Training Name: Best Practices of CMSME Financing/Lending

Women Entrepreneurship Development: Women Empowerment, Barriers

to Credit Access, Success Factors & Other Initiatives

Dr. Md. Mosharref Hossain

1. Introduction

In Bangladesh, women constitute above 10 percent of the total number of entrepreneurs in the
country. Many women have surpassed their male counterparts in the small and cottage
industries, especially the handicrafts sector; while many courageous entrepreneurs have
excelled in Small and Medium Enterprises (SMEs). Women have ventured in RMG, light
engineering and pharmaceuticals, guiding others to compete in a man's world. However,
despite recent progress in advancement and empowerment, the majority of women still
remain vulnerable to poverty and social deprivations. Women entrepreneurs are in a less
favorable position compared to men in terms of accessing commercial credit from formal
financial service providers, more lucrative markets than the traditional local ones, and
technology and information to establish and grow their businesses.

In Bangladesh, around half of the population is women. For attaining sustainable economic
growth & poverty reduction, women's contribution in the mainstream activities is essential.
However, women involvement in economic sector is insufficient and the rate of women
entrepreneurs is very low compared to their male counterparts (Khaleque, 2018). There are
78.18 lakh entrepreneurs in the country, of which only 7.21% are women (Nazneen, 2018).
Therefore, it is evident that although the government policy emphasizes on ensuring equal
rights of women in all spheres, many women have failed to grow as entrepreneurs due to
various problems.

Like many other countries, adequate access to formal financial sources is a major obstacle
faced by women entrepreneurs in Bangladesh. Although government and other relevant
authorities have taken various initiatives for women owned enterprises, the extent of
women’s participation in the financial sector has not yet reached a satisfactory level and they
still suffer from a number of difficulties while gaining access to formal sector (Khaleque,
2018). It is evident from Bangladesh Bank data that the percentage of CMSME loan to total
loan of the financial sector has decreased during 2016-2018. CMSME loan to total loan in
2016 was 18.50%, it became 17.77% in 2017 and further declined to 15.33% in 2018. These
percentages of CMSME loans to total loan are very close to the required rate of 20% as per
the requirement of Bangladesh Bank. It is also observed that very tiny portion of small
enterprise loan goes to women-owned enterprises. Women-owned enterprises capture only
about 3% of the small segment loan. This loan was only 3.71% in 2016, which declined to
2.87% in 2017 and became at 3.01% in 2018. In this respect, their financial literacy and the
managerial capacity can help them to gain such access through analyzing financial sources,
its terms and conditions and effectively manage the overall business operations.

1
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

2. Women Empowerment

Around Bangladesh, it is women who are disproportionately affected by poverty and

discrimination. Often, women are not allowed to make decisions about their household's
income, or tradition and culture forbid them to leave their homes. In other words, half of the
population cannot contribute to their family's and community's economic development. A
great resource goes untapped. But women are an important part of the solutions needed to
truly overcome poverty. They play a key role in navigating their family and their community
to a better life.

