Bank loans

91% of SMEs deprived of bank loans: Expert

FBCCI Chairman, Md Jashim Uddin, said SMEs are the backbone of the economy, but banks are reluctant to lend in this sector.

TBS Report

August 14, 2022, 8:45 p.m.

Last modification: August 14, 2022, 8:46 p.m.

One of the factors contributing to the failure of SMEs is the lack of access to affordable institutional financing. Photo: Mumit M/TBS

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One of the factors contributing to the failure of SMEs is the lack of access to affordable institutional financing. Photo: Mumit M/TBS

Loans in the country’s small and medium-sized enterprises (SME) sector, as a proportion of total bank loans, have been declining over the past few years and around 91% of SMEs are currently without bank loans, said Khondaker Golam Moazzem, advisor to the FBCCI and CPD panel. Research Director.

“Commercial banks provide only 18% of their total disbursed loans to this sector, which is received by only 9% of SMEs. This is not good for sustainable development,” he said during a seminar on SME development at the FBCCI office in the capital on Sunday.

During the presentation of the keynote address, Golam Moazzem said, “The lack of development of the SME sector is responsible for the current growing inequality in the country. According to the World Bank, the country’s potential market for SME loans is Tk 26,600 crore, but this sector is neglected in the credit structure of banks. They do not pay attention to this huge profitable sector.

Industry Minister, Nurul Majid Mahmud Humayun was present as the chief guest of the seminar moderated by the Chairman of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Md Jashim Uddin.

“Banks weren’t allowed to make a profit selling only dollars. It’s unethical. They shouldn’t widen the rural-urban disparity by lending only to large urban customers. rather, it’s their responsibility to balance development,” Industries said. Minister Nurul Majid Mahmud Humayun.

The SME Foundation must be financially enabled by quickly overcoming limitations at the government level, he said.

FBCCI Chairman, Md Jashim Uddin, said SMEs are the backbone of the economy, but banks are reluctant to lend in this sector.

“To build a developed Bangladesh by 2041, some two million new jobs need to be created every year and the small and medium enterprise sector will play a major role in this,” said Jasim Uddin, urging banks to grant loans. loans to small and medium entrepreneurs through tripartite agreements with sectoral associations and borough chambers, if necessary.

“Small entrepreneurs do not enjoy the same government policy support as large industries. Due to the structure of taxes and duties, imports from abroad are encouraged rather than buying raw materials and intermediate goods in the local market,” said SME Foundation Chairman Md Masudur Rahman. , calling for a requirement to buy from the local market for government projects.