The credit flow to small and medium enterprises during the second quarter of the current calendar year increased 16% from the first quarter, Bangladesh Bank sources said.
According to central bank data, the total loan disbursement to SME sector rose to Tk225bn in the April-June from Tk194bn in the January-March.
In total, the SME sector received a total of Tk419bn during the first half of the year.
For the year, the SME loan disbursement target was set at Tk742bn by the Bangladesh Bank, suggesting that over 56% of the targeted figure has already been distributed in the first half.
While SME credit flow has grown significantly, the private sector credit growth is appearing disappointing.
Due to political uncertainty ahead of next general election, the large entrepreneurs are not showing any interest in investments, said bank sources.
Bangladesh Bank’s Deputy Governor SK Sur Chowdhury said: “We have been asking the scheduled banks to give emphasis on increasing credit supply to the SME sector.”
The SME credit will encourage emergence of new entrepreneurs, he said.
According to the data, 66% of total disbursement went to the business sector while the service sector got 28%, the manufacturing sector 28%, small industry sector 50.6% and the women entrepreneurs 3.6%.
The figure received by the business sector was Tk278bn while service sector received Tk20.1bn, manufacturing sector around Tk120bn, small industry Tk211bn and women entrepreneurs Tk15bn.
“As big entrepreneurs are not willing to expand their investment right now fearing political turmoil, banks focus on SME credit to continue business,” said Nurul Amin, President of Association of Bankers Bangladesh (ABB).