In the bustling markets of Bangladesh, from rural trading hubs to emerging industrial clusters, millions of small businesses were quietly shaping the nation's economic future. The cottage, micro, small and medium enterprises (CMSMEs) were more than just businesses -- they were the engines of employment, entrepreneurship, and inclusive growth.
Faisal Rahman, chief executive officer of Prime Bank, has said this in an interview with The Financial Express and elaborated on his bank's priority financing for this multifaceted sector of Bangladesh's economy.
"The CMSME sector is essential for inclusive growth in Bangladesh, acting as a key driver of job creation, economic diversification, and long-term development," says Mr Rahman.
He explains that the sector contributed an estimated 25-30 per cent of Bangladesh's GDP and accounts for nearly 70-80 per cent of non-agricultural employment. By creating income opportunities in rural and semi-urban areas, the sector reduces migration pressure on major cities while fostering entrepreneurship and strengthening supply chains across industries.
Recognising the strategic importance of the sector, the Prime Bank positioned itself as a key financial partner for CMSME entrepreneurs, offering a range of innovative financial solutions designed to support businesses at every stage of growth.
Rahman says their bank's approach went beyond traditional lending. The bank developed a diversified portfolio of products tailored to the unique needs of entrepreneurs, including working-capital loans, term financing, lease financing, hire-purchase facilities, and fixed-asset financing for machinery, vehicles, and infrastructure investments.
One of the bank's strongest contributions lies in expanding access to finance. For many small entrepreneurs, obtaining collateral remained a challenge. To break this barrier, Prime Bank has placed significant emphasis on collateral-free financing, particularly for cottage, micro, and small enterprises. Invoice-based financing solutions further help businesses manage cash flow and sustain operations during challenging periods.
"The Prime Bank has also partnered with SME Foundation and Bangladesh Bank under refinancing programmes to provide low-interest, collateral-free loans, making formal finance more affordable and accessible for underserved entrepreneurs," says the banker.
Despite economic headwinds, including inflationary pressures, rising borrowing costs, global geopolitical tensions, and energy-market volatility, the CMSME sector demonstrated remarkable resilience, according to him.
Compared with large corporate borrowers, small businesses often benefited from diversified exposures and closer connections to day-to-day cash flows, enabling faster monitoring and more flexible restructuring when needed.
While repayment challenges did exist, particularly among informal enterprises with limited financial buffers, recovery in the CMSME segment was often more gradual yet consistent.
"By contrast, large corporate defaults can create broader systemic risks and typically involve more complex recovery processes."
He says the barriers to finance evolved over time and now collateral was no longer the primary obstacle for many entrepreneurs. "Instead, challenges often stem from informality, documentation gaps, and limited financial literacy."
He mentions that positive policy interventions from Bangladesh Bank have already helped address these issues.
For example, allowing loans up to Tk 0.5 million without a trade licence for informal and marginal enterprises lowered entry barriers for first-time borrowers. The Prime Bank believes wider adoption of cash-flow-based lending, simplified documentation requirements, digital credit -assessment tools, and expanded agent banking networks could further strengthen financial inclusion.
The bank has placed particular emphasis on supporting segments that are critical to inclusive economic development -- women entrepreneurs, young entrepreneurs, and rural businesses.
For women-led enterprises, the bank has offered dedicated financing programmes featuring collateral-free facilities, simplified documentation, and flexible repayment structures.
"Such initiatives help women entrepreneurs expand businesses across trade, services, and light manufacturing sectors while aligning with national financial-inclusion goals," Mr. Rahman says.
He also went on: young entrepreneurs and startups also received focused support through flexible financing solutions designed to encourage innovation, self-employment, and sustainable business growth. These facilities helped new business owners build credit histories and scale their ventures with confidence.
In rural Bangladesh, where access to formal financial services remained limited, Prime Bank is expanding outreach through rural banking networks, cluster-based lending models, and accessible working -capital solutions.
"These initiatives are helping bridge the urban-rural financing gap while supporting agricultural and agro-linked enterprises," says the CEO of Prime Bank.
Technology is another area where Prime Bank saw transformative potential. The bank is actively investing in digital banking, automation, agent banking, and fintech-enabled services to make financing faster, simpler, and more accessible.
Through digital platforms, entrepreneurs can manage transactions and access banking services with reduced dependence on physical branches. At the same time, agent-banking networks are extending financial services to underserved communities and strengthening last-mile financial inclusion.
"Prime Bank is also exploring data-driven credit-assessment methods that leverage transaction behaviour and cash-flow patterns to improve lending decisions while reducing documentation burdens."
Looking ahead, the prospects for Bangladesh's CMSME sector remains promising. So, the rapid digitisation, expanding financial inclusion, growing domestic demand, and stronger integration into industrial supply chains are expected to create significant growth opportunities over the next five years.
Rahman, however, thinks the challenges remained there as informality, limited financial literacy, weak record-keeping practices, inflation, energy-price volatility, climate-related risks, and technology -adoption gaps continued to affect many small businesses.
"…ensuring that entrepreneurs can successfully adapt to a rapidly evolving digital economy will be critical for long-term competitiveness."
Prime Bank believes unlocking the full potential of the CMSME sector requires coordinated action from all stakeholders. The government could support entrepreneurs by simplifying business registration, taxation, and compliance procedures while improving infrastructure and industrial facilities.
Alongside, the regulators could deepen financial inclusion through cash-flow-based lending frameworks, alternative credit-assessment methods, and stronger credit -information systems.
Meanwhile, banks and financial institutions must continue innovating through digital banking, fintech integration, agent banking, and simplified lending processes.
The Prime Bank's CEO, Mr Rahman, notes as the country moves toward its next phase of economic development, the CMSME sector would remain at the heart of that journey.
"By expanding access to finance, embracing innovation, and championing inclusive growth, Prime Bank is helping ensure that millions of entrepreneurs have the resources and opportunities needed to turn ambition into sustainable economic progress," the banker concludes.
mufazzal.fe@gmail.com
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