3. Barriers Faced by Women Entrepreneurs

1. Inadequate Starting Capital: Inadequate starting capital is one of the main problems
for the women entrepreneurs in Bangladesh. Generally, women start their business
with limited capital accumulated from family savings and the relatives and other
sources.
2. Lack of Knowledge: Lack of knowledge among the women entrepreneurs is another
barrier. Many of them have no education over class eight or SSC level.
3. Lack of Market Information: Lack of market information is also one of the major
problems of women entrepreneurs. They lack of information on where, what price and
when the product should be sold.
4. Traditional Technology and Poor Technical Knowhow: Woman entrepreneurs
generally use local technologies to produce goods but these are not productive enough
to fulfill market demand, produce quality/ beautiful products to compete with the
international products available in the local market.
5. Lack of General Education and Practical Business Education: Apparently these
tasks do not need particular knowledge and families perceive girl’s education as a
waste of time.
6. Lack of Management Experience and Production Skill: The lack of management
experience and production skill is yet another major constraint facing the women
population.
7. Capacity Building: Even if women obtain the resources to start a business, they often
lack the tools— such as marketing, production and design, finance, bookkeeping, and
e-commerce—to maintain and grow their business.
8. Lack of Entrepreneurial Training: For processing, manufacturing, livestock and
fisheries activities entrepreneurial training is essential. But such training facility is
available in urban areas. Lack of necessary training, lack of experience severely
affects the efficiency of the rural women entrepreneurs.
9. Family Responsibilities: Family responsibilities such as household work, caring for
elders and rearing children prevent them from gaining skills, knowledge properly
since they cannot usually find the suitable time to be more proficient.
10. Government’s Taxing Policy: Government taxing policy, tax rate, and tax holiday
facility also affects development of women entrepreneurship; tax policy and taxation
can have profound influence on the women entrepreneurship development.

2
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

11. Lack of Skilled/Trained Manpower: Lack of skilled and trained manpower is a

further barrier to women entrepreneurship growth.
12. Lack of Access to Infrastructure: Insufficient infrastructure or lack of infrastructure
acts as a hurdle. The supply of electricity, power and gas are not available in many
rural and even sub-urban areas.
13. Problems in Collecting Accounts Receivable: After selling their products on
account, another difficulty arises in collecting those accounts receivables.

4. Factors Influencing the Development of Women Entrepreneurship in Bangladesh

1. Recognition: One of the key factors for the development of women entrepreneurship
in Bangladesh is recognition. When the activities performed by the family members
or by the neighbors, rural women feel encouraged to do it.
2. Family Occupation, Support and Resistance: The family environment influences
the creation of entrepreneurial enterprises. Female entrepreneurs who receive support
and cooperation from their families are likely to be more successful.
3. Entrepreneurial Experience: Even before creating their own enterprise, male
entrepreneurs often have more practical experience, not only within the family but
also through contacts with professionals.
4. Changing Trend in Women Entrepreneurs: Women of today are in several ways
different from the women of past years. Women entrepreneurs tend to be motivated
by the need to provide security to their families and by their family circumstances.
5. Regulative Factors: Regulative factors refer to different rules of the Government that
facilitates women entrepreneurship development in rural Bangladesh.
6. Independence and Keeping Thyself Busy: Independence and keeping thyself busy
is the factor for the development of women entrepreneurship in Bangladesh. The right
of doing something independently can keep them busy, and career and family
security.
7. Government Training Support Programs: In keeping with government policy of
integrating women into the mainstream of economic development, various new
projects have been undertaken in recent years.
8. Role of UN Agencies, Donors, INGOs, and NGOs: A number of UN Agencies,
donors, INGOs, and NGOs are engaged in poverty alleviation and women’s
development programs in Bangladesh.

5. Regulatory and Policy Initiatives of Bangladesh Bank for Women Owned Small
Enterprises Financing in Bangladesh
It is plausible that Bangladesh cannot speed up its current pace of development without
creating required level of employment opportunities for women though till now, the ratio of
women employment is not very satisfactory. To cover up this gap, Bangladesh Bank has
appeared as one of the authoritative institutions to upsurge the women entrepreneurship
through diverse regulatory and policy initiatives under SME Scheme. In 2010, Bangladesh
Bank has formed SME and Special Program Division for Women entrepreneurs. It has

