Ensure easy loan disbursement for SMEs
Structural reforms are needed to ensure quick and easy loan disbursements for the cottage and micro industry and small and medium enterprises (SME), according to speakers at a webinar yesterday.
The webinar, styled "Procedures of availing loan from SME stimulus package", was organised by SME Foundation and the Dhaka Chamber of Commerce & Industry (DCCI).
An easier documentation process, establishing a specialised SME bank and a comprehensive SME database along with policy reforms could pave the way for these local industries to flourish, speakers said.
Besides, better bank relations would improve the cash flow as loans could be sanctioned based on the company's working capital.
"Medium enterprises have better bank relations compared to small entrepreneurs because the latter lacks documentation. A friendly fund and easy access to loan management systems are the needs of the day," said DCCI President Rizwan Rahman.
He also said banks should be made to comply with loan disbursement figures stipulated by Bangladesh Bank.
"The SMEs are the lifeline of our economy and during the pandemic, we were able to uphold this image with policymakers," said Masudur Rahman, chairperson of SME Foundation.
Building the capacity of the SME entrepreneurs is vital for their financial inclusion while there are severe lacks in their financial literacy, especially of those outside Dhaka, he said.
"So, the framework for loan disbursements needs reform," Rahman said.
Changes need to come about in the ease of doing business in Bangladesh as soon as possible and various government chambers should work to build capacities of the SMEs, he added.
"We disbursed about Tk 122 crore within one-and-a-half months after the package was rolled out and this amount went to the SMEs but we cannot handle the money. We do not have that mandate," said Mafizur Rahman, managing director of SME Foundation.
Against this backdrop, he reiterated the need to establish a specialised SME bank.
"The entire sector cannot be covered with just Tk 200 crore and this fund will be completely disbursed by the end of this December," he said.
"The return rate of small entrepreneurs is quite satisfactory but we need to ensure easy access to loans. So, we requested all banks to give 50 per cent of loans to women entrepreneurs," Rahman added.
Saifuddowla Shamim, head of SME at IDLC Finance, said there were more than 80 lakh SME entrepreneurs in the country who need to improve their financial literacy.
"We have already trained 700 women entrepreneurs," he said, adding that the SMEs pay their loans back in a timely manner, so they should get priority.
Suman Chandra Saha, assistant general manager of SME Foundation; NKA Mobin, senior vice president of the DCCI, and directors Rashedul Karim Munna and Khairul Majid Mahmud were present.