Sme Banking Prospective of Bangladesh

Topics: Industry, Economics, Capitalism Pages: 118 (32560 words) Published: January 11, 2013
SME Banking and services in Bangladesh
Posted by: alo on November 18, 2012 in Business

The development of small and medium enterprises (SMEs) in developing countries is generally believed to be a desirable end in view of their perceived contribution to decentralized job creation and generation of output.  SMEs constitute the dominant source of industrial employment in Bangladesh (80%), and about 90% of the industrial units fall into this category.  The actual performance of SMEs, however, varies depending on the relative economic efficiency, the macro-economic policy environment and the specific promotion policies pursued for their benefit.  

For the JOBS Program, Zaid Bakht (1998) and Salahuddin Ahmad, et al. (1998) developed research papers that describe the policy environment within which SMEs in Bangladesh operate.  The reports also discuss the accompanying legal, regulatory and administrative constraints to employment creation by SMEs.  This paper attempts to highlight the findings of those two studies.  To complement the issues discussed in those two papers, a summary of industrial problems, as perceived by entrepreneurs during the past one decade (HIID, 1988; MCCI 1992; World Bank 1994; JOBS 1998), is also presented in this report.  

In Bangladesh, SMEs playing a significant role for the development of our economy by creating employment opportunity and producing important alternative machines and machinery parts for saving huge foreign currency for our country. So as a part of our development strategy, we should intensify our efforts to develop this sector to grow industrial base and volume of foreign trade. As we know that in this age of globalization, it is impossible to stop the flow of foreign goods to any country. Only quality products can meet the challenges in global market. For meeting this situation SMEs need to upgrade their technological capabilities and production facilities in order to produce quality products at a competitive price.  

The evidence for the re-emphasis on the SMEs is manifest in the Government’s own policy intent, in any reasonable survey of the literature, and in any compilation of economic statistics regarding the industrial sector. Though the SME sector is becoming gradually a rising industrial sector of our country and contributing more and more to our export, this sector faces several common problems like lack of technical know-how, shortage of long-term financial support, lack of skilled workers, marketing link, R & D, knowledge on safety measures, hygiene, environmental pollution, etc. We need to acquire proper institutional knowledge in the fields of technological and managerial education and ask academics and researchers to work more vigorously for the sector’s rapid development.  

SMEs in Bangladesh produce a multitude of labour intensive goods including, consumer items, toys small tools and paper products for the domestic market. Further development of these industries offers various investment opportunities. Export-oriented production in SMEs has gained momentum in the past few years. Entrepreneurs from Hong Kong, Japan and Korea have taken advantage of Bangladesh’s cheap and easily trainable labour and its infrastructure facilities to manufacture products for the export market.  

Origin of the report
I am lucky to say that our honorable teacher Mr. Md. Mamunur Rashid, Lecturer, Department of Business Administration, Stamford University, Bangladesh, assigned me the report on “SME banking in Bangladesh”. The data required for preparing this report has been collected from the various sources of most recent years.  

Background of the report
After Liberation of Bangladesh, intensive efforts were undertaken to accelerate the rate of industrialization in the country. At the beginning, import substitution and subsequently export-led economic growth strategy was pursued for industrialization. In order to attain this objective, large amount of...
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