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Prudential Regulation Guidelines For Small Enterprise Financing : 1.

Background : Bangladesh Bank vide BRPD circular No 07, Dated 03/11/2004 has forwarded the above mentioned Prudential Regulations for Small Enterprise (SE) 2. Guidelines Objective : To promote and establish the small Enterprises of Bangladesh to develop and implement pragmatic and value added products efficient credit approval & risk management processes, sound organization structure, strong credit administration and a robust collection procedures. 3. Small Enterprises means ideally not a public limited company, a) A Service Concerns with total assets at cost excluding land and building from Tk 50,000/- to 50 Lac and does not employee more than 25 persons b) A Trading Concern with total assets at cost excluding land and building from Tk 50,000/- to 50 Lac and does not employee more than and 25 persons c) A Manufacturing Concern with total assets at cost excluding land and building from Tk 50,000/- to 15 Crore and does not employee more than and 50 persons 4. Customer Segment a) Nature of Borrower : - Individual/Proprietorship Firms - Partnership Firms - Private Limited Company b) Nature of Business : - Service Concern - Trading Concern - Manufacturing Concern c) Area of Business Program Product Guidelines PPG 1) Any form of financing facility extended or bills purchased/discounted 2) Subscription to or investment in share, participation term certificates, term finance certificates. 3) Any financing obligation undertaken of behalf of the person 4) Loan repayment financial guarantees issued on behalf of the person 5) Acceptance/Endorsements made on account 6) Nature of Loan - Working Capital CC (Hypo), CC (Pledge), Packing Credit, Overdraft etc. - Fixed Assets 7) Geographical Coverage : The geographical areas that are covered by AB Branches located at urban & rural areas 8) Nationality : Bangladeshi 9) Eligibility : - Age 20-55 years, - Minimum Income - Experience : Adequate technical and managerial expertise to run the business. - Education : Minimum primary education - Liability : Who are not loan defaulters in any financial institution 10) Selection Criteria for the Small Enterprise Financing : - Employment Generation

- Supplies - Sales - Performance - Management 11) Per Party Exposure Limit : The minimum and maximum exposure of a bank on a single SE shall remain within the range of Tk 2 Lac and Tk 50 Lacs respectively subject to the following : a) In case of working capital finance- Maximum up to 80% of the net required working capital. Bank shall calculate the net required working capital as per appendix set forth. b) In case of fixed assets purchase- Maximum up to 70% of the purchase prize. 12) Security : Guidelines for security requirements for Small Enterprise Financing : 1) Loan limit shall be backed by tangible security and any other form of security with appropriate margins. 2) All facilities provided to SEs Should be secured by the banks in the following manner: i) Hypothecation on the inventory, receivable, advances payments, plants & machineries. ii) Registered mortgage over immovable properties including land, building & structure of the enterprise/ proprietor/ directors/ guarantor/ with registered irrevocable power of attorney. iii) Personal Guarantee of the borrowers/ owners of the SEs, in case of limited companies, guarantees of all directors other than nominee directors. iv) Personal Guarantee of the Spouse. v) One third party personal guarantee. vi) Post dated cheque for each installment including full interest where loan is repaid on installment basis. vii) One undated cheque for continuous loan like CC (Hypo), CC (Pledge) etc. 13. Minimum Margin Requirement : For any expose bank shall follow the minimum margin requirement as prescribed by Bangladesh Bank (if any)/ as prescribed by Agrani Bank Limited for each product of Small Enterprise Financing. 14. Verification of Personal Details and Quotation : Personal Details should be verified as per Borrowers Fact Sheet

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