SMESPD Circular No. 01: Regarding Definition of Cottage, Micro, Small and Medium Industry/Enterprise

Circular No. 01 Date: 19 June 2011

To, Managing Director / Chief Executive Officer All Scheduled Banks/Financial Institutions of Bangladesh Head Office Dhaka.

Dear Sir,

Subject: Regarding the definition of Cottage, Micro, Small and Medium Industry/Enterprise.

Reference is invited to SMESPD Circular No. 08 issued on 26/05/2008. In light of the definition of Cottage, Micro, Small and Medium Industries provided in the Industrial Policy 2010 of the Government of the People's Republic of Bangladesh, which amended the definition of Small and Medium Enterprises issued through the aforementioned circular, the definition of Cottage, Micro, Small and Medium Industry/Enterprise is hereby determined for the adherence of all banks and financial institutions in Bangladesh as follows:

Medium Industry/Enterprise

1.1 In the manufacturing sector, "Medium Industry/Enterprise" refers to those industrial establishments where the value of fixed assets excluding land and factory buildings, including replacement cost, is more than 10 Crore Taka and up to 30 Crore Taka, or where 100-250 workers are employed.

1.2 In the service sector, "Medium Industry/Enterprise" refers to those industrial establishments where the value of fixed assets excluding land and factory buildings, including replacement cost, is from 1 Crore Taka to 15 Crore Taka, or where 50-100 workers are employed.

1.3 In the business sector, "Medium Industry/Enterprise" refers to those establishments where the value of fixed assets excluding land and buildings, including replacement cost, is from 1 Crore Taka to 15 Crore Taka, or where 50-100 workers are employed.

1.4 If an enterprise falls under the category of a small industry/enterprise based on one criterion, it may fall under the category of a large industry/enterprise based on another criterion. In such a case, the enterprise shall be considered as falling under the category of a large industry/enterprise.

1.5 In the manufacturing/service/business sectors, regarding the value of fixed assets (excluding land and factory buildings) including replacement cost, the lower limit of large industry/enterprise begins immediately after the upper limit of medium industry/enterprise ends.

Small Industry/Enterprise

2.1 In the manufacturing sector, "Small Industry/Enterprise" refers to those industrial establishments where the value of fixed assets excluding land and factory buildings, including replacement cost, is from 50 Lakh Taka to 10 Crore Taka, or where 25-99 workers work.

2.2 In the service sector, "Small Industry/Enterprise" refers to those industrial establishments where the value of fixed assets excluding land and factory buildings, including replacement cost, is from 5 Lakh Taka to 1 Crore Taka, or where 10-25 workers work.

2.3 In the business sector, "Small Industry/Enterprise" refers to those establishments where the value of fixed assets excluding land and buildings, including replacement cost, is from 5 Lakh Taka to 1 Crore Taka, or where 10-25 workers work.

2.4 If an enterprise falls under the category of a small industry/enterprise based on one criterion, it may fall under the category of a medium industry/enterprise based on another criterion. In such a case, the enterprise shall be considered as falling under the category of a medium industry/enterprise.

2.5 In the manufacturing/service/business sectors, regarding the value of fixed assets (excluding land and factory buildings) including replacement cost, the lower limit of medium industry/enterprise begins immediately after the upper limit of small industry/enterprise ends.

Micro Industry/Enterprise

3.1 "Micro Industry/Enterprise" refers to those industrial establishments where the value of fixed assets excluding land and factory buildings, including replacement cost, is from 5 Lakh Taka to 50 Lakh Taka, or where 10-24 workers or fewer workers work.

3.2 In the service sector, "Micro Industry/Enterprise" refers to those industrial establishments where the value of fixed assets excluding land and factory buildings, including replacement cost, is less than 5 Lakh Taka, or where fewer than 10 workers work.

3.3 In the business sector, "Micro Industry/Enterprise" refers to those establishments where the value of fixed assets excluding land and buildings, including replacement cost, is less than 5 Lakh Taka, or where fewer than 10 workers work.

3.4 If an enterprise falls under the category of a micro industry/enterprise based on one criterion, it may fall under the category of a small industry/enterprise based on another criterion. In such a case, the enterprise shall be considered as falling under the category of a small industry/enterprise.

3.5 In the manufacturing/service/business sectors, regarding the value of fixed assets (excluding land and factory buildings) including replacement cost, the lower limit of small industry/enterprise begins immediately after the upper limit of micro industry/enterprise ends.

Cottage Industry/Enterprise

4.1 "Cottage Industry/Enterprise" refers to those industrial establishments predominantly consisting of family members, where the value of fixed assets excluding land and factory buildings, including replacement cost, is below 5 Lakh Taka and the maximum manpower consisting of family members is not more than 10.

4.2 If an enterprise falls under the category of a cottage industry based on one criterion, it may fall under the category of a micro industry based on another criterion. In such a case, the enterprise shall be considered as falling under the category of a micro industry.

Female Entrepreneur

5.0 If a woman is the owner or proprietor of a 'sole proprietorship establishment' or holds at least 51% (fifty-one percent) share among the partners of a 'partnership establishment' or directors/shareholders of a 'registered private limited company', she shall be considered a female entrepreneur.

Inclusion of Cottage and Micro Industry/Enterprise

6.0 From now on, cottage and micro enterprises/industries shall be included under the SME Loan Policy and Directory of Bangladesh Bank, similar to small and medium enterprises/industries.

This circular shall come into force immediately.

Please acknowledge receipt.

Yours faithfully,

(Signed/-) (Sukomal Singh Chowdhury) General Manager Phone: 7165322