"The big firms are required from growth and productivity considerations, but SMEs are required from employment and equity considerations," he said addressing a seminar on problems of SME financing.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) organised the seminar in Dhaka yesterday on the sidelines of a week-long fair of SMEs that began at Bangladesh-China Friendship Conference Centre on Monday.

The central bank governor also urged the banks and financial institutions to give the SMEs financial support by evaluating their cash flow, income index and asset value, not evaluating the balance sheet.

Mentioning some banks' reluctance to expand their SME credit portfolio, he said they do not consider SME lending attractive and profitable undertaking and also consider the SMEs high-risk borrowers.

The banks also feel that the SMEs have low capital base, insufficient assets and they are unable to comply with collateral requirements of the banks, he said.

"I think banks can identify SME sector as the thrust sector. It will not be difficult for the banks to charge lower rate of interest for SMEs without sacrificing recovery of cost of fund and maintaining reasonable profit," he suggested.

He also said, "We should attempt to strengthen the banks and institutions, particularly smaller ones, dealing with SME financing and find ways and means to minimise costs for management of SME financing."

Speaking at the function, Mohammad Ayub Mia, additional secretary of industries ministry, said as there is no comprehensive study on SME, the industry ministry with assistance from Asian Development Bank has taken an initiative to conduct a study.

FBCCI President Mir Nasir Hossain said due to limited capital base and stringent collateral requirements SME sector is facing financial constraints.

MA Baqui Khalily, professor of department of finance of Dhaka University, presented a keynote paper at the seminar. Among others, Standard Chartered Bank Bangladesh Chief Executive Officer Osman Morad, National Bank Ltd Managing Director M Aminuzzaman, Grameen Bank General Manager Mozammel Haque, and FBCCI directors MA Rouf Chowdhury, Dewan Sultan Ahmed and Abdur Razzaque spoke at the seminar.

In another seminar on promotion of SMEs for industrialization, Law, Justice and Parliamentary Affairs Minister Moudud Ahmed put emphasis on significance of the SME sector in the national policy to retain the growth of the sector.

The minister also said banks should change their loan sanctioning process to give loans to the SMEs.

He urged bankers to keep faith in the SMEs and said," We must have faith in our entrepreneurs."

"We need a political thinking to provide facilities for the SMEs and other sectors," said Anwarul Kabir Talukder, state minister for power, while addressing the seminar as a special guest.

Replying to stakeholders' demand for uninterrupted power supply to the SMEs, the power minister said," We have expanded 88,000 kilometers distribution line and added 1275 MW electricity to the national grid." He however admitted the shortage in peak hours.