The country’s apex trade body wants to set up a bank and a micro finance institute (MFI) to disburse mortgage-free loans to SMEs
Experts and economists of the country expressed their disapproval over the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI)'s plan to set up a new bank.
The country’s apex trade body wants to set up a bank and a micro finance institute (MFI) to disburse mortgage-free loans to small and medium entrepreneurs (SMEs) as the small and medium businesses are not getting adequate loans owing to the mortgage crisis.
“There is no logic in setting up a new conventional bank at this moment because the country has enough banks, non-bank financial institutions (NBFIs) and microfinance institutions (MFI) already,” said Zahid Hussain, former lead economist of the World Bank, Dhaka office.
Now, there are 61 banks and 34 NBFIs in Bangladesh, while FBCCI directors own most of the banks, he remarked.
“The establishment of a new bank will not increase the credit flow to the CMSME sector,” he said, adding that it is another discussion why the CMSME sector is deprived of adequate loans, but the solution is not to set up a new bank.
But the federation also wants to establish a university.
Zahid Hussain said that the proposal of setting up a separate university is logical because the country's existing education system is not linked with the job market.
If FBCCI sets up a separate university that can contribute to the creation of skilled human capital but there must be a clear plan in this regard, he added.
Echoing him, Policy Research Institute of Bangladesh (PRI) Executive Director Ahsan H Mansur said that the number of banks in the country is much more than the economy needs, so there is no reason for setting up a new bank.
“The job of the FBCCI is to arrange loans for small and medium enterprises; he said adding that the trade body should focus on discussing trade issues with the government,” he also said.
The economist said that the establishment of banks is not FBCCI’s job, the organization should work to protect the interest of the business community.
"We do not need so many banks in our economy. The smaller and weaker banks should be merged with the strong ones," said Ahsan, also the chairman of BRAC Bank.
“FBCCI should not be allowed to set up a bank in any way,” said AB Mirza Azizul Islam, former adviser of the caretaker government.
If FBCCI gets the license for a bank, there would not be any distance between bank and businessmen. They will easily access bank loans, which is not good for corporate governance, explained Islam.
Finance Minister AHM Mustafa Kamal is not aware of the FBCCI’s plans to set up a bank.
“I did not receive any proposal from the FBCCI. No one discussed the issue with me. I do not know about that,” the finance minister replied in a question from reporters after a virtual meeting on Wednesday.
The outgoing board of FBCCI on April 24 approved the proposals in a virtual meeting.
“Many small and medium entrepreneurs do not get bank loans failing to meet collateral requirements. FBCCI has taken the initiative to set up a bank to provide loan facilities to them on easy terms,” stated Sheikh Fazle Fahim, FBCCI president.
In April last year, the government implemented a Tk20,000 crore stimulus package for the cottage, micro, small and medium enterprises (CMSMEs) through banks, but traders and researchers have been saying that CMSMEs are not getting the loan facility as most of them fail to fulfill requirements.