Small and Medium Enterprise

• Small and medium enterprises (SMEs) are globally recognized for their intrinsic
contribution to economic growth and creating employment opportunities.
• Both developed and developing countries comprehend that SMEs have become one of the
key instruments to achieve sustainable economic growth.
• World Bank data (2022) has shown that SMEs represent about 90% of businesses and
more than 50% of employment worldwide.
• Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.
• In many Asian countries, it has been estimated that SMEs contribute more than 90
percent of industrial output and create employment opportunities for 60 percent of the
labor force (Veskaisri, Chan, & Pollard, 2007).
• SMEs significantly contribute to the development of domestic industry by supporting
both major and minor economic activities that generate employment.
• The contribution of this sector is more relevant in developing countries like Bangladesh
as the production processes and products manufactured in this sector require less
investment relative to large-scale enterprises.
• Entrepreneurs quickly start with minimal money, hire many workers, fulfill local
demands, and add to export earnings.
• SMEs played an essential role in providing job prospects and even manufacturing
machinery and machinery parts to save our nation a large amount of foreign currency.
• It has the vision of lowering poverty, creating jobs, and generating the country's
economic growth.
• Today, SMEs play a significant role in the national Economy.
• Roughly 80% of industrial employment, 90% of all industrial units, approximately 45%
of manufacturing value added, and about 25% of the labor force are all accounted for by
them.
• Their overall contribution to export revenue ranges from 75% to 80%. Most of the SMEs
that comprise the industrial sector, which accounts for 31% of the country's GDP, are
small and medium-sized businesses.
• SME can reduce the urban migration in the capital and other major cities, increase cash
flow in rural areas, and thereby enhance the standard of living of the rural people.
• SMEs are widely distributed all over the country which means developing SMEs will
play a major role in bridging the urban-rural income gap and contribute towards inclusive
growth.
• As per the statistics of the SME Foundation, there are more than 7.8 million CMSMEs in
Bangladesh where 7.3 million people are engaged.
• CMSMEs make up 90% of industrial units, 80% of industrial employment and contribute
45% to manufacturing value added. SMEs are growing by roughly 6% annually. Despite
their significance, CMSMEs contribute only 25% to the GDP. They contribute 59% in
Indonesia, 52% in Srilanka, 45% in Vietnam and 40% in Pakistan (Lightcastle). However,
the country aspires to increase GDP’s contribution to 32% by 2024 (SME Policy 2019)
National Industrial Policy 2016
The Importance of SMEs
• Capability of quick adaptation; working with less capital but more intense labor; having
low cost of management and thus having cheap production.
• Schumacher (1973) denotes the superiorities of SMEs as such:
• Have a competitive structure.
• More efficient.
• Keep up with the new demands and new technology.
• Working styles are not monotonous or boring.
• More enduring to the economic crisis.
• Have a more successful role in increasing employment and arranging income.
• Have been leading enterprises in the industrialization of Western Countries since 1960
(Çarıkçı,2001).
• SMEs, observing the market closely, understanding the requirements of customers better
and having intimate relations with its employee, have more elasticity than the large ones
in terms of manufacturing, marketing and service.
• SMEs pass over many troubles lightly with less damage.
• SMEs‘ advantages are (Yılmaz, 2004):
• Sources of new ideas and discoveries. They contribute to the industries for providing
required elasticity.
• Have the opportunity to make a decision more quickly.
• They work with less expense of management and general operating, they have faster and
cheaper production.
• Play an important role in creating private initiatives.
• They enjoy large shares in employment and training.
• These enterprises are the first establishments in which many qualified workers receive
technical training.
• SMEs constitute an effective way to expand the manufacturing and industrialization to
the whole country.
• SMEs are of the situation to be the manufacturer of intermediate goods and inputs of
large industrial enterprises.
• SMEs may be effective in increasing quality of life providing some opportunities for
small investments to use labor force, raw material and financial sources that cannot be
used because of social and political reasons.
• SMEs reflect small savings and family savings directly to the investments.
• The small firm is too important, too dominant and too much about creating the future
business generation for marketing practitioners.
• According to the report of European Community,
• These enterprises constitute a required part of commercial and industrial structure
because of their numbers and studies about different cases;
 • Effects over all sectors having a field of manufacturing, trade and service;
• Contributions to employment and level of welfare‖ (EC, 2003).
• SMEs are globally recognized for their intrinsic contribution to economic growth and
creating employment opportunities.
• Both developed and developing countries comprehend that SMEs have become one of the
key instruments to achieve sustainable economic growth.
• World Bank data (2022) has shown that SMEs represent about 90% of businesses and
more than 50% of employment worldwide.
• Formal SMEs contribute up to 40% of GDP in emerging economies. In many Asian
countries, it has been estimated that SMEs contribute more than 90 percent of industrial
output and create employment opportunities for 60 percent of the labor force (Veskaisri,
Chan, & Pollard, 2007).
• The SME sector accounts for over 50% of the gross domestic product (GDP) of most of
the developed countries in the world. The ratio is 60% in neighbouring India, and 45% in
Vietnam.
• According to estimates from the Bangladesh Bureau of Statistics, the SME sector
contributed 22.86 percent in FY19.
• However, In FY20, this sector's contribution declined to 22.40 percent due to the
pandemic.
• The overall share of SMEs in the industrial sector was 20.15 percent in FY20.
• Bangladesh Institute of Bank Management’s Associate Professor Dr Md Mosharref
Hossain said that some 5.8 million SMEs, out of the total 8.1 million, operate in
Bangladesh’s rural areas. However, urban SMEs get access to 81 per cent of loans and
female entrepreneurs only 7 per cent.
• According to World Bank data, there is a $2.8 billion investment deficit in the SME
sector. If the banks played a more positive role, Bangladesh’s economy would benefit a
lot through this sector.