3
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

defined that when a woman hold ownership of a Sole proprietorship or proprietorship

concern or hold at least 51.00% of shares of a partnership company or limited company shall
be treated as women entrepreneurship. In other words, women entrepreneur refers to a
woman who is running her own or family owned business1.
Since 2010, lots of initiatives have been taken by Bangladesh Bank (BB). All the banks and
non-bank financial institutions have been engaged in target based SME financing through
their dedicated SME department. It is evident that without proper monitoring the expected
outcome of women empowerment through SME financing is impossible. Emphasizing on
monitoring, BB has taken a lots of incentives earmarked for women entrepreneurs. For
example, to establish ‘Women Entrepreneur Development Unit’ in Banks and Financial
Institutions to strengthen the monitoring activities of developing women entrepreneur. The
purpose is to ensure the priority in providing credit facility to the women entrepreneur of
small and cottage industries in industry and service sector, create new women entrepreneur
through promotional activities, find out the cluster for women entrepreneur, increase and
attain the target for SME credit disbursement by banks and Financial institutions. This unit
will monitor the activities of ‘Women Entrepreneur Dedicated Desk/Help Desk’ at branch
level2.
Bangladesh Bank in its SMESPD Circular No.01, dated 03.04.2017 has set interest rate for
Women Entrepreneurship financing at 9.00% under Small Enterprise Refinance Scheme. It
also coordinating with JICA and Asian Development Bank (ADB) to get fund and promote
women entrepreneurs under refinance scheme. It keeps provision of providing 100%
refinance/ pre-finance to women led enterprises under the Two Step Loan (TSL) Fund of
Japan International Cooperation Agency (JICA) assisted Financial Sector Project for the
development of SMEs at preferential terms and conditions3. Moreover, to speed up the
financing in Cottage, Micro, Small and Medium sector BB allow refinancing facility to
women entrepreneur upto 25 lacs without collateral but with personal guarantee where new
entrepreneurs will be allowed to get more than 10 lacs without collateral if required, based on
the Banker-Customer relationship considering the business nature, produces and market as
per SMESPD Circular Letter No: 01 issued on 02 April, 2017.
To soften the burden of interest rate BB make it in single digit for women entrepreneurs
where maximum 9% interest rate has been fixed for Bangladesh Bank Refinance Scheme
dedicated for women entrepreneurs under Cottage, Micro, Small and Medium Sector.
Considering working capital as lifeblood of business, BB makes it easy for women
entrepreneurs by fixing grace period. As per the SMESPD Circular Letter No. 03, dated 30-
10-2017, grace period for 1 year loan will be 3 months and for mid and long term loan it will
be 03/06 months based on the Banker-Customer relationship.

Besides focusing on conventional banks, Bangladesh Bank also give its required attention to
the Shariah-based banks with due care and in line with market demand to facilitate women

1
SMESPD Circular No: 01, 07 January, 2016
2
SMESPD Circular No: 01, 08 February, 2015
3
SMESPD Circular Letter No: 02/2016, 03 May, 2016

4
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

entrepreneurs. In its recent circular4, BB covers the operation of Refinancing Scheme for
Shariah-based financing to Agro-based industries, small entrepreneurs (including women
entrepreneur) and new entrepreneurs of Cottage, Micro & Small sector. According to this
circular, refinancing facility for 01 year will be provided to participating financial institutions
(PFIs) which will be renewable for the entire period of original credit facility, provided that
the credit facility is unclassified. Besides these, as the banking sector is passing through
profound changes in terms of faster customer services and increasing use of advanced
technology, time-to-time BB has to come forward with different time demanding regulatory
interventions to support women entrepreneurs which have been summarized in Appendix 1.

6. Initiatives for Women Entrepreneurs

Importance of women entrepreneurs in the national development process has been

acknowledged. The steps to realize these objectives are as follows:

Legal assistance for getting trade license and other trade documents
Financial support to reduce interest rates, ensure easy access to loans, and guarantor-
free loans for women entrepreneurs
Marketing assistance to use local products. Market should be created abroad through
fairs and other promotional campaigns
Technology including continuous product/service quality control, quality
enhancement through adopting new technology, tax reduction on imported new
machinery, etc.
Adoption of business management practices covering a range of activities like HR,
employee handling, customer management, recordkeeping, costing, inventory
management, procurement, strategic positioning, etc.

