A brief presentation for orientation program CREDIT WHOLESALING PROGRAM OF SME FOUNDATION Presented By: Suman Chandra Saha Program Manager (Credit Wholesaling))
Credit wholesaling program of SME Foundation
Aug 14, 2015
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- 1. A brief presentation for orientation program CREDIT WHOLESALING PROGRAM OF SME FOUNDATION Presented By: Suman Chandra Saha Program Manager (Credit Wholesaling))
- 2. www.smef.org.bd CREDIT WHOLESALING PROGRAM: Credit Wholesaling (CWS) Program is a specialized credit program operated by SME Foundation (SMEF) through Banks and NBFIs aiming to channelize collateral free single digit rate of interest loan to the target clusters/sectors/clientele, to create access to the formal source of credit for MSMEs who are considered as missing middle and also to encourage lending financial institutions to provide fund to the micro & small enterprises that are dissimilar in terms of financial requirement and business treatment. 2
- 3. www.smef.org.bd CREDIT WHOLESALING PROGRAM: Credit Wholesaling (CWS) Program is a specialized credit program operated by SME Foundation (SMEF) through Banks and NBFIs aiming to channelize collateral free single digit rate of interest loan to the target clusters/sectors/clientele, to create access to the formal source of credit for MSMEs who are considered as missing middle and also to encourage lending financial institutions to provide fund to the micro & small enterprises that are dissimilar in terms of financial requirement and business treatment. 3
- 4. www.smef.org.bd CREDIT WHOLESALING PROGRAM: Credit Wholesaling (CWS) Program is a specialized credit program operated by SME Foundation (SMEF) through Banks and NBFIs aiming to channelize collateral free single digit rate of interest loan to the target clusters/sectors/clientele, to create access to the formal source of credit for MSMEs who are considered as missing middle and also to encourage lending financial institutions to provide fund to the micro & small enterprises that are dissimilar in terms of financial requirement and business treatment. 4
- 5. www.smef.org.bd CREDIT WHOLESALING PROGRAM: Credit Wholesaling (CWS) Program is a specialized credit program operated by SME Foundation (SMEF) through Banks and NBFIs aiming to channelize collateral free single digit rate of interest loan to the target clusters/sectors/clientele, to create access to the formal source of credit for MSMEs who are considered as missing middle and also to encourage lending financial institutions to provide fund to the micro & small enterprises that are dissimilar in terms of financial requirement and business treatment. 5
- 6. www.smef.org.bd OBJECTIVES: create access to formal source of finance for MSMEs provide collateral free single digit rate (maximum 9%) of interest fund to the MSMEs create an avenue for fund to the missing middle encourage the lending financial institutions for financing MSMEs boost up specific sector/cluster/clientele through financial support 6
- 7. www.smef.org.bd MANDATE ON CREDIT WHOLESALING PROGRAM 7
- 8. www.smef.org.bd WORKING COMMITTEE ON CWS PROGRAM: There is a working committee on the credit wholesaling program. The main task of the committee is to provide necessary suggestions and recommendations for the program. The committee is however involved in monitoring of the Credit Wholesaling Program. The Committee: Mr. Md. Abul Quasem, Deputy Governor, Bangladesh Bank, Convener Mr. Arefin Ara Begum, Joint Secretary, Ministry of Finance, Member Mrs. Parveen Mahmud, DMD, PKSF & Board Member, SMEF, Member Mr. Md. Fakhrul Islam, Managing Director, BASIC Bank Ltd Mr. M. Ehsanul Haque, Managing Director, Mercantile Bank Ltd 8
- 9. www.smef.org.bd SOURCE OF FUND: Expected: SMESDP component support Current: Excess amount of interest from endowment fund remains after program and management cost Proposed: Budgetary support from the Govt. Loan/grant received from the development partner 9
- 10. www.smef.org.bd COMMON FEATURES: single digit rate of interest (maximum 9%) no collateral requirement nominal service charge (0.5 % and legal papers cost) reducing method for interest calculation pre funding loan size lies between 50 thousand to 10 lac loan period maximum for 4 years for specific sectors/clusters/groups No credit risk by SMEF flexible mode of repayment women are given preference 10