Disadvantages of SMEs
• These are lack of general administration, especially the lack of total participation of low
level workers to the decisions taken by the owners or partners, not employing specialist
and financial consultants in the enterprise, lack of an expert group in financing and lack
of department, lack of capital and financial planning, not taking enough support from the
banks and other financial corporations, lack of product development, lack of coordination
between production and sale, not showing the activities of modern marketing, littleness of
business sites and residential areas, risk of bankruptcy and losing its independency, not to
be able to provide specialized staff, legislation and bureaucracy, SMEs may be called
disadvantageous.
Strategy for Development of SME
• The 7th five-year plan (2016-20) recommends a three-step strategy for the development
of the SME sector of the country.
• The first step relates to the consolidation of the naturally developed capabilities mainly
serving the domestic market.
• The second step focuses on making the entry of SMEs into the export market easier and
• The third step emphasizes the enhancement of capacities to thrive into the global market.
• The first role of the proposed strategy is protectional; protecting the naturally developed
capabilities. The role in the second and third strategy is promotional; promoting the
capacities of the SMEs to penetrate into the export market and thrive withstanding the
global competition.
• A comprehensive approach to the development of this sector should be adopted, which
will entail wide-ranging fiscal incentives, preferential access to finance, favourable trade
policy, provisioning of land and site services, and the facilitation of technological and
marketing support.
• For promoting agro-processing and small scale rural enterprise, a value chain approach
[value can be added, cost can be reduced, and competitive advantage can be established]
will have to be followed by integrating input providers, traders, processors and service
producers.
• To promote the growth of SMEs, numerous development projects should be considered
such as providing incentives for development of agro-based industries;
• special assistance for expansion of rural industries; education and skill development
programs;
• and broad-based growth promoting macro-policy.
• Areas have to be identified where SMEs have a comparative advantage and higher
growth potential and it is an essential element of a strategy for the development of the
SME sector.
• This will mean exploring market opportunities on a sustained basis and mobilizing the
required support services for the promotion of these industries once such niches are
identified.
• Collection and analysis of the relevant industry related information will be an essential
prerequisite for such strategic planning.
• It is with this purpose that the government has set up the SME Foundation whose
mandate is to work out such development strategies for the SME sector in Bangladesh on
a continuing basis in close tandem with the private sector.
• The capacity and activities of the SME Foundation need to be strengthened to this end.
• Also, a national SME census needs to be conducted through the Bangladesh Bureau of
Statistic (BBS) in order to create a comprehensive information repository regarding the
SME sector.
• The census will give special focus on enumerating women entrepreneurs engaged in
manufacturing enterprises classified as SMEs.
• SMEs need a differentiated and hassle free indirect tax system.
• The structural difference between the SMEs and their large-scale counterparts, justify a
case for a differentiated system of indirect tax for the SMEs that will enable them to pay
the indirect tax-free from harassment.
• Further trade liberalization measures should be taken with a view to providing SMEs
easier access to imported inputs.
• One important factor affecting the growth of SMEs has been the trend in domestic
demand.
• Thus, the rapid growth of the construction sector seems to have contributed to the
expansion of SMEs producing non-metallic mineral products, particularly bricks,
structural clay and cement products.
• Public expenditure directed particularly towards the agricultural and the rural sector
would raise the purchasing power of the rural people.
• Since the demand structure of this segment of the population is more oriented to local
products, it would act as a stimulus to growth and expansion of SMEs.
• The comprehensive credit policy for SMEs developed by the Bangladesh Bank should be
implemented duly.
• Under this policy, the commercial banks and other financial institutions are required to
disburse SME credit according to the target set by Bangladesh Bank and send
disbursement report to Bangladesh Bank.
• The financial institutions will be required to develop loan products that relate better to a
specific type of credit needed in SMEs.
• Provision of subsidized credit to clusters, disadvantaged groups, and fringe regions with
close monitoring should be ensured.
• SME cells should be set up for identifying potential borrowers, loan disbursement,
monitoring use of credit and collection of the loan.
• To strengthen targeting of SME credit, a prerequisite for this is the creation of SME
database, which would help assess the relative growth potentials of diverse SMEs and
enable proper targeting of SME credit in line with the earlier suggestion of selective SME
development strategy.
• Clustering is a critical concern for rapid industrialization in general and development of
SMEs in particular.
• The growth of SMEs also depends on successful integration, both vertical and horizontal.
• SMEs alone cannot move further without mutual support from other SMEs or large-scale
enterprises.
• SMEs in Bangladesh face formidable challenges in expanding their capacities.
• An efficient strategy for capacity expansion of SMEs is through agglomeration of co-
located industries to take advantage of scale economies in logistics and infrastructure and
a host other ancillary facilities.
• The system of technical and vocational education in the country needs to be restored for
the development of manpower in the SME sector.
 • Many of the skilled workers may join family-owned SMEs. The institutional capacity to
pass on appropriate technical and vocational education needs to be strengthened.
• For this, close association of the potential employers in developing the right curriculum
would be important.
• Women entrepreneurs should be brought into the mainstream SME development process.
• In facilitating the development of the private sector and SME, the primary role of the
government will have to be to create investment-friendly law and order situation,
supportive legal and regulatory framework and appropriate macroeconomic policies.
• These will need to be complemented by prioritized public investment designed to ease
various structural bottlenecks pertaining to physical and infrastructural facilities, energy,
and technology.
• In addition, the quality of governance will have to be improved to ensure a reliable
supply of basic services upon which honest and efficient businesses depend.
SME Policy 2019
• The SME Policy 2019 announced in September 2019 is expected to play an essential role
in changing the country’s SME scenario.
• The policy aims to increase the contribution of the SME sector to Gross Domestic
Product (GDP) from 25% to 32% by 2024.
• The policy emphasizes extensive SME development activities. One of the policy
objectives is to improve the SME business environment by increasing institutional
funding, adopting ICT-based technology, developing marketing strategies, and
establishing SMEs as the backward linkage of large industries.
 Small Business Ideas in Bangladesh
• A list of great small business ideas Bangladesh based for 2023. There are lots of
business ideas are available in Bangladesh. Most profitable, easy and successful
businesses for you to start as a beginner in Bangladesh in this 2023.
• At the present time, Bangladesh is passing to her best time to start a new small business.
• Bangladeshi young entrepreneurs are highly interested to start a small business rather
than jobs. This is the obviously great initiative for Bangladesh economic.
• Bangladesh garments industry, poultry industry, tea industry, leather industry, sea fish
industry and recent time online businesses are most profitable businesses in Bangladesh.

Open a Small-Scale Super Shop Business

• A Small-scale super shop business is profitable business ideas in Bangladesh.
• Location is very important for this business. A busy residential area is a perfect place to
start.
• 450 to 500 square foot is space is perfect to start a small super shop.
• Hire 1 or 2 employees to help you in this business. The minimum investment is BDT 10
Lac

Fashion House
• This business is a very suitable business in Bangladesh.
• Before starting fashion house business you should do some plan. A perfect business plan
is required to start this profitable business in Bangladesh.
• Like super shop business, the minimum investment is 10 Lack BDT. Location is the key
for this business. You can also run online shop too.

Open a Toy Shop in Bangladesh

• The toy industry is new in Bangladesh. The most of the toys are coming from China. You
have to buy them in wholesale from Dhaka and Chittagong where the price is reasonable.
• Before starting toy shop in Bangladesh, you have to analysis the market. One thing you
have to keep in mind that toys are not for all class of people. So you have to make a
perfect business plan for the toy shop. Again, location is key.

Baby and Mother’s Product Business

• This is not an easy business looks like. You have to study before the start. The products
are very sensitive.
• Near hospital, a largely residential area is the perfect location to start this business.
• It is very profitable small business ideas Bangladesh Based.
Fast Food Shop Business in Bangladesh
• This is the one of the most favorite business idea in this list. The most of the young
entrepreneurs in Bangladesh are interested in this profitable business.
• Especially, in the big cities like Dhaka, Chittagong is the place where you can start fast
food shop business.
• A good service and location is the key to success. I think the minimum investment is
around 5 to 7 lack BDT.

Stationary Shop for Students

• Let’s introduce another small profitable business idea in Bangladesh.
• It is a local business idea but very profitable.
• A stationary shop is the best option while your investment is low.
• Besides school, college, the university is the perfect location to start.

Coffee Shop Business

• A small coffee shop business is best to own business idea. In Bangladesh, there is few
coffee shop who are only selling coffee.
• If you want to start your own business for a long time then you can choose this business.
• Notably, a business plan you have to make where no option to do mistakes. Personally, I
know a guy who was unsuccessful in this business due to location.
• A commercial area, near the park, the shopping mall is the suitable place to start coffee
shop business.

Mobile Phone Selling Shop

• This would be another opportunity to start own business in Bangladesh.
• Online advertising or online version of your shop can increase sales.