7. Women Entrepreneurs Access to Formal Finance: Survey Findings in 2019

In this study, a sample survey was conducted on 344 women owned small enterprises of
which 45.93% were from manufacturing concerns, 38.66% were from trading concerns and
15.41% from the service concerns. The survey result (Fig-5.2) showed that 40.70%
enterprises received loans from banks, while 59.30% enterprises did not receive any loan
from the banks. Out of those enterprises who received loan, 41.77% enterprises received the
full amount they had applied for and the other 58.23% enterprises received a part of their
total requirement. On an average, all of the women entrepreneurs received 71.03% of loan
they have applied for.

4
SMESPD Circular Letter No. 01 07 January, 2018

5
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Figure 5.2: Survey Results on Access to Formal Credit of Women Entrepreneurs from Banks

Willing to take further loan

114 (92.68%)
Satisfied
123 (87.86%)
Not willing to take further
loan 9 (7.32%)

Loan received
140 (40.70%) Willing to take further loan
11 (64.71%)
Not satisfied
17 (12.14%)
Not willing to take further
Total Sample 344 loan 6 (35.29%)
Manufacturing 158
Trading 133
Not Applied Reasons:
Service 53
168 (82.35%) -Do not need
- Personal borrowing from
family /relatives/friends
Not received
204 (59.30%)
Reasons:
- Lack of Guarantee
- No trade license
- New business
Applied but - Low repayment capacity
rejected - Poor business condition
36 (17.65%) - Non-fulfillment of loan
conditions
- Unmarried
Source: Authors’ calculation based on survey

A study conducted by Ahmed, Hossain and Hossain (2017) revealed that very few of the
women entrepreneurs got access into the formal sources (18.57% from private bank and
6.16% from NGOs). The findings of their study also shown that although some women
entrepreneurs got the financial access, the credit limit was inadequate (around 3 lakh Taka
loan ceiling) and interest rate and processing time were very high. Therefore, from the
present survey it is evident that the credit access of women entrepreneurs to banks has
increased due to various initiatives of government, central bank, commercial banks and some
other related stakeholders.

Among the enterprises who received loans (Fig-5.2) from the formal financial institutions,
87.86% enterprises were satisfied in terms of loan covenants and, of them, 92.68%
enterprises were willing to take further loan. But 7.32% enterprises were not willing to take
further loan from the financial institutions mainly due to the fact that the requirement of
borrowing was over.
Again, among the enterprises who received loan (Fig-5.2) from banks and financial
institutions, 12.14% enterprises were not satisfied with the loan covenants and requirements.

6
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Figure 5.3: Reasons for Dissatisfaction with bank Loan

90.00% 82.35%
76.47%
80.00%
70.00% 64.71%
58.82%
60.00%
50.00% 41.18%
40.00%
30.00% 17.65%
20.00%
10.00%
0.00%
Longer Obtained Unfavoural Bankers' Needed to Too much
duration to less than repayment negligence visit many paper work
get loan required schedule times
amount

Source: Authors’ calculation based on survey (Multiple response)

From the questionnaire survey and interview of different entrepreneurs we found that
‘sanctioning less amount of loan than the requirement’ is the major reason for their
dissatisfaction (Fig-5.3). About 82.35 percent of the dissatisfied respondents claimed and
gave the priority on the required amount of loan. The 76.47% of dissatisfied borrowers claim
that they had to visit the banks/financial institutions many times before getting the loan.
Other major points of their dissatisfaction with the bank loan are longer duration to obtain the
loan (64.71%), bankers’ negligence (58.82%) and unfavorable repayment schedule (41.18%).
Too much paper work, complex and long processing, deposit of blank cheque against loan
was also highly emphasized by them. Total survey results are shown in figure-5.3.

