Regulatory Alerts2023-03-16
Added
SMESPD Circular Letter No. 04: Regarding target and allocations of sector-wise loans for CMSME Entrepreneurs
The circular replaces previous guidelines by requiring banks and financial institutions to set CMSME loan targets based on the previous year's position by the end of January each year, with a minimum annual growth of 1% to reach at least 25% of total loans and advances by the end of 2024. By that date, at least 50% of CMSME loans must be for cottage, micro, and small enterprises, 15% for women entrepreneurs, and sector-wise allocations must include at least 40% for productive industries, 25% for services, and a maximum of 35% for trade. These directives are issued under Section 45 of the Bank Company Act, 1991, and Section 18 of the Financial Institutions Act, 1993, and take immediate effect.
Bangladesh Bank Head Office Motijheel, Dhaka-1000 Bangladesh.
SMESPD Circular Letter No. 04 Date: 02 Chaitra 1429 16 March 2023
Managing Directors/Chief Executives All Scheduled Banks and Financial Institutions operating in Bangladesh
Regarding target and allocations of sector-wise loans for Cottage, Micro, Small and Medium Enterprises.
Reference is drawn to your attention to SMESPD Circular No. 02 dated 05 September 2019 on the subject cited above.
- In order to ensure consistency among various financial statements prepared by banks and financial institutions and various reports submitted to Bangladesh Bank, paragraph 3 of the aforementioned circular is hereby replaced as follows:
Banks and financial institutions shall inform the SME & Special Programs Department of their CMSME loan targets based on the loan and advance position of the previous year, by the last working day of January each year. The volume of CMSME loans and advances within the loan and advance position of banks and financial institutions shall be increased by at least 1% annually and raised to at least 25% by the middle of 2024. The achieved target rates by the end of 2024 shall be as follows:
| Subject | Achieved Target Rate by the end of 2024 |
|---|---|
| CMSME Loans and Advances | 25% of Total Loans and Advances |
| Volume of Loans and Advances for Cottage, Micro and Small Enterprises | 50% of CMSME Loans and Advances |
| Volume of Loans and Advances for Women Entrepreneurs | 15% of CMSME Loans and Advances |
| Sector-wise Distribution of CMSME Loans and Advances | At least 40% in Productive Industries, at least 25% in Service Industries, and a maximum of 35% in Trade |
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Apart from this, the other instructions contained in the aforementioned circular shall remain unchanged.
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These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991 and Section 18 of the Financial Institutions Act, 1993.
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These instructions shall take immediate effect.
Yours faithfully,
(Mohammad Ashiqur Rahman) Director (SMESPD) Phone: 9530502