- 11. www.smef.org.bd ROLE OF SMEF: identifies a cluster, analyze the financial needs select as partner financing institute (PFI) for funding participate in an agreement with PFI release fund to PFI as per requisition monitor the financing process of PFI and provide feedbacks provide capacity development support to the entrepreneurs evaluate and trace the changes after intervention 11
- 12. www.smef.org.bd FLOW CHART OF CWS PROGRAM: 12
- 13. www.smef.org.bd ELIGIBILITY OF PARTNER FINANCIAL INSTITUTION: licensed by Bangladesh Bank under the relevant act recovery rate is minimum 95% and on-time realization rate is minimum 92% (of the respective loan range i.e. Tk. 50,000 to 1,000,000) compliant of Bangladesh Banks Prudential Regulations including; a) loan loss provisioning and capital adequacies; b) minimum capital requirements; c) exposure limit to a particular customer; d) internal control system; e) risk management etc. functioning MIS and internal evaluation system dedicated and separate division for SME financing with special products for MSMEs 13
- 14. www.smef.org.bd ELIGIBILITY OF ENTREPRENEURS: should fall into the Micro or Small segment as per Industrial Policy-2010 should have up dated trade license, TIN & VAT registration (where applicable) involved in manufacturing or service business Others relevant papers, documents 14
- 15. www.smef.org.bd PARTNER FINANCIAL INSTITUTIONS (PFIS) Existing MIDAS Financing Ltd. for Bogra Light Eng. Cluster. & Dholai Khal Light Eng. Cluster NCC Bank Ltd. for Rajshahi Footwear & Syedpur Jhut Garments Cluster Mutual Trust Bank Ltd. for Women Entrepreneurs Eastern Bank Ltd. for Dhaka Leather products producers group Trust Bank Ltd. for Jessore & Chittagong Hill Tracts Handicrafts Cluster Bank Asia Ltd. for Shaympur-Kadamtoli Electronics Products Cluster IDLC Finance Limited for Islambah Plastic Cluster, Dhaka Proposed EBL for Bhairab Shoe Cluster NCC Bank Ltd. for Moulvi Bazar Agar Cluster NBL for Jute Products Producers Group 15
- 16. www.smef.org.bd MONITORING OF CWS: Beneficiary entrepreneurs are physically visited by SMEF officials very after the loan disbursement to collect baseline data, to confirm whether the terms and conditions are fulfilled duly and also to know if they need any other support. After a certain period of time (before ending the program) all entrepreneurs are visited again to trace the change for baseline and evaluation reports are being prepared. 16
- 17. www.smef.org.bd PRESENT STATUS: Status of CWS (as on 31 January, 2014) Sl Name of PFI Name of Cluster/Clientele Amount (in crore) Beneficiary Enterprise Sanctioned Disbursement Outstanding Male Female Total 1 MIDAS Financing Ltd. Bogra Light Engineering Cluster 8.00 6.50 2.50 150 2 152 Dholai Khal Light Engneering Cluster 3.00 .00 0.00 0 0 0 2 Shakti Foundation Women Entrepreneur 0.50 0.25 0.00 0 0 0 2 Mutual bank Ltd. MTB Gunobati 5.75 5.75 4.00 0 97 97 MTB Youthline 1.00 3 NCC Bank Ltd. Kaluhati Footwear Cluster 2.00 0.45 2.00 18 1 19 Syedpur Garments Cluster 1.55 35 0 35 4 Eastern Bank Ltd. Dhaka Lather Product Producers Cluster 1.00 1.00 1.00 22 0 22 5 Trust Bank Ltd. Jessore & CHT Nakshi Kantha Cluster 3.00 2.30 2.30 0 172 172 6 Bank Asia Ltd. Dhaka Electrical Product Cluster 2.00 2.00 2.00 30 0 30 7 IDLC Finance Ltd. Islambag Plastic Cluster 3.00 .00 Total 29.25 19.80 13.80 255 272 527 17
- 18. www.smef.org.bd GROWTH OF CWS PROGRAM (31 JAN, 2014) 18 0 50 100 150 200 250 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Disbursement Parlor Handy Craft Loom/Hosiery Leather Plastic Light Eng. Twisting DressMaking Agro-Pro Elec.& Electronic Others SECTOR WISE DISBURSEMENT:
- 19. www.smef.org.bd GEOGRAPHICAL PRESENCE OF CWS: 19
- 20. www.smef.org.bd PROPOSED SCHEMES: 1. Start-up & Innovative Technology Financing Scheme (along with Guarantee) 2. Women Entrepreneurs Financing Scheme 3. Technology Development/Up-gradation Financing Scheme 4. Cluster Based Financing Scheme 5. Seasonal Business Financing Scheme 6. Area/Region-based Financing Scheme 7. Sector/Sub-Sector Based Financing Scheme 8. Factoring/Invoice Financing Scheme 9. Venture Capital Promotion Scheme 20
- 21. www.smef.org.bd SNAPSHOTS: 21 Agreement Signing with MIDAS Financing Ltd. Agreement Signing with MTBL Agreement Signing with EBL Agreement Signing with IDLC Finance Ltd.
- 22. www.smef.org.bd SNAPSHOTS: 22 Agreement signing ceremony with MIDAS Inauguration of Trus-sukonna Agreement signing ceremony with NCC Bank Agreement Signing with Bank Asia Ltd.
- 23. www.smef.org.bd 23 Any Idea?
- 24. www.smef.org.bd THANK YOU FOR PATIENT HEARING 24
- 25. www.smef.org.bd 25
- 26. www.smef.org.bd 26
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