An Ice-cream shop
• A good location, quality of ice-cream, well decoration is the three principles in this
business. Indeed, an ice-cream shop is a profitable business idea.

Small Scale Restaurant Business

• The restaurant business is one of the trending business ideas in Bangladesh. But, the
main fact is, 80% of the restaurant is losing their investment.
• On the other hand, less than 20% restaurant is making a big amount of profit.
• So before thinking about this business, you have to make a perfect business plan. You
must find out your strength and weakness.
• In this business ideas list, it is one of the most profitable idea, but also challenging.
Cosmetics shop for girls
• Mainly the girls are the main customers for this business. Almost all the girls are used to
by using any cosmetics item.
• Around 35% to 40% or more can be earned from this business. You can open an online
cosmetics shop also to make more sales.

A fixed price shop for men’s products

• Fixed price shop is always a profitable business. When you targeted customers all are
men then you have to keep all the men’s products. From saving foam to shoes will be
your products.

Start an Aquarium Shop Business in Bangladesh

• Generally, your customers are rich enough because they want to buy an aquarium.
• The quality-full aquarium you have to display. This is a slow business rather than other
businesses but still very profitable.
• Again, the location and services are the keys to success.

Used Products Buy and Sell

• This is another low-cost business ideas in Bangladesh as well as in the world too.
• The business is simple, you will buy used products and make some repair and sell it to
another customer. For example, mobile phone, laptop, computers, TV is the products for
this business.
• Online advertising is the option to buy or sell. A good amount of money can be earned
easily if you are a hard worker.

Open a Juice Bar

• The juice bar is a profitable idea to start your own business. At the starting time, you need
around 7 to 8 lack to start.

Electronic Products Selling Shop

• This business is most trending and lucrative business ideas now in Bangladesh. Like
other shop’s business location is the key fact.
• You can apply for big companies’ dealership and that would be great to start.

Farming Business Ideas in Bangladesh

Poultry farming business in Bangladesh for eggs.
• If you want to start farming business then why not poultry farm for eggs production?
Layer poultry farming business is one of the old business but profitable too.
 • In fact, one of the most successful business industry in Bangladesh. In the recent time,
farmers are getting low profit due to poultry feed cost. There is a solution, you have to
make one feeds for your hens. This method will increase your profit.

Broiler Poultry farming business

• Whenever we go to eat for chicken fry the broiler hens are there. It is a profitable
business in cities and also countryside area in Bangladesh. If you want to make more
profit then you have to make feed for your farm by keeping food quality.

Goat Farming Business

• Surely, this is a very profitable small business ideas Bangladesh based. It requires less
hard work but a good return of profit. The demand for goat’s meats is always high in
Bangladesh.

Duck Farming Business in Bangladesh

• Duck’s eggs are more demandable then hens eggs. To start a duck farming business you
need to have a pond or any free water source.
• If you have a small pond then you can start is comfortable. Combining fish and duck is
very profitable idea to start a new business Bangladesh.

Dairy farming business in Bangladesh

• In the farming business, the dairy farm would be number one business. This is a long-
term business.
• In fact, you can run your dairy farm as a side business too. Before starting a dairy farm
you should make a business plan.
• You can earn more than 500 BDT from two cows by selling milk. The cattle are the
bonus income in dairy farming business.

Fish Farming Business in Bangladesh

• This is another lucrative business idea to start your own business in Bangladesh. There is
huge demand of fish in the local and national market.
• If you want to start a side business, then fish farming business is a good option. There
you don’t need to invest a big amount money to start.

Fish and Duck in the same place.

• Combining duck and fish farming business is a very good business to start in Bangladesh.
• It will reduce fish feed cost and your business will be profitable. There are lots of people
doing this in Bangladesh.
• Women, young businessman or beginners can be operated with minimum effort.
Vegetable farming business
• If you want to start your own business with small capital in Bangladesh then there this is
vegetable farming.
• Every small starting is the steps of big industry.
• If you can supply your vegetable in a super shop then that would be great. Besides, there
is a huge demand for vegetables in the local markets too.
• So there you don’t need to worry about the selling process.

Start Bee farming business in Bangladesh

• Honey is the things that are always valuable food item. Before starting commercial bee
farm you have to need to get well training.
• This is a small business where investment is low but the return is good.

Start an Organic Farm

• As more people are moving towards organic foods due to major health concerns, this is
one of the great business choices.
• Usually, organic food is free from chemicals, pesticides, and other toxic substances.
• You can leverage both social media and offline advertising to increase your brand
awareness and grow your business.
• Organic farming is highly suitable for people interested in agriculture or food services.

Profitable Small Business

Furniture Shop
• Today furniture is the most increasing industry in Bangladesh. At the beginning, you need
to invest a good amount and then you’ll earn a good return. You can sell your furniture
online. Online advertising is good ways to market your furniture.

Mobile Food Cart

• It is another small-scale business opportunity in Bangladesh. Before starting this business
try to get permission from your local authority.

Bicycle Shop
• In the present time bicycle business is most profitable. You can buy it from a company or
can sell their bicycle. This business is so good while you are doing another one.

Being an Insurance Agent

• Because you will earn money from one sale for up to 15 years. For example, you sold an
insurance today, then you will get commission until the maturity of that insurance. This is
like tree plantation. I think becoming an insurance agent is best passive income way in
Bangladesh.
Business Plan Writing
• To be sure business plan writing business is very unique in Bangladesh. If you have vast
knowledge in every business sector then you can sell your business plan.
• This is creative ways to make money in Bangladesh but needs hard work.

Start a laundry business

• But it is suitable for active and physically fit people.

Food Catering
• A good meal is appreciated by all. Catering services are always in high demand. The
cuisine is served at all types of events, including birthday parties, weddings, and
anniversaries, and caterers are in high demand to ensure that the food is tasty.
• A kitchen and a few people to cook, serve, distribute, and manage logistics are all that are
required for a food catering service. You can begin with a food catering business because
it is a low-cost, high-profit venture.

Provide lunch in corporate office

• Homemade lunch providing in the corporate office is a great small business idea
Bangladesh Based.
• Before starting you have to make the menu and ensure that you can provide good quality
foods.
• Young business mined people, students, women can start this business very comfortably.

Online Small Business Ideas

Online Shop or E-commerce business
• E-commerce business is one of the profitable business ideas but there needs lots of hard
work. The main advantage of this business is you can run this business from home also.
In Bangladesh there are more than 9000 e-commerce websites and more than 15000 F-
commerce pages are doing business.

