Change attitude towards lending to SMEs

Banks and non-bank financial institutions should change their attitude towards lending to small and medium enterprises (SMEs) and ease access to finance, Industries Minister Nurul Majid Mahmud Humayun said yesterday.

"We are now giving more importance to big and influential businesses. But they don't repay. They just gobble up the money," the minister opined while speaking as the chief guest at the closing ceremony of the National Policy Dialogue on Priorities for SME Development in Bangladesh.

The SME Foundation, in association with International Labour Organization (ILO) Bangladesh, organised the event at Parjatan Bhaban in the capital's Agargaon.

Humayun said that providing small entrepreneurs with access to finance would pay off immensely as they could contribute to the economy in every corner of the country. "They will never run away after taking money. Rather, businesses from Gulshan and Banani are capable of flying after taking money," the minister added.

At the event, Nazim Hasan Sattar, general manager of the SME Foundation, and Gunjan Dallakot, ILO's SME development specialist in Bangladesh, jointly presented the keynote paper.

"There are many policies from different agencies, often uncoordinated and overlapping in Bangladesh," said Sattar.

While policy implementation remains an issue, he reminded that there was no single policy covering entire cottage, micro, small and medium enterprises (CMSME) in the country. "There is a general lack of concrete policy action to promote SMEs' productivity, competitiveness and market access, including in the export markets," he added.

The government should also look into alternative financing sources like equity investment, blended financial products and convertibles, Dallakot said. He further added that the scope and coverage of digital financial services in the country needed to be expanded.

"Credit rating agencies, monitoring mechanisms and tracking systems need to be developed to complement access to finance initiatives," he added. Dallakot also suggested developing a mechanism for low-cost and accessible standards and quality certification for CMSMEs' products and services in line with international standards.

Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry, questioned why women entrepreneurs were asked to show a guarantor while taking loans. "The lending process should be eased for women entrepreneurs to help them contribute to the economy," said Alam.

However, he urged coordination among ministries such as the finance and commerce ministries to ease the cost of doing business.

Among others, Md Ehsan-E-Elahi, secretary at the Ministry of Labour and Employment, Toumo Poutiainen, country director of ILO's Bangladesh Office, and Md Mafizur Rahman, managing director of the SME Foundation, also spoke at the event. Prof Md Masudur Rahman, chairperson of the SME Foundation, presided over the event.