Sme Activities of Brac Bank Limited

Only available on StudyMode
  • Download(s) : 78
  • Published : February 11, 2013
Open Document
Text Preview
4.0 Definition of SME

An SME is defined as, “A firm managed in a personalized way by its owners or partners, which has only a small share of its market and is not sufficiently large to have access to the stock exchange for raising capital”. SMEs ordinarily have few accesses to formal channels of finance and depend primarily upon savings of their owners, their families & friends. Consequently, most SMEs are sole proprietorships & partnerships. As with all definitions, this one is not perfect. Depending on context therefore definition of an SME will vary.

Despite the common features globally, countries do not use the same definition for classifying their SME sector. Also, a universal definition does not appear feasible or desirable. SMEs have been defined against various criteria.The three parameters that are generally applied by the Governments to define SMEs are:

μCapital investment in plant and machinery

μNumber of workers employed

μVolume of production or turnover of business

Other definitions are based on whether the owner of the enterprise works alongside the workers, the degree of sophistication in management, and whether or not an enterprise lies in the "formal" sector. The definitions in use depend on the purposes these are required to serve according to the policies of the respective countries/Governments.

A quantitative definition in each national context is, however, advantageous, as it makes it easier to target macro-level policies for a specific group of enterprises. The countries with such definitions have recorded a higher growth rate in the SME sector. This indicates that the more precise the definition, the more effective the transaction of policies intended to benefit the sector with actual results. In countries where no definition exists, the enterprises are in a disadvantageous position.

22 SME Activities of BRAC Bank Limited

Definition of SME as per Bangladesh Bank

Organizations not a public limited company meet the following criteria:

Enterprise

Criteria Trading/Services

Manufacturing

Small Enterprise

Medium Enterprise

Number of
Staff (Not
More than)

Fixed Asset
(Except Land
& building)

Number of
Staff (Not
more than)

Fixed Asset (
Except Land
& building)

25

BDT 50 Thousand – BDT
50 Lac

50

BDT 50 Lac – BDT 1
Crore

50

BDT 50 thousand – BDT
1.5 Crore

150

BDT 1.5 Crore – BDT 20
Crore

Definition of SME as Per BRAC Bank

Based on the bank’s perspective of SME and its stumbling blocks and considering the context of Socio-economic status of our country SME investments become:

Small & Medium investment

BDT 0.3 million to BDT 5.0 million

23
SME Activities of BRAC Bank Limited

4.1 SME History of BRAC Bank

He wants to see poverty banished forever. This has been his single-minded pursuit in life. Ever since a devastating cycle wreaked havoc on the lives of the people and property in the coastal regions of pre-independence Bangladesh 1970, everything changed for a young chartered accountant. The young man was so moved by the death and destruction that he, along with some friends, dedicated to set up HELP to carry out relief and rehabilitation efforts. Later after the...
tracking img