It is important to note that from the dissatisfied enterprises, 64.71% enterprises were willing
to take further loans from banks and financial institutions and 35.29% enterprises were not
willing to take further loan. Again, from the satisfied respondents 7.32% enterprises were not
willing to take further loan. Thus, 10.71% enterprises (both satisfied and unsatisfied) showed
their unwillingness to take further loan from the formal sector and the reasons they identified
are: business is not profitable, negative attitude of bankers, harassment by the financial
institutions, interest rate and service charge is high, obtaining loan from informal sector is
easy, security and guarantee requirement is high.

7
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Figure 5.4: Reasons for Loan Rejection from Formal Financial Sector

Non-fulfillment of loan conditions 27.78%

Poor business condition 25.00%
Low repayment capacity 30.56%
Unmarried 5.56%
New business 16.67%
Lack of showroom 8.33%
No trade license 19.44%
Lack of Guarantor 58.33%

Source: Authors’ calculation based on survey (Multiple response)

On the other hand, 17.65% enterprises applied for the loan but they were rejected. The
reasons behind the rejection of loans are depicted in Figure-5.4. From the figure it is observed
that the top most reason for rejection of loan is lack of guarantor (58.33%) followed by low
repayment capacity (30.56%) and non-fulfillment of loan conditions (27.78%). Other reasons
for the rejection of loans are poor business condition (25.00%), no trade license (19.44%),
new businesses (16.67%), lack of business showroom (8.33%) and unmarried status of the
borrower (5.56%) (Figure-5.4).
From the survey it is found that 59.30% enterprises did not receive any loan from banks and
financial institutions. Out of the total enterprises who did not receive loan, 82.35%
enterprises did not apply for any loan as they were carrying on their business with their own
finance and borrowing from other informal sources like family, relatives and friends. In our
questionnaire survey we tried to identify the general perceptions of the entrepreneurs about
their reluctance in applying for loan form formal sector by asking the question “why are you
not willing to borrow from banks/FIs?” with a detailed list. The responses of the question are
exhibited in Figure-5.5.
Figure 5.5: Reasons for Not Applied for Loan to Formal Financial Sector

Managing loan guarantor 75.00%

Lack of Collateral 27.98%
Bank impose many loan conditions 36.31%
Complicated loan procedures 50.00%
Easy availability of funds from other sources 20.24%
Borrowing is disgraceful 16.07%
High sunk cost for obtaining loan 66.67%

Source: Authors’ calculation based on survey

8
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

From Figure-5.5 it is noteworthy that 75% of the women did not apply for loan due to their
inability to manage loan guarantor. Other major reasons for not being willing to apply for
bank loans are high sunk cost for obtaining loan (66.67%), complicated loan procedures
(50%), too many loan conditions (36.31%), lack of collateral (27.98%), easy availability of
fund from other informal sources (20.24%) etc.

8. Conclusion

Contribution of women in the economy is very important for the growth of the
socioeconomic environment of Bangladesh. Without meaningful and active participation of
women in regular economic activities, a dynamic and sustainable economy is impossible to
achieve. Bangladesh has undertaken systematic reforms across all sectors with an emphasis
on initiatives to increase women's participation through laws, international conventions and
affirmative activities. Today women have brought about social and economic change and
opened up a new dimension in the business arena through their participation in different
socioeconomic activities in Bangladesh.

9. Cases on Women Entrepreneurship Development in Bangladesh

Case 1: Minara Defeats Poverty by Making Caps

Minara used to pass her days in misery. There was none to stand beside her family. Minara’s
husband Kafil Uddin did not earn enough to run his family. They are a family of six, three
sons and a daughter; all are pursuing their educations in nearby school and college. The
family saw the faces of poverty as they struggled to move on with life’s pressing needs.

