Bangladesh Bank Governor Atiur Rahman on Saturday called upon the commercial banks and financial institutions to gear up lending for the small and medium enterprises to help boost the country’s economic growth.
“The story of Bangladesh is the story of SMEs,” he told a conference of SME entrepreneurs in Dhaka. “It contributes a lot to the country’s economy and its industrialization.”
He suggested all banks and NBFIs to finance the SMEs sector as part of their social responsibility.
Atiur was speaking at the ‘SME Entrepreneur Conference’ organised by BRAC Bank, aimed at infusing dynamism in the SMEs sector. Around 2,000 entrepreneurs attended the first such conference.
Atiur said SME has a significant role in generating economic growth and job opportunities. “It made up 25% of the country’s total GDP last year. About 40% of gross manufacturing output and around 25% of the total labour force in Bangladesh belongs to SME sector.”
Some 90% private sector enterprises are SMEs and 70% to 80% of the non-agricultural workforce is employed in the SME sector, he said.
“It is a labour-incentive and creative sector as it involves small investment. We can turn our huge population into a tool of production if we take special care of it,” said the governor.
Highlighting several initiatives so far taken by the central bank to promote the sector, he said “we have been able to tackle global recession by giving priority to the sector.”
Referring to the SME financing in the past three years, he said a total of Tk177bn went to SME sector from 2010 to 2012 while Tk670bn in 2012 alone. The rate of disbursement last year was 118% higher than the period’s target of Tk59bn.
This year, Bangladesh Bank sets a loan disbursement target of Tk72bn for the small and medium entrepreneurs this year.
The governor said 21 banks and 22 non-banking financial institutions have provided Tk34bn to the SMEs sector under the refinancing schemes of the central bank, funded by different development partners.
Under the scheme, Bangladesh Bank provided about Tk24bn (as of July 2012) to different banks and NBFIs at a subsidised interest rate of 15%. Of this fund, Tk4bn is reserved for women entrepreneurs.