Problems And Prospects Of SME

Topics: Research, Bank, Scientific method Pages: 70 (11372 words) Published: March 17, 2015

1. Introduction
1.1 Background of the Study:
The definition of SME is not unique; it varies across countries. Number of people employed and size of capital, sales, assets, etc. are used to classify enterprises into micro, small, and medium. In Bangladesh, small enterprises were first defined in the Industrial Policy of 1991. According to the industrial policy 1999, small enterprises are those employing less than 50 workers and/or with a fixed capital investment of less than Tk100 million. Enterprises with 50-99 workers having a fixed capita of Tk100-300 million are to be regarded as medium-sized.

For the first time in the history of City Bank, SME Banking business processes are going to be driven through a centralized platform model. This is a fundamental move away from a 25 years legacy system of decentralized geography based branch banking model.

SME Banking of City Bank is assuming a new and modern dimension. It is entering in to a wider horizon. The philosophy of extending banking services to SME's of the country is to meaningfully push every one of them up to the next level of respective business operations. The upward push would be meaningful as they would be business wise competitive for a sustainable future. It is therefore would be turning in to an abode of SME's to grow to the next level. Hence, the bank has named it City Business - for taking SME's to the next level.

1.2 Problem Statement:
There is little doubt of SMEs importance in development of an underdeveloped economy, as still this sector is facing multifarious problems relating to raw materials, power, land, marketing, transport, technical facilities, and finance etc. and due to these constraints it is getting more difficult for them to contribute to nation’s GDP as expected. This paper attempts to find out the major constraints faced by the SMEs in Bangladesh. It identified seven important factors as impediments to SME growth and development, amongst which high lending rate, government regulatory constraint, small domestic market size, collateral requirement for financing and lack of technically skilled workers are on the top. SME financing has been identified as a major obstacle to SME growth. Unfortunately, the issue seems to be as unresolved as it always has been. Though the majority of the issues are with the SME themselves, the banks also have major issues in designing financial products for the SMEs. As a developing country Bangladesh has a lot of potentiality in SME sector. Our Study is here to know the SME financing and its problems & prospect with a suggestions and recommendations regarding the issue. There is no proper guideline and previous paper regarding SME, this report will help to fill the gap.

1.3 Rationale of the study:
Bangladesh is an agricultural based country, where around 85% people are living at village with activities of agriculture, in this perspective Bangladesh can achieve industrialization through agriculture based small and cottage industry to start aggressively. Small and medium enterprises (SMEs) make up the largest portion of the employment based in many developing countries and, indeed, are often the foundation of the local private sector. Now the SMEs are not only concentrated to low-tech, traditional, and agro-based economic activities; these are spread over other non-traditional manufacturing and service sector as well. In fact, the SMEs are recognized as engines of economic growth worldwide. To achieve high and sustained economic growth, a triggering force is mandatory to exit from endemic poverty and socioeconomic deprivation. The entrepreneurs behind could and should play a much larger role in development, but too often are held back by a lack of ready access to financing from local formal sector financial institutions. Commercial banks are also developing their procedure and operational guideline supported by structured recruitment process and subsequent training with a view to mitigating...

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Prospectus of City Bank Limited
Annual report of City Bank Limited (2008-2012)
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