They said very high lending rate and absence of collateral-free medium and long-term loans are the core problems of the SME sector.

The seminar on Problems of SME Financing was organised by Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at its auditorium.

Terming small and medium enterprises the 'most capital-starved section', Mohammad Ayub Mian, additional secretary to the Ministry of Industries, said,

"These are the SMEs which are not on the radar of NGO-MFI micro-credit, but do not have enough financial critical mass to attract formal banks."

Citing the findings of a study conducted by the Power and Participation Research Centre, he told the seminar that only 10 per cent of the capital invested in SMEs comes through banking system, while self-finance accounts for 76.5 per cent of fixed capital and 51.8 percent of working capital.

In addition to credit support, the SMEs require monitoring and training, said M Aminuzzaman, managing director of National Bank Limited.

Abdul Muyeed Chowdhury, chairman of the newly founded SME Foundation, said when around one million people join the domestic job market every year, the SME sector might emerge as an alternative job market, if the sector is nurtured.

SME Foundation is a government-founded private ogranisation that eyes providing one window solution to the SMEs, Chowdhury said, adding that besides providing funding, the foundation will also provide connectivity, training, export facilities to the enterprises.

In his keynote paper, Dr Baqui Khalily, a professor of finance at the Dhaka University, said the reasons behind improper financing to SMEs by private banks include their profit maximisation drive, high risk and poor return through investing in this sector.

He recommended subsidy to banks for motivating those to finance the SMEs.

He, however, suggested creation of an alternative credit mechanism for financing the SMEs if subsidy does not work.

There were around six lakh small and cottage industries in the country in 2006, according to a data showed by the keynote paper.

Dewan Sultan Ahmed, vice president of FBCCI, also took part in the discussion, chaired by FBCCI Director MA Rouf Chowdhury. e main barrier to flourishing small and medium enterprises (SMEs) in Bangladesh, speakers observed at a seminar yesterday in Dhaka.

They said very high lending rate and absence of collateral-free medium and long-term loans are the core problems of the SME sector.

The seminar on Problems of SME Financing was organised by Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at its auditorium.

Terming small and medium enterprises the 'most capital-starved section', Mohammad Ayub Mian, additional secretary to the Ministry of Industries, said,

"These are the SMEs which are not on the radar of NGO-MFI micro-credit, but do not have enough financial critical mass to attract formal banks."

Citing the findings of a study conducted by the Power and Participation Research Centre, he told the seminar that only 10 per cent of the capital invested in SMEs comes through banking system, while self-finance accounts for 76.5 per cent of fixed capital and 51.8 percent of working capital.

In addition to credit support, the SMEs require monitoring and training, said M Aminuzzaman, managing director of National Bank Limited.

Abdul Muyeed Chowdhury, chairman of the newly founded SME Foundation, said when around one million people join the domestic job market every year, the SME sector might emerge as an alternative job market, if the sector is nurtured.

SME Foundation is a government-founded private ogranisation that eyes providing one window solution to the SMEs, Chowdhury said, adding that besides providing funding, the foundation will also provide connectivity, training, export facilities to the enterprises.

In his keynote paper, Dr Baqui Khalily, a professor of finance at the Dhaka University, said the reasons behind improper financing to SMEs by private banks include their profit maximisation drive, high risk and poor return through investing in this sector.

He recommended subsidy to banks for motivating those to finance the SMEs.

He, however, suggested creation of an alternative credit mechanism for financing the SMEs if subsidy does not work.

There were around six lakh small and cottage industries in the country in 2006, according to a data showed by the keynote paper.

Dewan Sultan Ahmed, vice president of FBCCI, also took part in the discussion, chaired by FBCCI Director MA Rouf Chowdhury.