FCBs yet to be active about SME credit operations

Posted by BankInfo on Mon, Dec 17 2012 07:29 am

The foreign commercial banks (FCBs) operating in Bangladesh are yet to make any significant contribution to the growth and promotion of small and medium entrepreneurs (SMEs), official sources said.

"Most FCBs are still unwilling to disburse SME loans because of low level of profits out of operations in the sector," a concerned high executive admitted, preferring anonymity.

There is no presence of FCBs outside a few major cities. "We have only some branches in selective urban areas. As a result, the FCBs are not able to get themselves directly involved in credit operations for the SME sector, unlike the other banks," a bank official said.

"All banks should do more for SMEs, which are the economic lifeblood of the country. The more the SMEs will be operationally active, the better the national economy will perform", a Bangladesh Bank's (BB) official said.

The state-owned commercial banks (SCBs), the specialised Banks (SBs), private commercial banks (PCBs) and non-banking financial institutions (NBFIs) are now mostly involved in providing the available credit supports to the SME enterprises.

According to Bangladesh Bank data, during the January-September, 2012, the FCBs could disburse only Tk 10.328 billion among the 2,828 SME enterprises, while the SCBs, PCBs and the SBs made available Tk 28.42 billion among 15,476 SME enterprises, Tk 419.399 billion among 3,26,158 and Tk 26.34 billion among 8,542 such enterprises as credits respectively.

Besides, SCBs disbursed to the women entrepreneurs in the SME sector Tk 765 million among 1,002 entrepreneurs and the PBCs, Tk 13.94 billion among 9,550, the SBs Tk 1.67 billion, among 387 entrepreneurs, the NBFIS, Tk. 784.1 million among 844 such enterprises in January-September, 2012.

During this period, the disbursement of credits to the women SME entrepreneurs stood at Taka 107.8 million involving 689 clients.

The FCBs credit operations were largely concentrated in trading operations instead of service and manufacturing sectors, the bankers said.

"There is no alternative to further development of the SME sector to help accelerate the pace of economic growth as the sector is still the main driving force of the economy," Sukomal Sinha Choudhury, general manager of the SME and Special Programmes Department at the Bangladesh Bank's (BB) told the FE.

News: The Daily Financial Express/Bangladesh/16th-Dec-12