Minara Begum was wondering how to win over the woes. Then one day she stumbled on the
idea of making caps and selling on wholesale basis. Her husband didn’t show much interest
as they lacked the capital required to start the business. Minara Begum was determined that
she would do something to give her children a better life. She started looking for finance
from both her relatives and also from formal sources. Getting to positive response, Minara
Begum finally visited Surma Bank Farmgate Branch. Seeing her determination, the branch
decided to allow a credit limit of Tk. 300,000 to Minara to allow her to procure raw materials
and start her venture. She started making caps in a shabby house where around 20 people are
currently working. Minara’s fate starts to change as well. With Surma Bank at her side,
Minara’s hope of defeating poverty and providing children’s well-being comes true. Minara
moves on from the shabby house to a four-storied building with an enhanced investment of
Tk. 1.0 million from the Bank. Her children are now concentrating on education for
fulfillment of their dreams and contribution for the nation.

Contribution of Finance in Achieving Inclusive Growth:

1. After getting finance of Tk 3, 00,000.00 Minara started her business.
2. She provides good education to her children.
3. She moves on from the shabby house to a four storied building.
4. Her organization employs 20 people.

9
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

5. She buys raw materials which reciprocally also change the fortune of seller of raw
materials.
As a whole banks’ finance ensures inclusive growth by reducing poverty of families of
Minara, her employees, and suppliers.

Case 2: Halima has become an Employer of 400 workers

Halima Khatun could have pursued a career commensurate to her better and a bit higher
educational career. But instead of looking for a job she had a long mindset to rather create
jobs for others, especially helpless women. A credit limit from ABC Bank Bangladesh
Limited has made her dream true. As an SME investment client she is now a catchword for
referring to success beyond Kumarkhali of Kushtia.
When she was too minor she would often think of doing something special and appreciable.
This vision found a new dimension when her eyes opened wide to the world outside home
confinement. Her husband came out in support of her quest for learning needle-works
(Karchupi Kaj) on maiden fashion wears.

Her own earning, that contributed to her family, started from those exclusive needle-works
since 2005. She started organizing the neighboring poor widows and women suspended in
worst economic condition to engage them in similar works. With their active hands got
together she started getting stitching works on contractual production-sharing on weekly
basis. Soon after she started her hand-crafted fashion decorations through needle-works
especially on bridal sharee, design sharee, fancy sharee, urna (scarf), lehenga, 3-piece,
punjabi and embroidered quilts which spread its popularity widely among fashion lovers of
the locality.

Such popularity ignited her passion and commitment to open up her own and exclusive
factory in 2009. The only hindrance arose is adequate capital for a countable start-up. She
started looking out for a fund from local banks and investment funders. But she failed in her
quest getting poor response from lenders who were not interested in such a non-traditional
craft. She then went to ABC Bank’s Kumarkhali Branch. The branch carried out feasibility
study of the proposal from different dimensions and subsequently came to credit a fund of
Tk.3, 50,000/- (US$ 4,500) in 2011 under Women Entrepreneur Development Scheme.

This marked the beginning of her success story. From the same year she started supplying her
fashion wears to neighboring districts. As of now, her enterprise runs a credit to the tune of
Tk.9,00,000/-(US$ 11570 almost). She now employs 400 women workers along with a male
marketing team of six. Success has marked not only in quality, it implied in quantity as well.
She is set on an arduous plan of supplying in bulk to the capital city Dhaka and other remote
marketplaces across the country. Taking care of her family she has chalked out her day’s
work that need her intensive insight and attention to all that concerns her business - ranging
from raw material outsourcing to fashion ideas, comparative market analysis, outsourcing of
accessories and patterns, human resource factors and all other details. Her business now calls
for modern computer-aided fusion and pattern designing, samplings and other precision
works.

10
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Contribution of Finance in Achieving Inclusive Growth:

1. Her organization employs 400 women workers who are now free from poverty.
2. She buys raw materials which reciprocally also change the fortune of seller of raw
materials.
3. She organized neighboring poor widows and women suspended in worst economic
condition to engage them in similar works.
4. Life standard of these rural women workers has been changed after getting job.

