Small and Medium Enterprises (SMEs) play a vital role in the economy in terms of employment and income generation, and development of local market and supply chains. But lack of access to external finance is hindering development of these enterprises.

Speakers at a seminar on “SME Financing” expressed the view, highlighting the urgency for identifying the problems faced by small enterprises in obtaining loans from financial institutions.

They also urged authorities concerned to make the procedures easier and remove the unnecessary lengthy procedures while allocating loans.

The discussants also found high interest rates, collateral requirements and lack of skills and attitudes of bankers as the most significant problems that the SMEs face while availing loans from the formal financial institutions.

Bangladesh Bank Deputy governor Md. Abul Quasem, who attended the programme as the chief guest, also echoed a similar tone saying that small enterprises in manufacturing sector are getting less credit as compared to service and trading sectors.

He also stressed the need for clearly defining the sector so that big and large enterprises under the coverage of SMEs could not avail the financial access. “We have already identified some cluster areas in Jessore and Jamalpur region which demand SME supports…,” he said adding that the central bank is contemplating to help handloom weavers at Olipur in Kurigram and Jamdani workers at Rupganj in Narayanganj flourishing these special enterprises.

The deputy governor, also the chairman of BIBM executive committee, urged the organisers to pinpoint the problems and identify proper solutions which he said will be incorporated in bank policies.

Organised by Bangladesh Institute of Bank Management (BIBM), the seminar was also addressed among others by SME foundation Managing Director Syed Rezwanul Kabir, BIBM director general Dr. Toufic Ahmed Choudhury, international consultant Leif Andersen, BIBM director Dr. Prashanta Kumar Banerjee and Prime Finance and Investment Managing Director Asad Khan.

Prof Ashraf Al Mamun and BIBM lecturer Md. Mosharref Hossain  jointly presented a key note paper on “SME Financig: Demand side problems and supply side responses” while BIBM Lecturer ANK Mizan presented another key note paper on SME Credit Risk Model”.

The key note presenters in their papers have tried to describe in details the nature of SME business in Bangladesh, their nature, structures, contributions, financing, problems and prospects, risk identification, assessment and management.

The speakers said areas, such as, Rangpur, Dinajpur and Saidpur still remained unbanked and unattended.
“Availability of required working capital at appropriate time is another significant problem for most of the small businesses,” said a participant.

Most of the small businesses are family based and lack of appropriate financing for their startup and maintaining the operations are still challenging.

Collateral is a tool for securing the loan and many of the entrepreneurs do not have it, SME Managing Director Syed Rezwanul Kabir said.

The Independent/Bangladesh/ 8th April 2012