Bangladesh Bank has issued licence to Agrani SME Financing Company Ltd, a subsidiary financial institution of Agrani Bank Ltd, to keep the ‘Small Enterprises Development Project’ functioning.

The new financial institution was awarded license on January 31 this year under the section 4 (1) of the Financial Institution Act, 1993.

With the emergence of the new company, the total number of country’s financial institutions rose to 30.

About the rationale behind BB’s move of awarding a fresh license amid a volatile financial sector, a BB official said it was only to facilitate SME activities of Small Enterprises Development Project.

In recent times, the existing financial institutes have been passing through turmoil situation as they mostly depend on call money market which recently witnessed a surge in interest rate by around 190 percent.

BB’s new move, however, might not be proved to be very effective in near future as the institution will have to compete with the existing companies having strong infrastructure and network, Akhter H Sannamat, a financial market analyst observed.

“I don’t find it necessary to open any new financial company now, though it might have some true special functions,” he said.

“There are many banks and financial institutions that already have penetrated into the SME sector. For the last six to seven months, BB also directed them to enter into the sector,” Sannamat said, adding that it would be very “challenging” for it to survive.

“The existing companies will find them in better positions as they have the necessary infrastructure and network but the new company has to struggle as it will take much time for it,” he also observed.

The cabinet on December 31 in 2009 approved a proposal on the formation of Agrani SME Financing Company Ltd by turning small enterprises development project into a subsidiary of Agrani Bank Ltd.

News: Daily Sun/ feb-07-2011