Structural reforms of loan disbursement process, less documentation process, establishing a specialized SME bank, a comprehensive SME database, policy reforms, bank-SME good relation, cash flow based loan sanction, considering working capital loan as term loan and considering large and small investors equally will pave the CMSMEs to flourish as the sector is the lifeline of our economy, experts suggested.
In discussion meeting titled ‘Procedures of availing loan from SME stimulus package’ between SME Foundation and Dhaka Chamber of Commerce and Industry (DCCI) held on Tuesday. Chairperson of SME Foundation Professor Dr. Md. Masudur Rahman joined as the chief guest and Managing Director of SME Foundation Dr. Md. Mafizur Rahman joined as special guest.
DCCI President Rizwan Rahman in his opening remarks said that contribution of CMSME to the GDP is only 25 percent whereas it is 35 percent to 60 percent in Philippines, Vietnam, Sri Lanka and China. According to a local study, overall income from the CMSME sector reduced to 66 percent in 2020 in compared to 2019 and 76 percent products remained unsold, he said. According to a DCCI study, it was found that due to pandemic 62 percent CMSMEs have to cut their manpower and 90 percent are continuing their businesses with less capacity. 73 percent of the stimulus packages have been distributed but most of the CMSMEs are still deprived of that fund.”
He also said, “The medium enterprises have good relation with Banks in compared to small entrepreneurs because of lack of documentation and confidence. A CMSME friendly fund and easy access of loan management system is the demand of time now, he added. If Bangladesh Bank can give a guidelines to the banks that they have to disburse a specific amount of loan to the CMSMEs then banks will have to comply with.”
Chairperson of SME Foundation Professor Dr. Md. Masudur Rahman said, “SMEs are the lifeline of our economy and during the pandemic we did able to uphold this image to the policy makers. According to the data of 2013 SMEs are 78 lakh but at present this number is more than 1 crore. India and China their GDP 60 percent comes from SMEs. SME entrepreneurs capacity building is more important for financial inclusion. Need more training for financial literacy. Entrepreneurs outside Dhaka are more severe. Framework reforms for loan needed. Ease of doing business need reforms as early as possible.”
Dr. Md. Mafizur Rahman, Managing Director, SME Foundation said we have disbursed about BDT 122 crore within one and half months. And this amount went to SMEs, he added. We cannot handle the money, we have not that mandate as SME Foundation. But he reiterated establishing a specialized SME bank. 200 crore taka is not enough for rest of the SMEs but by 31st December this year we will complete disbursement of this fund. Return rate of small entrepreneurs are quite satisfactory but we need to ensure easy access of loan. We requested all banks to give their 50 percent loan to the women entrepreneurs.
Suman Chandra Saha, Assistant General Manager of SME Foundation presented the keynote paper. He said that the SME Foundation from its own fund, under credit whole selling programme already disbursed BDT 122 crore through the existing banking channel. 2186 entrepreneurs from 40 Districts got loan from this fund out of which 524 were women entrepreneurs. Finance Division has already allocated a fund of another BDT 200 crore to SME Foundation at a rate of 4 percent interest which is under process of disbursement, he added. This fund will aim to SME sub-sector and cluster based small entrepreneurs and 30 percent will go to women entrepreneurs. He also said that if any entrepreneur failed to get loan from the bank, he or she will be clarified the reason of not getting loan by that bank.
NKA Mobin, FCS, FCA, Senior Vice President, DCCI said SME Foundation and Bangladesh Bank need to work jointly on policy reforms issues. He also said that cash flow based loan should be introduced as a term loan especially for the service sector, he said. Rashedul Karim Munna, Director, DCCI requested to redefine the definition of SME. Banks should consider less documentation process for the SMEs, he added.He also urged for aspecialized SME bank to safeguard the SMEs. A database for SME sector should be prepared by this year and a 3-5 year strategy paper needs to be prepared.
Lastly he suggested to bring most of the CMSMEs under the stimulus package.
Khairul Majid Mahmud, Director, DCCI said CMSMEs sometimes cannot gather all necessary documents for getting loans due to lack of capacity. Large businesses can manage funds from the banks easily but small businesses cannot get that easily. He also said that women and men should be evaluated in the equal manner in terms of loan approval.
Saifuddowla Shamim, Head of SME, IDLC Finance Limited said SME entrepreneurs in the country are more than 80 lakh. He also urged on financial literacy for the CMSME sector.They have already trained 700 women entrepreneurs, he informed. SMEs are the pay master, they are good in refund, so should get priority, he added.
