
Finance Cooperation.
In Bangladesh, various commercial banks like -
BRAC Bank,
AB Bank,
National Finance,
IDLC,
National Housing and Investment,
Standard Chartered etc.

12. Reasons For Taking Credits By SMEs
Reasons for seeking credits % of Respondents
Starting business 20%
Procuring equipment from local
markets
20%
Procuring equipment from
international markets
10%
Procuring raw material from local
markets
10%
To facilitate works in process 30%
Hiring skilled labor 10%

13. SME Loan Constraints
Usage of obsolete technology.
 Massive competition from large scale industries and
imports.
 Inadequate infrastructure, especially in rural areas.
 Difficulty in marketing products.
 The inability to bear the risk of the business of the
customer.
 Long term lending sanction.

14.  94 percent of enterprises experienced a significant loss of
sales in 2020.
 49 percent decrease in sales on average for micro
enterprises.