Top bankers and banking specialists on Monday gathered at a seminar in Dhaka to identify key barriers obstructing Bangladesh's cottage, micro, small and medium enterprises (CMSMEs) from participating in the global trade network.
The obstacles they identified include financial limitations, credit-history gaps, high transaction costs, complex documentation requirements and limited international connections.
The experts called for a dedicated policy framework, improved collaboration between policymakers and operational bankers, trade financing solutions, awareness programmes addressing KYC (Know Your Customer) and AML (Anti-Money Laundering) challenges, as well as training initiatives for both bankers and small ventures.
The Bangladesh Institute of Bank Management (BIBM) organised the seminar titled 'International Trade Finance and SME: Bridging the Gap'.
Dr Shah Md Ahsan Habib, professor (Selection Grade) at BIBM, delivered a keynote paper at the event, while Dr Md Akhtaruzzaman, director general of BIBM, chaired it.
Md Abdus Salam Azad, supernumerary professor at BIBM, Mohammad Abu Jafar, acting managing director of Dhaka Bank Limited and M Khurshed Alam, deputy managing director of Eastern Bank, also spoke at the event.
During his presentation, Dr Shah Md Ahsan Habib talked about the policy approach towards SMEs and CMSMEs, noting both of them narrow focus within national boundaries.
He shed light on the inadequate attention given to trade finance as a distinct area of concern. Dr Habib expressed concern over the lack of specialised desks and products from financial institutions targeting trade finance for SME traders.
He underscored the need for SMEs to be well-informed and equipped to handle KYC and AML challenges to get access to necessary trade financing schemes.
"Considering the current overall circumstance in the country, documentary collection might be the most suitable option for SME traders at this moment. However, banks must have the right kind of approach to support SME exporters in this regard. There must also be the required policy initiative to ensure legal enforceability of purchase-sale contract", he added.
Md. Abdus Salam Azad underscored the importance of export diversification through SME trade financing. He drew attention to the underappreciated status of the CMSME sector, citing its limited access to financial resources.
Azad also called for a comprehensive study to promote cluster development and identify SMEs across the country.
Mohammad Abu Jafar advocated for a distinct trade policy tailored to CMSMEs, believing it would strengthen the sector and contribute to the nation's economy.
He lamented the absence of separate trade financing initiatives for CMSMEs, which hampers their participation in international trade.
M Khurshed Alam pointed out the lack of favourable policy support for CMSME trade financing.
He commented on the preferential treatment received by the readymade garment (RMG) sector from the central bank, contrasting it with the relatively limited support extended to the SME sector.
Dr Md Akhtaruzzaman suggested that the country's banking sector could play a crucial role in training customers to effectively export their products abroad.
He urged banks to tap into their own potential to promote trade financing for CMSMEs, without relying solely on government intervention.
Dr Akhtaruzzaman also emphasised the importance of the SME Foundation in raising awareness to strengthen both the sector and the nation's economy.
In a statement, Kazi Sayedur Rahman, chairman of the BIBM Executive Committee and deputy governor of the Bangladesh Bank, said, "With the regulatory support of Bangladesh Bank, Banks and NBFIs have come forward for the development of the SME sector under the close monitoring and supervision of BB".
Total loan and advance outstanding in the CMSME sector were 80.6 per cent of the annual CMSME net outstanding based target of BDT 2855.65 billion set by banks and NBFIs for the year 2022, he said.
The BB is continuously issuing policies, procedures, and other incentives to the CMSME sector to boost international trade transactions, Rahman added.
The seminar attracted a diverse array of participants, including senior bank executives, academicians, media representatives and faculty members of BIBM.
The event commenced with an opening address by Dr Ashraf Al Mamun, associate professor and director of Research, Development & Consultancy at BIBM.
sajibur@gmail.com
