Why Small and Medium Enterprise Loan is Important for Banks

The main focus of commercial banks is to develop human and economic position of a country. Its function is not limited only to providing and recovering of loan but also try to develop the economy of a country. So for this reason, SME program of commercial banks bears number of significance importance. 

• Support Small Enterprise: The small enterprise, which requires small amount of  loan, but they have no easy access to the banks and financial institutions.

• Economic Development: Economic development of country largely depends on the small and medium sales enterprises. Such as, if we analyze the development history of Japan, the development of small & medium sales enterprises expedites the development of that country.

• Employment Generation: The commercial bank gearing employment opportunities by two ways: Firstly, by providing loan to the small enterprises expanding, these businesses require more workers. Secondly, Small & Medium Enterprise (SME) program requires educated and energetic people to provide support to entrepreneurs. 

• Promote Micro Enterprise: Throughout the Union, more and more micro enterprises are being created. The new definition takes this development into account by setting financial thresholds for them. This refinement aims to encourage the adoption of measures addressing the specific problems micro enterprises face, especially during the start-up phase.

• Encourage Manufacturing: A focus of commercial bank is to encourage manufacturing by the entrepreneurs who are producing by purchasing various types of materials. CROs try to educate them to produce material, if possible because if they can produce in line of purchase profits will be high.