SME and Microfinance

Criteria of CMSMEs updated as per SMESPD Circular No. 01 dated 17 March 2025 (Master Circular — Bangladesh Bank) UPDATED 2025

CMSME (Cottage, Micro, Small & Medium Enterprise) plays a vital role in market creation, employment, and the national economy of Bangladesh. It accounts for approximately 45% of manufacturing value addition, 80% of industrial employment, 90% of total industrial units, and contributes nearly 25% of the country's GDP. As per the Economic Census 2024 (BBS), there are now 11.8 million economic units in Bangladesh — up from 7.8 million in 2013 — of which more than 56% are informal enterprises.

1. SME Sectors

Manufacturing: Food processing, agro-based industry, tannery, garments, light engineering, leather goods, electronics, handicrafts

Trading: All goods including import and export sectors

Service: Transport, telecommunication, hotel, information technology, health, education

Note: Under SMESPD Circular No. 01/2025, service industries have been redefined in line with the National Industrial Policy 2022.

2. Eligibility for CMSME Investment / Financing

Sole proprietorship, Partnership, Private Ltd. company — with required infrastructure, manpower, cash flow, and marketability of products/goods. Informal/marginal enterprises are now formally recognized for the first time under the 2025 Master Circular.

3. CMSME Classification Criteria NEW 2025

Source: SMESPD Circular No. 01, dated 17 March 2025, Bangladesh Bank. If an enterprise falls into different tiers based on criteria below, the higher tier prevails.

Enterprise Type	Sub-Sector	Fixed Asset Value (excl. land & building)	Number of Employees	Annual Turnover (Service/Trading only)
Non-Institutional / Marginal	Mfg / Service / Trading	Less than Tk. 5 lac	Maximum 10	N/A
Cottage	Manufacturing	Less than Tk. 10 lac	Maximum 15	N/A
Micro	Manufacturing	Tk. 10 lac to less than Tk. 75 lac	Maximum 25	N/A
	Service	Less than Tk. 10 lac	Maximum 15	N/A
	Trading	Max. Tk. 15 lac	Maximum 10	Max. Tk. 2 crore
Small	Manufacturing	Tk. 75 lac to less than Tk. 15 crore	26 to 120	N/A
	Service	Tk. 10 lac to less than Tk. 2 crore	16 to 50	N/A
	Trading	Tk. 15 lac to less than Tk. 2 crore	11 to 30	Tk. 2 cr. to less than Tk. 20 cr.
Medium	Manufacturing	Tk. 15 crore to Tk. 50 crore	121–300 (RMG/labour-intensive: max. 1,000)	N/A
	Service	Tk. 2 crore to Tk. 30 crore	51–120	N/A
	Trading	Tk. 2 crore to less than Tk. 15 crore	31–100	Tk. 20 cr. to less than Tk. 50 cr.

Tiebreaker Rule: If an enterprise falls under different tiers based on different criteria (e.g., fixed assets suggest "Micro" but employees suggest "Small"), the higher tier shall prevail.

4. CMSME Loan / Investment Ceilings NEW 2025

Source: SMESPD Circular No. 01, dated 17 March 2025. Total funded loan/investment across all banks and FIs for a single enterprise cannot exceed these limits.

Enterprise Type	Manufacturing (max. BDT)	Service (max. BDT)	Trading (max. BDT)
Informal / Marginal	5 lac	5 lac	5 lac
Cottage	20 lac	—	—
Micro	2 crore	50 lac	75 lac
Small	25 crore	8 crore	8 crore
Medium	100 crore	75 crore	10 crore

5. CMSME Portfolio Targets for Banks & FIs NEW 2025

Target	Details
Overall CMSME credit disbursement	25% of total loan portfolio by end-2025; 27% by 2029
Cluster financing target	Minimum 10% of CMSME portfolio
Manufacturing sector	Minimum 40% of CMSME portfolio
Service sector	Minimum 25% of CMSME portfolio
Trading sector	Maximum 35% of CMSME portfolio
Women entrepreneurs	Minimum 15% of total CMSME lending; 1% cash incentive for timely repayment
Cottage, Micro & Small (CMS)	Minimum 50% of total CMSME portfolio

6. Women Entrepreneur — Definition & Special Facilities

Definition: A woman who is the owner of a proprietary firm, OR in a partnership/private limited company owns at least 51% share, is treated as a Women Entrepreneur.