Make a YouTube Channel earn money from Bangladesh

• If you are good in video editing, you can open your own YouTube Channel. Of course, it
is a money making project but never use others video. Try to make your own content
because YouTube is clever than us.
Social Media Manager
• Surely, this is the golden period for Bangladesh online revolution. Many companies are
looking for the social media manager. You can start this business without investment. But
you need online advertisement to get customers.
Monetize your website with Google AdSense
• If you have a website where you are getting lots of visitor then you can monetize your
site with Google AdSense. Google AdSense is revenue sharing project where you can
earn a safe, limitless and secure money by monetize your website.
Online Newspaper business
• This is a short time business idea. You can start with a very little amount of money. The
business plan is simple. You will but domain, hosting, provide content, make a viral
Facebook page and try to sell all the things.
Set Up a Bus Service Website
• Usually, this website requires a robust internet connection. While most teenagers and
adults search for bus routes, schedule buses, and opt for advance bookings through
various portals. Hence, starting a bus service website or an app is the best way to enjoy a
significant return on investment.
• It provides complete details about bus routes, stops, and offers huge discounts on bus
fares. That’s why to start a bus service website; you should have keen knowledge about
various local and non-local routes. The minimum investment for establishing a bus
service website is around BDT2,00,000, whereas the profit margin is about 10%.
App Development Business
• Smartphones have especially become a part of life. According to App Annie, almost 33
billion apps were downloaded in 3/4th of 2020. Moreover, the money spent on
developing apps is around $28 billion, which increased by 20% compared to 2019.
• If you’re highly interested in app development or related business, it’s an ideal choice to
generate revenue. Establish a strong digital footprint to attract, engage, and nurture ideal
customers. Another best feature of app development is it neither requires certification nor
physical location. So, it has fewer barriers to kick-start the app development business.

More Small Business Ideas

T-shirt Business
• This is an attire that all class people love. T-shirt Business is low-cost business ideas in
Bangladesh. If you have a unique design, know your customers demand then you will
succeed.
• Small Scale Sports Products Manufacturing Business
• Bangladesh is a sports crazy nation. You can start small scale sports products
manufacturing business. Like Sports Jersey, Cap, Sports pants etc.
Leather belt Manufacturing Business
• Among all the manufacturing business ideas this is a most profitable business in
Bangladesh. In fact, investment is lower than another manufacturing businesses.
Small Scale Garments Business in Bangladesh
• Try to work to fulfill local markets demand. A small-scale Garments is an obviously
profitable business but before starting make a business plan. Try to find out your strength
and weakness for this business.
Start Photography
• Photography is an art. This is not only a hobby. You can earn a lot’s of money as a
professional photographer. In Bangladesh, a wedding photographer is in very demand.
You can open your business by running a Free Facebook page. Upload Photos of your
work so that people can understand your quality. Indeed, it is a profitable small business
idea Bangladesh.
Rent wedding dresses
• This looks funny but surely you can earn lots of money. Renting wedding dresses is good
option to start while you are doing another business. You can take it as a part-time
business also. Make online advertise to do get more customers.
Security Service Company
• Many house owners and small companies are looking for security service. In Bangladesh,
there have few companies who are providing this types of business. You can start this
business in a very comfortable way.
Artificial Tree and Flower Making Business
• Though, this is machine depended business but a very professional business idea. The
demand of artificial tree, flowers are increasing day by day. They are used in-house
designing. The startup cost is high but whenever you start no one can stop you.
Invest in IPO
• Investing in IPO (Initial Public Offering) business is completely risk-free business idea
in Bangladesh. You can apply for IPO for and if you are lucky then you get good profit
by winning IPO Share.
Invest in Secondary Share Market in Bangladesh
• In general, Share Market in Bangladesh is two types. One is risk-free but limited earning
is called IPO. The next one is the secondary market where have risks but if you are expert
then you can earn a lot of money.
Clothing Boutique Owner
• Many people enjoy fashion, and if you’ve ever dreamt of being a fashion tycoon, then
you may want to think about starting a boutique. You can get a small shop with windows,
put together a solid social media account, and connect with other businesses in your area.
If you go about it correctly, you could make it the go-to boutique in your area.
Tutor/Coaching Centre
• Do you still have a solid idea as to what it is that you learned in a subject in school?
Maybe you went to university for math, English, or the sciences? If so, then you may be a
perfect candidate to become a tutor. There are opportunities for both online and in-home
tutoring available nowadays, making it an easy start among small business ideas.
Children’s Daycare Provider
 • Do you enjoy kids and do you have experience caring for young ones? Then you may
want to look at the possibility of becoming a daycare provider. You will have to set apart
an area of your home to be used as the daycare and be able to provide safe options for
them as well. A home inspection is usually required, too. But, if you can get past all of
that, you can make a decent amount of money as a home daycare provider.
Event Planning
• Many people find planning for the details surrounding any sort of party or event to be
stressful or anxiety-inducing – and that’s where you could come in, if you decided to start
a business for this sort of work. You will have the opportunity to put together events for
businesses, individuals, and whoever else may come looking for the services you have to
offer.
Travel Consultant
• You don’t have to dream of traveling when you can help people with their traveling
dreams! Many times, travel consultants are able to connect with different hotels, theme
parks, and other destinations in order to provide their clients with great deals.
• In return, those same hotels, theme parks, and other destinations will provide you with
free stays, discount tickets, and more. It’s a win-win!
Bakery
• Everyone loves the smell of a bakery, and different people need different baked goods for
any number of reasons. If you enjoy baking, then it may be your best bet to start this
adventure yourself. You can plant yourself in the middle of your local commercial district
and you’ll find that you have a lot of business throughout the week.
Car Washing and Detailing
• Do you love making cars look fresh and clean? Do you enjoy getting outside and getting
active? If so, then start your own car washing and detailing business. Many car owners
would totally pay someone to come to their home with the right materials to get their car
looking as good as new. If you have a pail, a good hose, sponges, polishing wax, and car
shampoo, you’ll be ready to get started.
Flower Shop
• Flowers are great for any occasion, and you don’t need any sort of schooling to be able to
run a flower shop of your own. Opening a flower shop is actually really inexpensive –
you really just need to buy a cooler to keep your flowers fresh and you need to rent the
space. You can grow flowers yourself in a greenhouse or connect with local flower
enthusiasts to buy their products. People in your local area will love having access to
fresh flowers for weddings, funerals, dances, and other events.
Jute Bags
• Jute materials are durable, appealing, dependable, light, and inexpensive. Jute backpacks
have a lot of export potential. Cotton strings and Jute fiber cloth are required as raw
ingredients for making Jute bags. These can also be found readily. These can be shipped
after being kept or stored in cartons.
Candle Making
 • Because decorative and scented candles have recently been in high demand. You may
start a candle-making business from home for a modest cost. Due to little capital
investment, high-profit margins, and enormous candle sales, the candle industry has a
promising future. These small businesses also have a large export market.
Delivery Businesses
• Delivery Business is one of the best choices to earn colossal ROI. All you need to do is
deliver the products, food, or other goods on time.
• One of the primary reasons for the success of this industry is it’s safe and delivers
anything you want at your doorstep. Also, the rapid increase in online purchases results in
the necessity of delivery partners. That’s why it’s recognized as one of the best small
businesses worldwide. Even after the COVID pandemic, this industry is expected to rise
without a hitch.
Sell Home Decor or Home Improvement Equipment
• The home decor or home improvement industry is booming these days. Most people are
looking for the best home decor products or home improvement tools. The home decor or
improvement tools are best for redesigning rental property without actually damaging the
original design.
• Also, you find thousands of customers buying home decors such as wall arts, artificial
plants, pots, stools, and colorful decorating items. Meanwhile, there are also tons of
people buying green grass, lawn tools, or other home improvement equipment to enhance
the interior of their homes.
• So, establishing a dedicated store for home decor and home improvement equipment
reaps huge bucks within no time due to the huge market demand.
Virtual Assistant
• As a virtual assistant, you’ll handle everything from diary management to trip
reservations to email management and more. But you’ll do it in the privacy of your own
house. You could also assist with other activities such as graphic design or bookkeeping if
you have additional abilities.
Health & Lifestyle Business (Fitness Centers, Online Medicines)
• Health and lifestyle businesses such as fitness centers, gyms, beauty salons, online
medicines, etc. are booming and can be started with low investment. Even online
consultation by doctors business is right now in demand, and if you can create a simple
platform to link doctors with patients, you are a winner.
Real Estate Agency/ Broker
• Real estate is the most significant industry in terms of average spend by a customer, and
the best thing is that you can become a real estate agent or broker without any massive
investment. However, you need to be a good person with excellent communication skills
and networking talent. Without buying any inventory, the art of selling big-ticket real
estate projects is not easy on paper. But for the right entrepreneur, nothing is impossible.
Recruitment Agency
• There is some big money involved in the recruitment business, globally. And literally,
anyone can become a recruitment agent without any investment. All you need to do is
 connect job seekers with employers and take a commission out of this. As with the real
estate business, there is no major investment involved, but good communication skills
and a grasp of the job market are very much needed.
Business Ideas for Women
• Clothing /Boutique business • In-home childcare
• Food service business • Beauty parlor
• Graphics designing • Fitness Center (Gym)
• Interior designer • Bonsai Tree Business
• Yoga training • Dance School
• Home-based chef business idea • Frozen Food Mart
• Teach or tutor
Business Ideas for Small Town
• Open a Book Shop • Carpenter
• Open a Pharmacy Store • Tour Guide
• Elderly Care Business • Gardener
• Start a Plumbing Business • Auto Repair Services
• Motel and Lodge • Home Cleaning
• Food Delivery Services

