NRB Bank yesterday made its foray into the largely neglected segment of small and medium enterprises as part of its promise to contribute to creating entrepreneurs.

To start off, the newly set-up bank handed over loan sanction letters to owners of Ligion Herbal Ltd, a herbal company, and Bimurto, a handicraft company, at a ceremony at the capital's Sonargaon Hotel.

Ligion Herbal's Chairman Tania Haque and Bimurto's owner Wafi Islam got loans of Tk 1 crore and Tk 18 lakh respectively to expand their businesses.

NRB Bank, which began operations in August last year, has built a team and developed products for SMEs, said Mukhlesur Rahman, managing director of NRB Bank, on the occasion.

“It is a great thing that we have launched products for SMEs.”

Iqbal Ahmed, chairman of NRB Bank, said the best way to create entrepreneurs is to finance the SMEs, as almost all conglomerates across the world as well as in Bangladesh started off as small ventures.

“Our motto is to create SMEs, as without them the country will not grow,” he said, while urging his bankers to educate customers about the products.

Abul Kashem, deputy governor of Bangladesh Bank, said the SMEs today would become big industries in future if they are provided with adequate financing and other facilities.

He advised the SMEs to maintain accounting and prepare business cases properly, so that banks find them to be feasible clients.

Kashem suggested NRB Bank use the refinancing scheme of Bangladesh Bank to provide low-cost funds to SMEs.

Syed Md Ihsanul Karim, managing director of SME Foundation, welcomed the bank's move to the world of SMEs.

Presenting a paper on challenges and future of SMEs, Toufic Ahmad Choudhury, director general of Bangladesh Institute of Bank Management, said SME financing is still regulator-driven; banks are yet to participate in it spontaneously. 

About 85 percent of the loans lent in the country are for Tk 2 lakh or less and the remaining 15 percent are corporate loans, he said.

“All the 56 banks can't rely on 15 percent for survival. You have to go to the SMEs and create a market for yourself.”

He also asked banks to separate trading from the SME scheme, as traders are already doing fine within the current framework of traditional banking. 

Choudhury said banks would have to understand SME financing properly as this segment is very different from traditional banking. He advised banks to understand the needs of SMEs properly and customise their products.

The economist urged banks for streamline the documentation process for SMEs, as at present they need to submit 27 different papers to qualify for a loan.

Wahid-Bin-Ahmed, vice-president of NRB Bank for SME banking, and Zeeshan Hasib, head of corporate banking of NRB Bank, also spoke.  

NRB Bank has so far opened eight branches, with plans to open five more this year.