SME sector pays high interest as BB delays release of fund to banks
Tuesday, 26 June 2007
FE Report
Bankers of the small and medium enterprise (SME) sector Monday said belated disbursement of fund from the central bank to the commercial banks is one of the reasons behind high interest rate for financing the sector.
The bankers said this at a seminar on focus group discussion on SME Refinancing Scheme held at a city hotel.
IFC-SouthAsia Development Facility (SEDF) in collaboration with Bangladesh Bank (BB) organised the seminar to enhance SMEs loan accessibility to the commercial banks and Non-Banking Financing Institutions (NBFIs).
BB Executive Director Abul Quasem, BB General Manager of Agricultural Credit and Special Programme Department (ACSPD) Dasgupta Asim Kumar, BB deputy General Manager M Adul Haque, IFC-SEDF senior financial markets specialist Karma, IFC-SEDF financial market specialist Tanmi Haque were present, among others, at the programme.
Representatives of One Bank, Dutch-Bangla Bank, Brac Bank, Jamuna Bank, Eastern Bank, Mercantile Bank, National Credit and Commerce Bank, Dhaka Bank, Basic Bank and the City Bank were present at the first session.
Besides, representatives of the IDLC, Phoenix Leasing, Midas Financing, United leasing, Uttara Finance and Investment, Fareast Finance and Investment, Peoples Leasing and Financial Services, Industrial and Infrastructure Development, National Housing and International Leasing and Financial Services were joined in the second session.
The bankers at the programme also stressed the need for training of SME entrepreneurs, technical assistance, complete definition of SMEs in order to enhance their knowledge in obtaining loans and credits.
They also said simplification of the existing loan procedures were necessary for smooth growth of the sector.
The seminar had two separate sessions one with the banks and the other with NBFIs.
"The BB has provided a proper guideline for the small enterprises but it lacked the definition and guidelines for the medium enterprises," said one banker at the seminar.
Abul Quasem, central bank executive director, said for expansion of credit flow to SME sector, the banks and financial institutions should come forward by reducing their loan costs.
"You may introduce user friendly loan product for the sector, simplify loan documentation and sanction process, go for collateral substitution and counseling services for the new entrepreneurs to flourish," Quasem suggested to the bankers.
He said recently the BB has introduced refinancing scheme for women entrepreneurs at reduced rate of interest.
The SME market potential is estimated to be Tk 390 billion and the number of potential clients around 1.3 million.
BB General Manager of the ACSPD said the BB has so far disbursed Tk 4.55 billion to the banks and financials institutions against their financing to 5393 SMEs across the country.
The BB, government of Bangladesh, World Bank and Asian Development Bank are providing the revolving fund, which can be utilized for refinancing in the days ahead, BB GM added.
Ten per cent of the fund has been kept aside for women entrepreneurs, he added.
Bankers of the small and medium enterprise (SME) sector Monday said belated disbursement of fund from the central bank to the commercial banks is one of the reasons behind high interest rate for financing the sector.
The bankers said this at a seminar on focus group discussion on SME Refinancing Scheme held at a city hotel.
IFC-SouthAsia Development Facility (SEDF) in collaboration with Bangladesh Bank (BB) organised the seminar to enhance SMEs loan accessibility to the commercial banks and Non-Banking Financing Institutions (NBFIs).
BB Executive Director Abul Quasem, BB General Manager of Agricultural Credit and Special Programme Department (ACSPD) Dasgupta Asim Kumar, BB deputy General Manager M Adul Haque, IFC-SEDF senior financial markets specialist Karma, IFC-SEDF financial market specialist Tanmi Haque were present, among others, at the programme.
Representatives of One Bank, Dutch-Bangla Bank, Brac Bank, Jamuna Bank, Eastern Bank, Mercantile Bank, National Credit and Commerce Bank, Dhaka Bank, Basic Bank and the City Bank were present at the first session.
Besides, representatives of the IDLC, Phoenix Leasing, Midas Financing, United leasing, Uttara Finance and Investment, Fareast Finance and Investment, Peoples Leasing and Financial Services, Industrial and Infrastructure Development, National Housing and International Leasing and Financial Services were joined in the second session.
The bankers at the programme also stressed the need for training of SME entrepreneurs, technical assistance, complete definition of SMEs in order to enhance their knowledge in obtaining loans and credits.
They also said simplification of the existing loan procedures were necessary for smooth growth of the sector.
The seminar had two separate sessions one with the banks and the other with NBFIs.
"The BB has provided a proper guideline for the small enterprises but it lacked the definition and guidelines for the medium enterprises," said one banker at the seminar.
Abul Quasem, central bank executive director, said for expansion of credit flow to SME sector, the banks and financial institutions should come forward by reducing their loan costs.
"You may introduce user friendly loan product for the sector, simplify loan documentation and sanction process, go for collateral substitution and counseling services for the new entrepreneurs to flourish," Quasem suggested to the bankers.
He said recently the BB has introduced refinancing scheme for women entrepreneurs at reduced rate of interest.
The SME market potential is estimated to be Tk 390 billion and the number of potential clients around 1.3 million.
BB General Manager of the ACSPD said the BB has so far disbursed Tk 4.55 billion to the banks and financials institutions against their financing to 5393 SMEs across the country.
The BB, government of Bangladesh, World Bank and Asian Development Bank are providing the revolving fund, which can be utilized for refinancing in the days ahead, BB GM added.
Ten per cent of the fund has been kept aside for women entrepreneurs, he added.