11
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Appendix 1: Bangladesh Bank Circulars Related to Women Entrepreneurs Financing

Sl Reference No. Date Title Key Message

No
1 SMESPD Circular 05 September, 2019 Master circular on Cottage, Micro, - Instructions of previous issued all circulars and circular letters will
No. 02 Small and Medium Enterprise be inactive by this circular.
Financing
2 SMESPD Circular 07 January, 2018 Operation of Shariah-based - It covers the operation of Refinancing Scheme for Shariah-based
Letter No. 01 Refinancing Scheme financing to Agro-based industries, small entrepreneurs (including
women entrepreneur) and new entrepreneurs of Cottage, Micro &
Small sector.
- Refinancing facility for 01 year will be provided to participating
financial institutions (PFIs) which will renewable for the entire
period of the original credit facility, provided that the credit facility
is unclassified.
3 SMESPD Circular 30 October, 2017 Sanction of Working Capital and Grace - Working capital financing to SME, especially women
Letter No. 03 period in recovery for entrepreneurs of entrepreneurs need to be continued.
Cottage, Micro and Small sector - The grace period for 1 year loan will be 3 months and for Mid and
Long term loan it will be 03/06 months based on the Banker-
Customer relationship.
4 SMESPD Circular 29 June, 2017 Redefine the Cottage, Micro, Small and Define and determine the credit limit of Cottage, Micro, Small and
No. 02 Medium enterprises. Medium enterprises under Manufacturing & Service sectors and
Micro & Small enterprises under Trading sector.
5 SMESPD Circular 03 April, 2017 Fixation of interest rate of Bangladesh Interest rate will be maximum 9%.
No: 01 Bank Refinance Scheme for women
entrepreneurs under Cottage, Micro,
Small and Medium Sector.
6 SMESPD Circular 02 April, 2017 To speed up the financing in Cottage, - Allow refinancing facility to women entrepreneur upto 25 lacs
Letter No: 01 Micro, Small and Medium Sector. without collateral but with personal guarantee.
- New entrepreneurs will be allowed to get more than 10 lacs
without collateral if required, based on the Banker-Customer
relationship considering the business nature, produces and
market.

12
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Sl Reference No. Date Title Key Message

No
7 SMESPD Circular 03 May, 2016 Provision of providing 100% refinance/ - Provision of providing 100% refinance/ pre-finance to women led
Letter No: 02/2016 pre-finance to women led enterprises enterprises under the Two Step Loan (TSL) Fund of JICA
under the Two Step Loan (TSL) Fund assisted Financial Sector Project for the Development of Small
of JICA assisted Financial Sector and Medium Sized Enterprises.
Project for the Development of Small - In order to motivate women entrepreneurs in productive
and Medium Sized Enterprises. investments, the Steering Committee of the project decided to
allow providing 100% refinance/ pre-finance at preferential
interest rate [ bank rate + maximum 5% spread] in line with
prevailing women entrepreneurship development strategy of BB.
- Terms and Conditions of On-Lending Loans have been revised to
include the provision of refinancing/ per-financing to women led
enterprises at preferential terms and conditions.
8 SMESPD Circular 07 January, 2016 Master Circular on SME. Revised circular on different issues of SME after doing required
No: 01 corrections and incorporating time demanding different new issues
over the previous Master circular of 14 July, 2015.
9 SMESPD Circular 21 September, 2015 Incorporating Day-Care Center in SME Considering the current need, Day-Care Center has been
Letter No: 04 sector. incorporated in SME sector. Banks are asked to provide credit
facility in this sector, where Refinancing facility from Bangladesh
Bank may be considered.
10 SMESPD Circular 14 July, 2015 Master Circular on SME Financing It sum up the initiatives taken by BB through previously issued
No: 04 different circulars covering the definition of Small and Medium
Enterprise, SME Financing, Women Entrepreneur and different
Refinancing Schemes.
11 SMESPD Letter 11 June, 2015 Establishing Women Entrepreneur's Each bank and financial institution has to establish a separate
Circular No: 01 Dedicated Desk/ Help Desk. "Women Entrepreneur's Dedicated Desk" and properly trained
employees need to be appoint there. If possible, women employee
will head this desk.
12 SMESPD Circular 08 April, 2015 To provide credit / financial facility to All Banks/NBFIs have to find out at least 3 women entrepreneurs
No: 02 new women entrepreneurs in Cottage, who still have not avail any credit facilities from any Bank/NBFI
Micro and Small Industries. from the territory of each branch. They also need to provide
sufficient and required training and financial supports by
Bank/NBFI. It also mentioned that, of these 3 new women
entrepreneurs, at least 1 have to provide credit facility under
Cottage/Micro or Small sector.
13 SMESPD Circular 08 February, 2015 Establishment of ‘Women Entrepreneur -To ensure the priority in providing credit facility to the women
No: 01 Development Unit’ in Banks and entrepreneur of small and cottage industries in industry and service
Financial Institutions to strengthen the sector, create new women entrepreneur through promotional
monitoring activities of developing activities, find out the cluster for women entrepreneur, increase and