Steps / Measures taken by Bangladesh Bank for SME Development

Bangladesh Bank for SME Development
• BB has introduced several schemes and programmes to flourish and expand SME
Enterprises.
• Refinance scheme funded by BB, IDA and ADB has been facilitated for the development
of SME Sector.
• BB has taken diverse steps; like opening of ‘Dedicated Desk’ for SME and ‘SME
Service Centre’ in the banks and special facilities for the women entrepreneurs.
• ‘SME and Special Programmes Department’ established in BB which is solely
responsible for policy formulation, facilitating fund, monitoring and development of
entrepreneurship in the SME sector.
Guidelines Formulated by the Department
 • For compliance of the banks and NBFIs for the development of SME sector are
enumerated below:
• An indicative target for SME loan disbursement is set by the banks and financial
institutions considering SME development as one of the most important development
agenda of the country.
• According to the target, SME loan shall be disbursed to the small, medium and women
entrepreneurs.
• Following the 'Area Approach Method' banks/financial institutions will try to attain
their indicative targets separately by dividing it as branch wise, region wise & sector
wise.
• Each bank/FI shall follow a separate business strategy in financing SME loan with least
formalities in executing documentation to ensure easy and speedy loan sanction and
disbursement process.
• Priority shall be given to small entrepreneurs.
• For more participation of women entrepreneurs in industrial development of the country
and for conducting business activities by women entrepreneurs in large number, priority
shall have to be given to potential women entrepreneurs in respect of SME credit
disbursement.
• Banks & FIs shall put highest priority in receiving loan application from small and
medium women entrepreneurs and settle the loan disbursement process within very
reasonable time from the date of acceptance of the application.
• Each bank and FI shall establish a separate ‘Women Entrepreneurs’ Dedicated Desk’
with necessary and suitable manpower, provide them training on SME financing and
suitably appoint a lady officer as chief of dedicated desk.
• Branch wise list of ‘Women Entrepreneurs’ Dedicated Desk ‘ should be sent to SME
and Special Programmes Department of BB within 2 months from the date of
declaration of this policy and program.
• Banks and FIs may sanction up to Tk. 25,00,000 to women entrepreneurs against
personal guarantee. In that case, group security / social security may be considered.
• The success in SME loan disbursement will be considered as yardstick for further
approval of new branches of the concerned bank.
• License for New Branches will be issued for financing the priority sectors like SME and
agriculture in the name of ‘SME / Agriculture Branch’ instead of ‘SME Service
Centre; in order to involve banks in financing priority sector like SME and
Agriculture’.
• Each bank/FI shall fix the interest rate on SME loan sector/subsector-wise.
• However, bank/FI will inform BB sector/sub-sector wise rate of interest immediately and
ensure disbursement of refinanced fund to the clients (women entrepreneurs) at Bank rate
+5% interest.
• Training programs shall be arranged for the entrepreneurs.
Area Approach Method
 • ‘Area Approach method’ is applied for SME sector like agricultural credit.
• Territorial industrial production, type of industrial products i.e. areas famous for
industrial production or important due to geographical location should be taken into
consideration while disbursing SME loan.
• Cluster based approach is helpful for the bank’s risk analysis and intensive monitoring of
SME financing.
• For this purpose, light engineering clusters, identified by IFC-SEDF and Upazila-wise
lists of potential SME sectors identified by Branch Offices of BB (after discussion with
the local bankers).
Cluster Development Policy
• Banks/FIs will inform BB after adopting cluster development policy to flourish SME
sector.
• CDP can be formulated in co-operation with banks, financial institutions and NGOs.
• The objectives of this policy are to strengthen the existing cluster, development of new
clusters in special sector, development & expansion of sustainable and competitive
technology, skill development of entrepreneurs, development of marketing channels,
reduce credit risk and enhance overall product development.
• A Cluster is a concentration of enterprises producing similar products or services and is
situated within an adjoining geographical location around 5 km radius and having a
common strengths, weaknesses, opportunities and threats”.

Key criteria selected to define a SME cluster are as mentioned below:

• Products or services should be similar or homogenous along with related products
• Enterprises must be production or service units
• Number of units: 50 and above
• Adjoining geographical location: several villages, wards, unions and industrial estates
• Scattered within an area of 5 kilometer radius
• There are 177 SME clusters located in 51 districts with about 70 thousand enterprises and
employing about 20 lac people. The approximate annual turnover of these SME clusters
is about Tk295 billion. All these are naturally-grown clusters.
• Taking development interventions in these clusters could lead the country to a balanced
development of all regions.
• Minimum resource allocation could offer optimum output because of location of
entrepreneurs in these clusters.
• Development of these clusters could generate new employment, increase GDP growth
and foster poverty alleviation.
• To identify a cluster we use three specific indicators, these include interconnected
enterprises located in a specific location, producing the same or similar products and/or
delivering homogenous services.
• Among the 20 lac workers of these SME clusters, 74% are male and 26% are female.
Each of the clusters on average employ about 11,000 people with each enterprise on
average employing 28 employees.
Among the identified SME clusters, there are
• 38 handicrafts and miscellaneous clusters,
• 34 agro-processing/agri-business clusters,
• 31 light engineering and metalworking clusters,
• 22 knitwear and readymade garments clusters,
• 16 fashion-rich effects clusters,
• 13 leather making and leather goods clusters,
• 10 handloom and specialised textiles clusters,
• 5 healthcare and diagnostics clusters,
• 3 plastics and other Synthetics clusters,
• 3 electronics and electrical clusters, and
• 2 educational services clusters.
In terms of location, there are
• 68 clusters located in Dhaka division,
• 32 clusters in Rajshahi division,
• 25 clusters in Chattogram division,
• 21 clusters in Khulna division,
• 12 clusters in Rangpur division,
• 10 clusters in Barisal division, and
• 19 clusters located in the Sylhet division.
• Around 80%, 15% and 5% of enterprises of the SME clusters are micro, small and
medium-sized enterprises respectively.
• All the SME clusters are mainly producing primary products and offering very basic
services.
• From the agro-processing sector, these include manufacturing products such as
household items, consumer goods like rice, broken rice (commonly known as khud),
husking dust (commonly known as Kura), burning wood (commonly known as 'lakri'),
oil, and oil cake (commonly known as 'khail'), etc.
• The following are the products and services offered by the other sectors.
• Light engineering sector: Doors and window grilles, window frames, collapsible gates,
iron and steel furniture, motor parts, engine repair work, pumps, machine tools,
agricultural equipment, automobile body building, repairing and coloring, ship breaking,
etc.
• RMG Sector: Threads, pants, jackets, three-piece sets for women, towels/gamchas,
shirts, measuring tapes, frocks, baby clothes, suits, and clothes, etc.
• Fashion designing and fashion-rich sector: Jewellery made from gold/ silver/ other
metals, hair spa, hair proteins, party makeup, eye-brow tweezers, herbal face packs,
haircut, etc.
• Leather goods sector: Men's shoes, ladies' shoes, baby shoes, sandals and slippers etc.
• Healthcare sector: X-rays, ultra-sonograms, ECG and different pathological tests,
haematological tests, biochemical tests, echocardiogram, CT scans, and surgery, etc.
• Plastics sector: Mugs, bowls, buckets, and many other home appliances, etc.
• Electrical and electronics sector: Electrical Boards, switches, sockets, holders, coils,
batteries, TV, electric cables, etc.
• Handloom and specialised Textiles sector: Blouses, saris, ornas, three-pieces, towels,
panjabis, cushion covers, bed sheets, and pillow covers, etc.
• Handicraft and Miscellaneous Sector: Tables mats, bamboo nets, large bamboo
baskets, dhol (traditional drums), tablas, kulas, candle stands, cup-plates, clay piggy-
banks, flower vases, different dices, mud covers, tubs, oil-based perfumes, incense sticks,
curry and rice cooking pots, bamboo goods, tray sets, bowl sets, file sets, ruler sets,
cylinder sets and wooden furniture such as beds, reading desks, computer desk, sofas,
dining table, chairs, etc.
• From the list above, it is clear that SME clusters are producing a long list of products to
meet local demand that act as a substitute for imports.
• The major strengths of SME clusters include its ability to benefit from economies of
scale, easy access to local raw materials, access to trade bodies' support, growing demand
for products, easy management and administration, lower cost of production, small
capital outlets, cultural affinity by opting for traditional production processes and
inculcating a sense of bond through a similar type of production process, etc.
• On the other hand, the major weaknesses of the SME clusters include the unplanned
development of enterprises with limited scope for expansion, the absence of required
infrastructural facilities and utility services, an unskilled and uneducated workforce with
no formal training, the lack of a common approach to address the problems of
environmental pollution, a traditional and less-efficient production process, missing or
unattainable economies of scale in some cases, the limited scope for product
diversification, limited product range, shortages of finance/ limited access to finance,
limited access to the latest technology, family-based business structures resulting in a
shortage of expertise, the absence of research and development supports, the absence of
skill development initiatives / institutions, the absence of central warehousing facilities
for raw materials and finished goods, etc.
• The opportunities for SME clusters include the potential initiation of planned
interventions by the government and development agencies, the growing demand for
goods and services in the local and national market, the slow but gradual improvement in
infrastructural facilities and power supply, the initiatives by the SME Foundation for
different planned development interventions, potential global markets for traditional
products, an easily trainable workforce, potential public-private partnerships to create
supportive infrastructure for SMEs, the establishment of common research and
development centres / laboratory facilities set under the PPP, the scope for market linkage
among the large and small firms in many sectors, the scope for supply and value chain
creation among enterprises, etc.
• Finally, the major threats for the SME clusters include the import of cheaper products
due to an open market policy, the non-availability of required capital for modernization,
the uncertain availability of utilities connection and supply, the arrival of better quality
 substitute products, the presence of trade diversion rather than trade creation, the
introduction of efficient technology in competing industries, the shrinking of local and
national markets due to the flood of imported products, the growing concerns of
environmental pollution may limit the growth of enterprises, the economic fallout of the
Covid-19 lockdowns, etc.
• Based on the above SWOT analysis and presented statistics we can state that the SME
clusters have a huge potential to contribute to the socio-economic development of
Bangladesh if the government can undertake certain key development interventions
and/or declare the SME clusters as Special Economic Zones.
Strategies for cluster development :
• - Identification of the cluster;
• - Formation of committee for cluster development;
• - Conduct baseline survey & diagnostic study;
• - Fixation of action plan;
• - Implementation of action plan;
• - Review & monitoring.

Financing SME Sector

• BB has instructed all scheduled banks to establish a "Start-up Fund" by allocating 1% of
their annual net profit each year, beginning in 2020 and continuing for the next five years.
• As of 30 June 2023, the total amount in the start-up fund had reached BDT 3.31 billion.
• In addition, BB has also created a separate fund of BDT 5.00 billion to facilitate refinance
options for start-up financing.
• By June 2023, BDT 0.16 billion was disbursed from this fund to support 70 customers
under the "Start-up Fund" initiative.
• Access to finance is vital for SME sector development.
• Entrepreneurs raise complain regarding high rate of interest.
• Higher rate of interest is a major hindrance, but availability of adequate fund is very
much important.
• That is why, BB is committed to facilitate SME credit through refinance window.
• For the development of SME sector, BB is providing refinance facilities to banks and
NBFIs against their disbursed SME credit from its own fund along with the assistance of
ADB, IDA, and JICA.
• At present, refinancing from 5 funds is running-BB Fund, JICA FSPDSME Fund, New
Entrepreneurs Fund, Agro Fund, Islamic Shriah Fund.
• A total amount of BDT 178.00 billion was provided to different banks and NBFIs under
different refinance/pre-finance schemes up to June 2022.
• Generally under a refinance scheme, a bank collects the amount from the central bank
after lending to the customer.
 • On the other hand, under the pre-finance scheme, a bank sets a target for loan
disbursement and collects it in advance from the central bank. Later that money is
distributed among the customers.