Facility	Details
Collateral-free loan (personal guarantee)	Up to Tk. 25 lac against personal guarantee
Loan guarantee scheme (BB-backed)	Up to Tk. 50 lac with BB's Credit Guarantee Scheme (CGS)
Refinance fund for women	BB has a dedicated BDT 3,000 crore refinance scheme; PFI rate 0.5%, customer rate max 5%
Cash incentive	1% cash incentive to women entrepreneurs who repay CMSME loans on time; 1% to bank/FI also
ANANNYA (MBPLC product)	Women's Loan @ 5% p.a. up to Small Enterprise; Tk. 0.50 lac to Tk. 100 lac
Dedicated Desk	Women Entrepreneurs' Dedicated Desk (WEDU) in all branches of scheduled banks

7. Group-Based Financing NEW 2025

The SMESPD Circular No. 01/2025 introduces group-based loans for Cottage and Micro entrepreneurs, allowing 5–10 individuals to apply collectively. However, each member must submit a separate application supported by a CIB (Credit Information Bureau) report.

8. Key CMSME Facts & Figures — Bangladesh (2024–25)

Indicator	Figure	Source
Total economic units / MSMEs	11.8 million (2024); 7.8 million in 2013	BBS Economic Census 2024
SME contribution to GDP	~25% (BB Study Nov 2022: 24.45%)	Bangladesh Bank / BBS
Share of manufacturing value addition	~45%	Planning Division
Share of industrial employment	~80%	Planning Division
Share of total industrial units	~90%	Planning Division
Share of non-agricultural workforce	70–80% (ADB)	ADB Report
People employed in MSMEs	~24 million	Daily Star 2024
Export earnings contribution	75–80% of total export earnings	Planning Division
Informal MSMEs	More than 56% are informal	BBS Economic Census 2024
GDP growth rate (FY 2024–25)	3.49% (slowest in recent years)	Wikipedia / BBS 2025
Master Circular	SMESPD Circular No. 01, 17 March 2025	Bangladesh Bank (SMESPD)

9. MBPLC CMSME Loan Products (at a Glance)

Product Name	Purpose	Type
CHAKA	Business expansion, capital machinery & fixed assets	Term Loan
SAMRIDDHI	Working capital / stock maintenance	Continuous Loan
MOUSUMI	Seasonal cash flow needs	Short-term Seasonal
ANANNYA	Women Entrepreneurs — working capital & expansion	Term / Continuous
SANCHALAK	Performance-based mixed credit facility	Term + Continuous mix
UNMESH	Foreign trade finance (L/C, LTR, Time Loan)	Trade Finance
UDAYAN	Young entrepreneurs (age 21–35), seed capital	Term Loan
START UP	New technology-based business; 4% p.a. (SMESPD Circular No. 02/2025)	Term / Working Capital
CMSME Cluster	Min. 30 entrepreneurs; within 5 km radius	Cluster Financing

10. Microfinance — Key Notes

Microfinance refers to the provision of small-scale financial services — including microcredit, savings, and insurance — to low-income individuals and households who are excluded from the formal banking sector. In Bangladesh, microfinance is primarily channelled through:

• Microfinance Institutions (MFIs) — Grameen Bank, BRAC, ASA, Proshika, etc.
• Bangladesh Bank's own refinance schemes for MFIs (FID Circular No. 01/2020)
• Short-term Micro-Credit: Repayable within 12 months; amount determined by the Agricultural Credit Department of Bangladesh Bank

Important: Under SMESPD Circular No. 01/2025, Bangladesh Bank has barred refinancing support for CMSME loans routed through MFIs or peer organisations. MFIs retain their separate refinance windows (FID circulars).

11. Quick Q&A — Exam Ready

Q1. What is the current Master Circular for CMSME financing in Bangladesh?

SMESPD Circular No. 01, dated 17 March 2025, issued by Bangladesh Bank (SMESPD Department). It replaced the previous 2019 Master Circular (SMESPD Circular No. 02, dated 05 September 2019).

Q2. What is new in the 2025 CMSME Master Circular?

