Micro, small and medium enterprises or MSMEs will be the key drivers in Bangladesh's transition to an upper middle income status, the central bank governor said yesterday.

“The global financial crisis acutely reminded us that we need two growth engines: export and domestic demand. Fortunately, we have been working on both of these engines by empowering MSMEs,” Atiur Rahman said at a conference on development of MSMEs in Bangladesh.

Southeast University organised the event chaired by Vice Chancellor Prof Anwar Hossain.

In Bangladesh, MSMEs account for 24 percent of total credit portfolio, 25 percent of total labour force, 32 percent of GDP, 40 percent of employment and 80 percent of industrial jobs, Rahman said.

“We have a young population who needs more and better jobs. We have actively leveraged our financial system for empowerment initiatives in agriculture, MSME, women entrepreneurship, and green financing,” Rahman said. These initiatives have created jobs and underpinned the country's domestic demand, he said.

He also highlighted what Bangladesh Bank has done to provide regulatory and financial support to MSMEs. He said the BB worked on both demand and supply-side constraints relating to MSMEs.

The central bank launched a dedicated department for SMEs in 2009. A target-based and market-friendly lending approach was instituted in 2010, Rahman said.

The BB has created its own refinancing window for MSME women entrepreneurs, dedicating at least 15 percent of total lending. They can receive collateral-free loans of up to Tk 25 lakh. Total SME lending tripled between 2010 and 2015, reaching more than 7.25 lakh recipients, Rahman said.

“You will also be happy to know that since 2010, credit disbursement always exceeded the target.”

Banks and financial institutions have been asked to ensure that small entrepreneurs receive at least 40 percent of their total SME portfolio, according to Rahman.

All banks and NBFIs have been asked to open a “Women Entrepreneurs Development Unit” in its head office and branch offices. “Also, we have a policy of group-based lending of Tk 50,000 or above, targeting micro women entrepreneurs,” he said.