Priority to the Small Entrepreneurs

• Among SME enterprises/entrepreneurs in our country, small entrepreneurs have more
prospects for generating employment, reducing unemployment and achieving economic
growth.
• Keeping this in view, at least 40% of the total disbursement target of SME credit should
be reserved for small entrepreneurs and the rest will be allocated to medium
entrepreneurs.
• The number of borrowers belonging to small segments increased dramatically from 65%
in 2010 to 91 % in 2015. However, out of targeted Tk20 thousand crore, only Tk13,505
crore worth of loans were disbursed in FY22, which is only 67.52% of the total target.
Industry (Manufacturing) and Service Sector
• Industry and service sectors are given priority over the business sector under refinance
scheme by Bangladesh Bank.
• 100% claims in industry and service sector is being refinanced.
• This policy will be continued to create a friendly environment for employment generation
and higher production.
Special arrangement for Women Entrepreneurs
• Women participation in the mainstream of economy is crucial for attaining sustainable
economic growth & poverty reduction.
• But women participation in institutional economic sector is inadequate & the rate of
women entrepreneurs is very low compared to that of male counterparts.
• There exist many obstacles in women participation in the mainstream of economy
although the degree of integrity, devotion, creativity and expertise of women society
make us surprised.
• Especially women participation in micro credit programmes and readymade garments
industry is contributing significantly to the country’s industrialization.
• BB has taken some steps and formulated a guideline for the banks & FIs to ensure more
institutional financial facilities for women entrepreneurs in SME sector.
a. According to the policy of SME & Special Programs Department as regards financing
women entrepreneurs Banks/FIs must maintain 10% of their total CMSME loan portfolio
and the percentage will have to be raised at least 15% by the year 2024.
b. This will include more women in the financial system which will ultimately expedite the
women economic empowerment.
c. The size of Bangladesh Bank own source fund ‘Small Enterprise Refinance Scheme’ has
been increased from Tk850 crore to Tk1500 crore to include more entrepreneurs specially
women entrepreneurs from remote areas in the financial activities.
 d. The eligibility criteria of availing CMSME Refinance Facility by the state owned
commercial Banks has been relaxed to expedite the process.
e. To ensure institutional credit facilities, at least 15% of total BB refinance fund for SME
sector has been allocated for women entrepreneurs.
f. Interest rate for women entrepreneurs will be Bank rate (which is at present 3%) plus
maximum 4%; i.e. not more than 7% per annum.
g. Banks/FIs will accept and settle all types of loan applications of SME women
entrepreneurs with the highest priority (within 10 working days of receiving complete
loan application).
h. Banks and FIs shall take initiative to advertise all the facilities for women entrepreneurs
in both electronic & print media.
i. Banks and FIs may provide a maximum loan facility of Tk.25,00,000/- against personal
guarantee if borrower is woman or majority of the owners of the enterprise are women.
j. Banks/FIs shall establish special advice and service centre for women entrepreneurs in
selected branches and ensure service friendly approach towards women entrepreneurs.
k. provide 03-06 months grace period facility for the term loan (1yr-5yr) in Favor of
CMSME Entrepreneurs including women entrepreneurs.
l. Recently BB issued Lead Banks Guidelines (15 January 2020) & developed a Lead Bank
Calendar to disseminate CMSME related information in the grassroots level through
discussion, seminar & view exchange programmes.
m. If any women entrepreneur face problem or harassment they can contact directly Problem
Solutions Centre of SME & Special Programmes Department through +88029530220.
n. Recently, Bangladesh Bank has instructed all banks and NBFIs to select at least three
prospective women entrepreneurs who have not taken any loan from the bank branches.
o. After selection of borrowers, banks/NBFIs are advised to provide training and bring at
least one woman entrepreneur under the banking services.
p. Under this initiative, more than 10,000 new women entrepreneurs were promoted during
April-December 2015.
Identification of the Real Women Entrepreneurs
• To identify the real women entrepreneurs, assistance can be sought from Bangladesh
Small and Cottage Industries Corporation(BSCIC), SME Foundation & professional
organizations, such as, Handloom /Handicrafts Association, Mahila Samity, different
Women Entrepreneurs’ Association, such as, Bangladesh Women Chamber of Commerce
& Industries (BWCCI), Women Entrepreneurs Association of Bangladesh (WEAB),
Bangladesh Homeworkers’ Women Association (BHWA), National Association of Small
& Cottage Industries of Bangladesh ( NASCIB) etc.
Collateral
• Lack of collateral of small entrepreneurs is deemed as a major hindrance to the expansion
of SME credit.
• Banks/FIs may provide collateral free credit facilities up to Tk. 25,00,000 against
Personal Guarantee in SME sector especially for small and women entrepreneurs.
 • Credit can also be provided against hypothecation of products and machineries, if needed.
• However, banks and FIs shall follow their own rules and banker-customer relationship to
determine collateral for credit facilities more than Tk.25,00,000.
• Banks and FIs shall apply their own due diligence method [information comprises the
facts about a customer that should enable an organization to assess the extent to which
the customer exposes it to a range of risks.] in selecting entrepreneurs.
• Banks/FIs shall formulate their own credit policy following the guidelines of the Central
Bank as minimum benchmark and inform SME and Special Programmes Department of
Bangladesh Bank.
• Group security or social security can also be considered in formulating such policy.
Acceptance and Consideration of Application
• Respective bank branch will sanction the SME loan limit considering the annual
requirement and following the existing credit norms.
• Respective branches will accept the application of the small and medium entrepreneurs
with their annual production plan.
Grace Period
• The entrepreneurs often raise complaints regarding short duration of grace period for
repayment of SME loan. Therefore, banks and FIs will consider the reasonable grace
period at the time of formulating credit policy for SME sector.
Eligibility of the Borrower
• Real entrepreneurs who are directly involved in SME sector will be considered eligible
for SME credit.
• Generally loan defaulters will not be entitled to get new loan.
Interest Rate on SME Credit
• Banks/financial institutions shall fix up the interest rate on small and medium loan for the
respective sector/sub-sector. The operating cost of the banks is high for the small
entrepreneurs. Reasonably, the rate of interest in this sector is somewhat higher.
Outsourcing of Credit Disbursement
• Banks/FIs may seek assistance from private organizations/NGO/ self-help group for
selecting borrower, monitoring of credit disbursement, recovery, motivation of the
borrowers, training for them etc.
• The SME sector in Bangladesh faces problems both from supply side and demand side.
However, to address the supply side problems, three refinance schemes of Bangladesh
Bank are already in place.
Supply and Demand Side Problems
• Besides, the banks/financial institutions have fixed target for disbursement in the current
year.
• The main problem of the demand side includes: marketing of products, lack of skill and
knowledge of the entrepreneurs to improve quality of products, absence of SME
information data base etc.
 • In order to develop genuine SME entrepreneurs, it is essential to arrange trade fairs of the
SME products matching buyer-supplier improving the quality of product and package
design, workshop and training on technology and design development.
New Entrepreneurs Creation
• To promote skills of young workers and new entrants in the labour market, the GoB has
taken a project titled "Skills for Employment Investment Programme (SEIP)" with the
assistance of ADB and Swiss Agency for Development and Cooperation (SDC).
• Aligned with this initiative BB has also taken steps for creation and development of new
entrepreneurs.
• To this end, BB will provide market oriented job training to 10200 people in the next
three years to start their own SME business or be employed in the SME sector.
Training Programmes
• For the purpose, the commercial banks and international donor agencies are requested to
arrange training on entrepreneurship development where Bangladesh Bank plays the
supporting role.
• Besides, institutions like BBTA, BIBM, DCCI, FBCCI, NASCIB, BWCCI, SME
Foundation will be requested to arrange training programmes on the development of
technology, skill and marketing of SME products.
• The banks and FIs will incorporate the implementation status of such training
programmes in their annual report.
Monitoring of SME Credit
• Three tier monitoring systems (BB Head Office, BB Branch Offices and Banks) will be
established in case of SME credit.

