What is SME Finance & Agricultural Finance Or, Define SME Credit with reference to BB’s given Definition

 SME Financing: SME finance is the funding of small and medium sized enterprises, and represents a major function of the general business finance market – in which capital for different types of firms are supplied, acquired, and priced. Capital is supplied  through the business finance market in  the form  of  bank  loans and overdrafts; leasing and hire-purchase arrangements; equity/corporate bond issues; venture capital or private equity; and asset-based finance such as factoring and invoice discounting.

 

SMEs are vital for economic growth and development in both industrialized and developing countries, by playing a key role in creating new jobs. Small businesses are particularly important for bringing innovative products or techniques to the market.

 

 

Criteria       Sectors Fixed assets excluding land & building (Tk. in crore)   No. of manpower Medium Small Micro Medium Small Micro Manufacturing 10-30 0.5-10 0.05-0.5 100-250 25-99 10-24 Trade 1-15 0.05-1 <0.05 50-100 10-25 <10 Service 1-15 0.05-1 <0.05 50-100 10-25 <10   Cottage Industry <0.05 <10

[According to Bangladesh Bank (SMESPD Circular No.1 dated 19 June, 2011), the cottage, micro & SME is newly defined the industry/enterprise:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

An  industry  or  enterprise  can  be  treated  as  that  category  one  following  a benchmark but the same can fall under higher category if another benchmark is considered. In that case it will be treated as higher category industry.

A woman, who owns a private firm or she holds minimum 51% stake in firm run jointly or registered, will be treated as women entrepreneur.]

 

Agricultural Finance: Agricultural credit is a financial term that refers to loans and other types of credit extended for agricultural purposes. Agricultural credit systems promote  the  expansion  and  continued survival  of  farm  and  livestock

operations, covering the entire agricultural value chain - input supply, production and distribution, wholesaling, processing and marketing.

Banks lend to farmers for a variety of purposes, including (1) short-term credit to cover operating expenses; (2) intermediate credit for investment in farm equipment and real estate improvements; (3) long-term credit for acquisition of farm real estate and construction financing; and (4) debt repayment and refinancing.