SMESPD Circular No. 02: Definition of CMSMEs in Manufacturing & Service Sector, Micro and Small Enterprises in Trading Sector, and Credit Limits

Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh SMESPD Circular No.-2 Date: ------------------------ 29 June 2017

To, Managing Director / Chief Executive Officer All Scheduled Banks and Financial Institutions operating in Bangladesh

Dear Sir,

Regarding the definition of Cottage, Micro, Small and Medium Enterprises in Manufacturing and Service Sector, Micro and Small Enterprises in Trading Sector, and determination of credit limits.

Reference is invited to SMESPD Circular No.-01 issued on 07 January 2016 on the above subject.

In light of the definitions of industries and industrial enterprises provided in the National Industrial Policy 2016 of the Government of the People's Republic of Bangladesh, the definitions of Cottage, Micro, Small and Medium Enterprises in the Manufacturing and Service Sector and Micro and Small Enterprises in the Trading Sector, as amended through the aforementioned circular, and the maximum credit limits are hereby redefined for all banks and financial institutions operating in Bangladesh as follows:

A. Manufacturing and Service Sector

1.0. Cottage Industry (Cottage Industry) 1.1. 'Cottage Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is below 10 Lakh Taka including replacement cost, which are formed by family members and other members, and the maximum number of employees is not more than 15. 1.2. If an enterprise falls under Cottage Industry based on one criterion, it may fall under Micro Industry based on another criterion. In such a case, the enterprise shall be considered as falling under Micro Industry. 1.3. A customer in the Cottage Industry sector may be provided with a maximum loan of 10 (Ten) Lakh Taka.

2.0. Micro Industry (Micro Industry) 2.1. In the manufacturing sector, 'Micro Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is between 10 Lakh Taka and 75 Lakh Taka including replacement cost, or those industrial enterprises where 16-30 workers or fewer are employed. 2.2. In the service sector, 'Micro Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is below 10 Lakh Taka including replacement cost, or those industrial enterprises where a maximum of 15 workers are employed. 2.3. If an enterprise falls under Micro Industry based on one criterion, it may fall under Small Industry based on another criterion. In such a case, the enterprise shall be considered as falling under Small Industry. However, this provision shall not apply to ready-made garment enterprises/labor-intensive industries. 2.4. A customer in the Micro Industry sector under the manufacturing sector may be provided with a maximum loan of 1 (One) Crore Taka, and a customer in the Micro Industry sector under the service sector may be provided with a maximum loan of 25 (Twenty-Five) Lakh Taka.

3.0. Small Industry (Small Industry) 3.1. In the manufacturing sector, 'Small Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is between 75 Lakh Taka and 15 Crore Taka including replacement cost, or those industrial enterprises where 31-120 workers are employed. 3.2. In the service sector, 'Small Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is between 10 Lakh Taka and 2 Crore Taka including replacement cost, or those industrial enterprises where 16-50 workers are employed. 3.3. If an enterprise falls under Small Industry based on one criterion, it may fall under Medium Industry based on another criterion. In such a case, the enterprise shall be considered as falling under Medium Industry. However, this provision shall not apply to ready-made garment enterprises/labor-intensive industries. 3.4. A customer in the Small Industry sector under the manufacturing sector may be provided with a maximum loan of 20 (Twenty) Crore Taka, and a customer in the Small Industry sector under the service sector may be provided with a maximum loan of 5 (Five) Crore Taka.

4.0. Medium Industry (Medium Industry) 4.1. In the manufacturing sector, 'Medium Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is more than 15 Crore Taka and up to 50 Crore Taka, or those industrial enterprises where 121-300 workers are employed. However, in the case of ready-made garment enterprises/labor-intensive industrial enterprises, the number of workers in Medium Industry shall be a maximum of 1000. 4.2. In the service sector, 'Medium Industry' refers to those industrial enterprises where the value of fixed assets, excluding land and factory building, is between 2 Crore Taka and 30 Crore Taka, or those industrial enterprises where 51-120 workers are employed. 4.3. If an enterprise falls under Medium Industry based on one criterion, it may fall under Large Industry based on another criterion. In such a case, the enterprise shall be considered as falling under Large Industry. However, this provision shall not apply to ready-made garment enterprises/labor-intensive industries. 4.4. A customer in the Medium Industry sector under the manufacturing sector may be provided with a maximum loan of 75 (Seventy-Five) Crore Taka, and a customer in the Medium Industry sector under the service sector may be provided with a maximum loan of 50 (Fifty) Crore Taka.

B. Trading/Business Sector

5.1. 'Micro Enterprise' in the trading sector refers to those enterprises where the value of fixed assets, excluding land and factory building, is below 10 Lakh Taka including replacement cost, or those enterprises where a maximum of 15 workers are employed, or those enterprises with a maximum annual turnover of 1 Crore Taka. 5.2. 'Small Enterprise' in the trading sector refers to those enterprises where the value of fixed assets, excluding land and factory building, is between 10 Lakh Taka and 2 Crore Taka including replacement cost, or those enterprises where 16-50 workers are employed, or those enterprises with an annual turnover of more than 1 Crore Taka but not more than 12 Crore Taka. 5.3. If an enterprise/establishment falls under a lower tier based on one criterion, it may fall under a higher tier based on another criterion. In such a case, the concerned enterprise/establishment shall be considered as falling under the higher tier. 5.4. Other enterprises in the trading sector, except 'Micro Enterprise' and 'Small Enterprise' defined in clauses 5.1 and 5.2, shall not be considered as falling under the SME Authorization Program. 5.5. A maximum loan of 25 (Twenty-Five) Lakh Taka may be provided for Micro Enterprises in the trading sector, and a maximum loan of 5 (Five) Crore Taka may be provided for Small Enterprises.

6. In light of this circular, information on SME Authorization must be submitted to this department on a quarterly basis as per due process. At the same time, information on the total loans distributed to Micro, Small, and other enterprises in the trading sector must be submitted separately to this department on a quarterly basis.

7. Regulation-3 of Part-B of the Bangladesh Bank Directive-2004 issued through BRPD Circular No.-7 dated 03 November 2004 is hereby repealed.

8. Except for matters related to this, other instructions in the aforementioned SMESPD Circular No.-01 (Master Circular) issued on 07 January 2016 shall remain unchanged.

This circular shall come into force immediately.

Yours faithfully,

(Swapan Kumar Roy) General Manager Phone: 9530502