Planned Small Business Specialty Bank

| Updated:
February 15, 2021 09:02:28

The Bangladesh Small and Craft Industries Corporation (BSCIC) is considering the establishment of an independent specialized bank to help the growth of the small and medium-sized, micro, small and medium-sized enterprises sector in the country.

The BSCIC has already requested the consent of the Ministry of Industries (MoI) and the necessary support for this purpose.

In accordance with the SME policy, the BSCIC may create a specialized SME bank.

“Support access to finance in SME-related innovations and introduce the ‘SME Bank’ in the country,” mentioned the SME Policy 2019.

“We have the ability to manage a bank, and under the SME policy we can launch a bank,” Mushtaq Hossain, president of BSCIC, told The Financial Express.

He said the Interior Ministry asked the BSCIC to carry out a feasibility study with a qualified company to make sure that the agency can actually run a bank or not.

“Now we are trying to obtain a fund of 20 million taka for the feasibility study.”

Hasan noted that small businesses are suffering as they seek bank loans and other services, as large commercial banks do not provide loans to CMSMEs.

“Therefore, they have to run their businesses by borrowing from various NGOs and individuals at high interest rates. As a result, it is difficult for them to survive.”

The president of BSCIC said that the entity can train 20,000 entrepreneurs each year and support them with easy loans to operate businesses without facing problems or delinquencies.

The entity has received one billion taka funds from the government to provide loans to CMSMEs.

The BSCIC has increased the maximum limit on loans from own funds up to five times to help these companies recover from the consequences of Covid-19.

Small businesses in the CMSME category can now avail of Tk 10 million as a loan to establish and operate their business.

“The BSCIC board could approve the highest of Tk 2 million,” according to the BSCIC letter, sent to its properties across the country on February 11.

The director of BSCIC (industrial development and extension) can now approve loan proposals of up to two million taka from the previous one million taka.

BSCIC regional directors can now disburse up to one million taka from the previous 5,000,000 taka, and district offices can approve 5,000,000 taka from 2,00,000 taka.

The entity began providing small business loans in 2015. Currently, it has outstanding loans of Taka 330 million through December 2020, and its loan recovery rate is 96 percent.

The president of BSCIC said that small entrepreneurs always pay back their loans.

“If we can launch a bank, we will be successful and help the SME sector grow,” he added.

Currently, the number of MSMEs is approximately 7.8 million and they contribute approximately 25% of the country’s gross domestic product (GDP), according to data from the Asian Development Bank (ADB) for 2015.

The BSCIC makes medium and long-term loans to small industries, either directly or through a consortium of commercial banks.

The agency also provides assistance in all other matters related to the development and expansion of small and craft industries (SCI).

The BSCIC is the official body that oversees the development of self-employment, cottage industries and small businesses.

It also provides statistics on types of companies, their activities and the number of people employed by them.

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