Purpose of the Monitoring of SME Credit:

a. To achieve the overall target of SME loan disbursement
b. To achieve sector wise industrialization; such as higher growth of industry and service
sector, increasing the number of women entrepreneurs and their development, district
wise employment generation and poverty reduction;
c. To provide required credit to the small entrepreneurs without any harassment;
d. Special monitoring of the banks performance in providing credit to the women
entrepreneurs;
e. To ensure area approach and cluster-based credit disbursement.
f. To ensure satisfactory recovery of the disbursed credit in this sector to address any
liquidity crisis;
g. And so on.
Methods of Monitoring of SME Credit
Monitoring in the Head Office of the Central Bank:
• An ‘SME Loan Monitoring Cell’ has been set up in the ‘SME and Special Programmes
Department’.
 • To achieve the objectives of SME credit policy, the Monitoring Cell comprehensively
monitors the SME credit management at the field level.
• In addition to the off-site & on-site supervision of SME loan, the respective Cell takes
necessary steps against any complain regarding SME credit subject to investigation.

Submission of Information/Statements:
• To review the annual implementation progress of SME credit programmes, the respective
banks/ financial institutions submits accurate information /statements as per format
regarding SME credit on quarterly basis to BB within 15 days of the next month
following the quarter under reporting.
• Besides, the existing statements are required to be continued as usual.

Monitoring in the Branch Offices of the Central Bank

• SME Credit Monitoring Cell is established in the branch offices of Bangladesh Bank like
Head Office. This Cell takes effective steps to monitor the SME credit disbursement and
recovery activities by the banks/financial institutions of their respective areas intensively.

Monitoring in the Banks Level:

• The respective banks have to ensure effective monitoring system so that real
entrepreneurs can get the SME credit in time according to the SME credit policy and
credit norms.
• They will also ensure that the entrepreneurs do not face any harassment and the indicative
target of SME credit is achieved.
• Respective banks will set up ‘Monitoring Unit’ and inform the same to Bangladesh Bank.

Monitoring by the Head Offices of the Banks:

• As part of their business strategy, higher authorities of banks must have clear vision and
direction about disbursing SME credit.
• The banks sanction credit in favour of the customers after considering their credit
worthiness and other relevant matters.
• The banks will take the following steps to ensure sincerity, efficiency and speed in
sanctioning and disbursement of SME loans.
• Simplifying of the SME credit Application Form;
• Guidance for filling up the application form and all other requirement should be advised
at the time of supplying the application form to avoid delay;
• All supplementary queries shall be made to the applicant in one instance;
• The letter requesting the Credit Information Bureau (CIB) of BB to verify loan
classification status of the applicant shall marked “SME, the priority” and CIB provides
the same on priority basis;
• Quick settlement of borrower’s complain;
 • Core Group or Cell was established to monitor SME credit disbursement activities, to
take new steps and solve problems surfaced at the field level rapidly.
• d. SME credit related item is included in the agenda of annual/half yearly managers’
conference.
• e. The officials in the regional/branch level are rewarded on the basis of performance of
SME credit disbursement and recovery.
• f. Modern information technology especially Mobile Phone, E-mail etc. are used in order
to monitor the activities of the regional offices and branches intensively.

Monitoring Activities in Regional Offices

a. The smooth implementation of the SME programme is monitored at regional offices level
of the banks. For the purpose, SME Credit Monitoring Unit is established in the regional
offices. The members of the Monitoring Unit visit their respective areas from time to time
to monitor that the disbursement is progressing in line with the target.
b. The role of Regional Offices perform the role of coordinator between higher authority of
the bank and the branches.
c. As a part of regular monitoring, the officers of Regional Offices/Monitoring Unit arrange
meeting with the officers of their respective branches and visit the branches from time to
time to ensure that the potential entrepreneurs do not face any harassment.
d. They address complain related to SME credit instantly’ provide required directions to the
branches and assist them to solve the problems existed in the branches.

Activities to be performed at the Bank Branches

• The success of SME credit disbursement programmes mostly depends on the
performance of the bank branches. Therefore, the bank branches have to perform
dynamic role in sanctioning and disbursing SME credit. Bank branches perform the
following activities to disburse and recover SME loan:
a. The branch manager evaluate/decide the demand for and scope of SME loan
disbursement. In this context, arrangement is made to disburse SME loan in the local
potential sectors.
b. Special initiative is taken to disburse SME loan to the small women entrepreneurs;
c. Identifying the courageous and successful small entrepreneurs and bring them under loan
activities / programme;
d. Motivating the entrepreneurs through necessary and comprehensive publicity;
e. Arranging SME loan to interested eligible and bonafied entrepreneurs through easy
transparent process and in a timely manner;
f. Monitoring of the proper utilization of disbursed loan;
g. Gearing up monitoring of SME loan recovery activities.

Preservation of Mobile Phone number of the Clients

 • To facilitate easy communication for proper monitoring of SME credit disbursement at
field level mobile phone number of each borrower should be preserved at branches
(mobile number of neighbour or close relative may be preserved marking ‘on request’, in
case the borrower don’t have his own mobile).
• A mobile/telephone directory of the SME borrowers may also be maintained at branch
level.

Availability of Information
• Banks display the detailed information regarding SME credit facilities in their website
and also in each of their branches at a common and easily noticeable place.
• Banks maintain sector wise (industry/product) information of credit flow, rate of default,
employment creation etc.
• This information helps in evaluating the effectiveness of existing guidelines adopted by
the government and assists in formulating SME guidelines in the future.

Incentives
• SME loan should be extended to rural areas instead of centralizing at urban areas. The
overall success in SME target achievement will be considered as an important criteria for
allowing the respective banks to open new branch, Authorized Dealer (AD) branch and
exchange houses abroad.

SME Service Centre:

• The banks (Private and Foreign) have so far opened 210 SME service centres to provide
more facilities to SME clients.

Explanation of Few Terms

Cluster:
• A cluster may be defined as a local agglomeration [an extended town area] of enterprises
(mainly SMEs but often also including some large enterprises) which are producing and
selling a range of related and complementary products/services.
• For example, leather and leather products manufacturing enterprises at Hazaribag of
Dhaka is treated as the cluster of leather goods.
• Clusters are identified considering various factors such as-geographical area, product or
service etc.

Social Security/Collateral
• Social security/collateral refers to the guarantee given by any social institution/social
community (acceptable to both parties) to secure the loan.
 • For example, when any business organization (Chamber of Commerce and
Industry/Association) gives guarantee/assets as security against the loan taken by a
person associated with the organization can be called social security.

Group Security/ Collateral:

• Group security means the security given by the group jointly against the loan taken by a
group member. Security includes both assets / guarantee.
• Guarantee given by the group is mostly used as Group Security for the repayment of the
loan.
• If any member becomes defaulter, whole group will be considered as defaulter and will
be deprived of further loan.
• As a result, defaulter member will be bound to pay the loan under the pressure of group
members.

Women Entrepreneur:
• An woman engaged in business in her own name will be treated as women entrepreneur.
• The women entrepreneurs should be given priority for SME loan and special facility (low
rate of interest) will be entitled under special consideration.
• It may be mentioned that if a woman entrepreneur owns/ possesses more than 50% shares
of a business, it will be deemed as a business conducted by woman entrepreneur and will
be entitled for facilities under special consideration.

Loan/Investments:
• Islamic banks operating in our country term ‘SME financing’ as ‘Investment’ instead of
‘Loan’.
• For this reason, the term ‘investment’ used by Islamic banks is interchangeable with the
word ‘loan/credit’ in SME financing.