(i) Informal/Marginal enterprises formally recognized for the first time.
(ii) Group-based loans for Cottage and Micro entrepreneurs (5–10 members).
(iii) Annual turnover added as a classification criterion for Service and Trading.
(iv) Expanded loan ceilings — Medium Manufacturing raised to Tk. 100 crore.
(v) CMSME credit target set at 25% of total portfolio by 2025 and 27% by 2029.
(vi) New 10% cluster financing target introduced.
(vii) Finance Companies (FCs) included alongside Banks and NBFIs.

Q3. How is a Small Enterprise (Manufacturing) defined under the 2025 Circular?

Fixed assets (excl. land & building) of Tk. 75 lac to less than Tk. 15 crore AND/OR 26 to 120 employees. Maximum loan ceiling: Tk. 25 crore.

Q4. What are the maximum loan ceilings for a Medium Enterprise?

Manufacturing: Tk. 100 crore | Service: Tk. 75 crore | Trading: Tk. 10 crore.

Q5. Who is a Women Entrepreneur as per Bangladesh Bank policy?

A woman who is the sole proprietor, OR owns at least 51% share in a partnership/private limited company. Entitled to collateral-free loan up to Tk. 25 lac (personal guarantee) and BB's Credit Guarantee Scheme up to Tk. 50 lac.

Q6. What is the contribution of CMSME to the Bangladesh economy?

~25% of GDP; ~45% of manufacturing value addition; ~80% of industrial employment; ~90% of total industrial units; 70–80% of non-agricultural workforce; 75–80% of export earnings. Total 11.8 million economic units (BBS Economic Census 2024).

Q7. What is group-based financing under the 2025 CMSME Circular?

5–10 Cottage or Micro entrepreneurs can apply collectively for a loan. However, each member must submit a separate application along with an individual CIB report.

Q8. What is a Cottage Enterprise under the new circular?

A manufacturing enterprise with fixed assets (excl. land & building) of less than Tk. 10 lac and a maximum of 15 employees. Maximum loan ceiling: Tk. 20 lac.

12. Quick Summary & Mnemonic Tables

Classification Mnemonic — "I Can Make Some Money" (ICMSM)

🧠 Mnemonic: "I Can Make Some Money"

I = Informal/Marginal → Fixed Assets < Tk. 5 lac | Employees ≤ 10 | Loan: Tk. 5 lac
C = Cottage → Fixed Assets < Tk. 10 lac | Employees ≤ 15 | Loan: Tk. 20 lac
M = Micro → Fixed Assets Tk. 10L–75L (Mfg) | Employees ≤ 25 | Loan: Tk. 2 cr (Mfg)
S = Small → Fixed Assets Tk. 75L–15 cr (Mfg) | Employees 26–120 | Loan: Tk. 25 cr (Mfg)
M = Medium → Fixed Assets Tk. 15–50 cr (Mfg) | Employees 121–300 | Loan: Tk. 100 cr (Mfg)

Circular History — SME/CMSME Master Circulars

Circular	Date	Key Feature
SMESPD No. 01/2016	07 Jan 2016	Introduced Cottage & Micro in CMSME framework; women collateral-free up to Tk. 25 lac
SMESPD No. 02/2019	05 Sep 2019	Previous Master Circular — revised CMSME definition, sector-wise targets
SMESPD No. 01/2025	17 Mar 2025	Current Master Circular — Informal enterprises recognized, group loans, expanded ceilings, turnover criteria added, FCs included

Loan Ceiling Quick Reference (2025)

Type	Mfg Loan Max	Service Loan Max	Trading Loan Max
Marginal	5 lac	5 lac	5 lac
Cottage	20 lac	—	—
Micro	2 crore	50 lac	75 lac
Small	25 crore	8 crore	8 crore
Medium	100 crore	75 crore	10 crore

🧠 Loan Ceiling Mnemonic (Manufacturing): "Five Toes Walked Slowly, Hundred Miles"

Marginal = 5 lac | Cottage = 20 lac | Micro = 2 crore | Small = 25 crore | Medium = 100 crore

Last updated: March 2026 | Reference: SMESPD Circular No. 01 dated 17 March 2025; SMESPD Circular No. 02 dated 09 July 2025; BBS Economic Census 2024; Bangladesh Bank SMESPD Portal