SME financing may exceed target

Shamsul Huda | Published: December 19, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Small and medium enterprises (SMEs) are continuously achieving targets of financing set by the central bank, sources said.
Loans in clusters without collateral, trends of shifting from trading to manufacturing, supporting women entrepreneurship and refinancing schemes are helping the sector to grow.
According to central bank's statistics, the SME financing by the banks and non-bank financial institutions (NBFIs) in first three quarters of the current calendar year has already crossed Tk 738 billion against its target of Tk 890 billion.
The SME financing also amounted 20 per cent more than the target set by the central bank in the last calendar year.
General Manager of SME and Special Programmes Department of Bangladesh Bank (BB) Md Masum Patwary said, "As per disbursement trend in the current quarter, it is expected that the financing may exceed our target."
He said gradually the banks and NBFIs are becoming dedicated for SMEs and they are also being supported by the central bank with refinancing facilities.
He said at this moment it is a challenge to encourage the financial institutions to focus on manufacturing based sectors along with the existing dominating trading sectors.
For macro-economic development by supporting the rural small entrepreneurs the central bank has taken initiatives to bring the villages under SME financing and provide collateral-free loans.
According to the central bank, in last five years more than two million entrepreneurs have received Tk 3.34 trillion in SME loans.
Out of them, some 109,000 women have received Tk 121 billion.
As per the statistics, of the two million entrepreneurs only 421,000 people, only 21 per cent, received industrial loans.
The BB official said as more banks are becoming dedicated to SME financing, loans are being given in diversified ways including the small entrepreneurs in the villages.
A senior banker said among the most SME dedicated banks are Islami Bank, Mutual Trust Bank, Mercantile Bank, Prime Bank, Dhaka Bank and Eastern Bank.
He said until now the banks are financing in SMEs from their own funds and the central bank's refinancing is below one per cent of the total SME financing by 56 banks and 31 NBFIs.
Another central bank official said, "We are requesting the commercial banks to be more dedicated to SME financing bringing more villagers under their scheme."
He said women entrepreneurs are risk-free and they are doing better by taking loans from the financial institutions under SME.
He said the non-performing loan status among women entrepreneurs is less than one per cent against the existing double-digit status in the overall financial products business.
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