"We are receiving good responses from banks and financial institutions now as against the initial period of forming the fund to encourage banks to provide credits to the SMEs," a senior BB official told the news agency. This will encourage growth of SMEs in the country, he added.

BB statistics show that seven banks and nine financial institutions disbursed the amount under the central bank's SME refinancing scheme.

Of the beneficiary enterprises, trading enterprises received the highest amount of credits followed by the industrial and service sector enterprises while the medium term credit was recorded higher, compared to working capital and long-term loans.

When asked, the BB official said initially they had to proceed in a liberal way to encourage banks providing credits to small entrepreneurs. Hence, credits flows to the trading sector were higher, he said.

"From now on, we will sanction refinance to banks and financial institutions examining their sector-wise credit disbursement portofolios," he said, adding if credits to the trading sector stand higher compared to the industrial one, we will discourage refinancing.

He said entrepreneurs of the agro-processing small industrial units, rice mills and less capital-intensive light engineering received a reasonable amount of credits under the refinancing scheme.

According to the Bangladesh Economic Review 2006, a total of Tk 1.9 billion was disbursed to banks and financial institutions as refinance till March. Of the amount, working capital financing was Tk 396 million, medium-term loan worth Tk 1.12 and the long-term finance stood at Tk 409 million.

The BB had in 2005 formed a Small Enterprise Fund (SEF) worth Tk 1.0 billion to provide refinance facility to the banks and financial institutions against their credits to the small and medium enterprises.