13
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)
Training Name: Best Practices of CMSME Financing/Lending

Sl Reference No. Date Title Key Message

No
women entrepreneur. attain the target for SME credit disbursement by banks and
Financial institutions.
-This unit will monitor the activities of ‘Women Entrepreneur
Dedicated Desk/Help Desk’ at branch level.
14 SMESPD Circular 09 October, 2014 Refinancing facility for ‘Agro based Women entrepreneurs owned participating financial institutions
No: 02 industries’, ‘Small Entrepreneurs will get priority in availing this facility and in this case, the Profit
(including Women Entrepreneurs)’ and rate/Mark-up cannot exceed the total of existing Bank rate and
‘New Entrepreneur in Cottage, Micro Average profit rate of Mudaraba Savings Account.
and Small Industries’ sectors under
Islamic Shariah based Financing.

15 SMESPD Circular 29 October, 2013 Fund facility for ‘Establishing Semi- Women entrepreneurs owned participating financial institutions
No: 01 urban based Agro processing will get priority in availing this facility and in this case, the Profit
industries’ and ‘Small Entrepreneurs rate/Mark-up cannot exceed the total of existing Bank rate
(including Women Entrepreneurs)’ (currently 5%) and Average profit rate of Mudaraba Savings
sector under Islamic Shariah based Account.
Financing.
16 SMESPD Circular 19 June, 2011 Definition of Cottage, Micro, Small If any women is the owner or proprietor of Sole proprietorship
No: 01 and Medium Industry/ Enterprise organization, or hold minimum 51% share of any Partnership firm
or minimum 51% share of Directors/Shareholders of any Private
limited company registered in Joint Stock Companies will be
considered as Women Entrepreneur.
17 SMESPD Circular 19 July, 2010 Refinancing for SME Sector To expand the benefit and coverage of ‘SME Refinancing Scheme’,
No: 01 a fund of USD 95 million has been developed by Bangladesh Bank
with joint participation of Asian Development Bank and
Bangladesh Government. 15% of this fund will be allocated for
women entrepreneurs to encourage them in SME sector.

18 SMESPD Letter 06 Sept, 2010 Group-based SME Loan Disbursement Individual women entrepreneur having credit facility of below BDT
Circular No: 05 to Women Entrepreneurs 50,000 can form a group incorporating same type of entrepreneurs
having below BDT 50,000 credit facility can apply for SME credit
facility of equal or more than BDT 50,000. This group-based SME
loan will be considered under the SME Refinancing Scheme of
Bangladesh Bank.

14
Technical Assistance (TA) Project of Supporting Post COVID-19 Small Scale Employment Creation Project (SPCSSECP)