The New Nation - Internet Edition

BSS, Dhaka

The fund flow in the Small and Medium Enterprises (SMEs) sector has increased by 120 percent in the last one year as commercial banks and financial institutions responded

to the demand for loan and propel the growth in the sector, SME foundation sources said.

Almost 48 private commercial banks (PCBs) opened SME service centres planned for infusing their capital, investments and employment in the sector following the Bangladesh Bank's directives in this regard.

According to a central bank's figures, the banks and financial institutions have distributed loans of Taka 48,475 crore between April to June this year, which is Taka 13,435 crore more than the same period of the previous year.

The state-owned banks provided higher amount of loans compared to private ones as the state-owned banks distributed 33.33 percent of the total loans alone. Specialized banks clinched second position with 19.15 percent while PCBs 18.77 percent. Talking to BSS, an official of the Bangladesh Bank said, the central bank has introduced a refinancing project and as part of that a number of funds has so far been created and the interest rate is only five percent.

Acting managing director of SME Foundation Dr Momtaj Uddin Ahmed told BSS that the foundation is gradually becoming as a major financier for small and medium ventures.

The foundation already has started negotiations with Bangladesh Bank to get a share of Taka 3.0 billion fund, offered by Asian Development Bank (ADB) for the country's SMEs.

Besides, negotiation is underway with leading international donor agencies, SME foundation sources said.

According to the bureau of statistics data released in 2006, there are nearly 100,000 SMEs in the country and 500,000 cottage industries employing about 70 per cent of total industrial labour forces. The SMEs contribution to the GDP is around 25 per cent, the foundation claimed.