Credit wholesaling programme starts
Monday, 3 May 2010
FE Report
The SME Foundation started credit wholesaling programme around the country to boost the growth of the potential sector.
"Commercial banks and non-financial institutions often show their reluctance to give loan to SMEs as they find it riskier," Aftab ul Islam, chairman of Small and Medium Enterprise Foundation (SMEF) said.
He was talking while handing over a cheque of Tk. 20 million to MIDAS Financing Ltd (MFL) in the city Sunday.
"The number of small entrepreneurs without access to credit is large" he said adding the purpose of the credit wholesaling programme is to ensure the access to credits to targeted SMEs mainly who are treated as the missing middle in context of accessing to formal financial services.
The majority of our small and medium entrepreneurs are women, belonging to the lower middle class. But they fail to get funding from commercial banks due to their inability to provide collateral, Mr Islam said, commercial banks are still reluctant to deal with small and medium enterprises.
"The common misunderstanding is that the SMEs might fail to pay back loans which is not true to the fact. Women entrepreneurs should give more priority to bring them in production for women's empowerment and gender equality."
Despite the fact that financing remains at the top of the list of problems faced by the SMEs, their inability to provide collateral against loans remains a disadvantage.
The majority of them are in dire need of operating fund than investment fund, he added.
Small and medium entrepreneurs also suffer from other common constraints such as difficulties in procuring raw materials, lack of access to relevant business information, low technological capabilities, and regulations that generate market distortions.
Rokiya Afzal Rahman, chairman of MFL said fostering the growth of SMEs is the key to economic progress for both developing and developed countries.
The SMEF will offer funds mainly for the manufacturing sector at around 4.0 per cent interest rate to the MFL which will extend the loan to the SMEs at 9.0 per cent.
The SME Foundation started credit wholesaling programme around the country to boost the growth of the potential sector.
"Commercial banks and non-financial institutions often show their reluctance to give loan to SMEs as they find it riskier," Aftab ul Islam, chairman of Small and Medium Enterprise Foundation (SMEF) said.
He was talking while handing over a cheque of Tk. 20 million to MIDAS Financing Ltd (MFL) in the city Sunday.
"The number of small entrepreneurs without access to credit is large" he said adding the purpose of the credit wholesaling programme is to ensure the access to credits to targeted SMEs mainly who are treated as the missing middle in context of accessing to formal financial services.
The majority of our small and medium entrepreneurs are women, belonging to the lower middle class. But they fail to get funding from commercial banks due to their inability to provide collateral, Mr Islam said, commercial banks are still reluctant to deal with small and medium enterprises.
"The common misunderstanding is that the SMEs might fail to pay back loans which is not true to the fact. Women entrepreneurs should give more priority to bring them in production for women's empowerment and gender equality."
Despite the fact that financing remains at the top of the list of problems faced by the SMEs, their inability to provide collateral against loans remains a disadvantage.
The majority of them are in dire need of operating fund than investment fund, he added.
Small and medium entrepreneurs also suffer from other common constraints such as difficulties in procuring raw materials, lack of access to relevant business information, low technological capabilities, and regulations that generate market distortions.
Rokiya Afzal Rahman, chairman of MFL said fostering the growth of SMEs is the key to economic progress for both developing and developed countries.
The SMEF will offer funds mainly for the manufacturing sector at around 4.0 per cent interest rate to the MFL which will extend the loan to the SMEs at 9.0 per cent.