Daffodil International University
Faculties and Departments => Business Administration => Business & Entrepreneurship => BBA Discussion Forum => Topic started by: Rozina Akter on June 01, 2013, 04:15:13 PM
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A major portion of the small and medium enterprise (SME) loans were disbursed for financing trading activities, to the neglect of credit support for manufacturing and service sectors, during the last January-March period.
According to the Bangladesh Bank (BB) data, around 67.21 per cent of the total aggregate disbursed amount of SME loans by banks and non-banking financial institutions (NBFIs), went for funding trading operations.
The manufacturing sector received only 27.53 per cent of the total amount of such loans and the service sector, 5.27 per cent, the data showed.
The SME loan disbursement operations in the first quarter of the current calendar year were discordant with the policy of the BB. The central bank has been putting its major emphasis on maintaining a high level of SME lending to the manufacturing and service sectors in order to help generate more jobs, the sources observed.
"The BB has regularly been urging the banks and NBFIs to disburse SME loans in conformity with its guidelines," the General Manager of BB's SME & Special Programmes Department, Sukamal Sinha Choudhury, told the FE late this week.
"If any bank or NBFI does not follow the guidelines, it will be at the receiving-end of appropriate actions by the central bank. The BB will monitor the lenders' adherence to the guidelines," he added.
The BB's GM of SME & Special Programmes Department, however, said the trend about SME loan disbarment has recently witnessed a changing trend because of its follow-up initiatives. "We have also instructed all banks and NBFIs to disburse SME loans in a higher proportion than what the case was in the first quarter of the current calendar year to the 'genuine' entrepreneurs across the country," he told the FE.
In response to the FE's query, some bankers said the banks and NBFIs usually find it difficult to recover SME credits, particularly for manufacturing and service sectors.
"We find it more secure for us, in terms of recovery of such credits if we lend out funds to the trading sector than those disbursed to manufacturing and service sectors," one of the bankers said.
On this issue, an analyst, preferring anonymity, said: "The trading sector is, by nature, a non-productive one and does not have adequate employment-generating potential. But the manufacturing sector plays a strong role in creation of jobs and maintenance of sustained economic growth".
He said two-thirds of SME loans have been found to be sanctioned for trading purposes. This situation is not supportive of the needs for promoting the real growth of the country's SME sector, he added.
The BB data showed the SME loans for trading, manufacturing and service sectors increased by 45.69 per cent, 17.73 per cent and 22.98 per cent respectively in the last January-March period over the related levels of the corresponding period of last calendar year.
The aggregate amount of SME loan disbursements during the period under review stood at Tk 193.519 billion or 26.09 per cent of the annual target, according to the BB.
Source: Financial Express,dated 1st June,2013
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Thanks Madam vary informative collection.
Khadiza Rahman Tanchi
Lecturer
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Looking forward to more collection..... :)
Thanks
Rozina Akter
Lecturer