BB moves to establish digital bank for SMEs

Bangladesh Bank has taken initiative to establish a new digital bank either at the end of this year or early next year aimed at promoting the country’s small and medium enterprises (SMEs) sector,

Deputy Governor of the central bank (SME department) Abu Farah Md. Nasser said this while speaking at a session titled, “Leveraging SMEs for Vibrant Supply Chain Linkage and Productivity Spillovers” at Bangladesh Business Summit 2023 held in Dhaka on Monday.

The three-day summit, organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) in association with foreign and commerce ministries as well as the Bangladesh Investment Development Authority, ended on the day.

“The SME sector is a lifeline of the country’s economy. The central bank has been extending all necessary support. We have taken initiative to establish a new digital bank to develop the sector so that real entrepreneurs get loan easily,” Nasser also said.

He added that the central bank has also formed a department for boosting the sector and reformed a good number of policies in recent years.

“During the Covid-19 pandemic, the central bank first provided Tk20,000 crore under the stimulus package for a year. Later, the figure has been increased for two more years. It means that we have provided a total of Tk60,000 crore to the entrepreneurs,” he said.

The sector has huge potential, he said, adding that the central bank will do everything all to develop the sector.

Speaking as a panellist, Malaysian High Commissioner to Bangladesh Haznah Md Hashim said her country has developed the SME sector, taking positive policy. So, the country got huge FDI.

“However, Bangladesh should make some reforms of fiscal policy, including tax-related issues, to attract foreign direct investment (FDI). Secondly, the consistency of the government policy support is very important here,” she added.

CPD research director Dr Khondaker Golam Moazzem suggested that the government provide enough funding for SMEs and address the future problems to help develop the sector.

In his keynote paper, CEO and Managing Director of SME Foundation Dr. Md. Mafizur Rahman underscored the need for developing and improving the value and supply chain management to boost the sector.

“New, small, women and marginal entrepreneurs face difficulties in accessing to banks credit. Alternative sources of financing have not yet got momentum. Lack of technical skills and management capacity could be considered as key obstacles to SMEs,” he added.

Mafizur said stakeholders, particularly the trade bodies, are not financially capable of serving and guiding the SMEs in the country. “Access to market i.e. lack of market competitiveness is another hurdle to SMEs what limits them to sustain and grow.”

He further said that there are a total of 7.8 million SMEs, including cottage and micro (CMSMEs), in the country and 7.3 million people are engaged in the CSMEs sector. Its contribution to the GDP is 25 per cent (the government set target to increase it to 32 per cent by 2024).

Speakers also said inadequate budget support, research and data constraints are still hurting the SMEs’ growth in the country. Most of the marginal, small and medium entrepreneurs, including women, face difficulties in accessing bank credit, they pointed out.

SMEs now occupy an important position in the national economy. They account for about 45 per cent of manufacturing value addition, about 80 per cent of industrial employment, nearly 90 per cent of total industrial units, and around 25 per cent of the labour force.

President of Dhaka Chamber of Commerce and Industry (DCCI) president Md Sameer Sattar said, “We need strong policy to develop the sector and skill up them too. We should lay emphasis on the technology as well.”

Dr Md Masudur Rahman, chairperson of SME Foundation, presided over the session moderated by Kamran T Rahman, senior vice president of Metropolitan Chamber of Commerce and Industry.