91% of SMEs deprived of bank loans: Expert
FBCCI President Md Jashim Uddin said SMEs are the backbone of the economy but banks are reluctant to lend in this sector
Lending in the country's small and medium enterprise (SME) sector, in proportion to total bank lending, has declined over the past few years and around 91% of SMEs are currently deprived of bank loans, said Khondaker Golam Moazzem, FBCCI panel advisor and CPD research director.
"The 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 at a seminar on SME development at the FBCCI office in the capital on Sunday.
Presenting 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 Tk26,600 crore but this sector is neglected in the banks' credit structure. They are not paying attention to this huge profitable sector."
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Industries Minister Nurul Majid Mahmud Humayun was present as the chief guest at the seminar moderated by the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) President Md Jashim Uddin.
"Banks were not approved for making a profit by selling dollars only. It is not ethical. They should not widen the rural and urban disparity by only lending to urban big customers. Rather, it is their responsibility to balance the development," said Industries Minister Nurul Majid Mahmud Humayun.
The SME Foundation has to be financially enabled by quickly overcoming the government-level limitations, he said.
FBCCI President 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 have to be created every year and the small and medium sector will play a major role in this," Jasim Uddin said urging the banks to give loans to small and medium entrepreneurs through tripartite agreements with sector-based associations and district chambers, if necessary.
"Small entrepreneurs do not get the same government policy support as the big industries. Due to the tax and duty structure, imports from abroad are encouraged rather than buying raw materials and intermediate goods from the local market," SME Foundation Chairman Md Masudur Rahman said, calling for a purchase obligation from the local market for government projects.
