A significant portion of bank loans in Bangladesh still primarily goes to large corporate borrowers, leaving SMEs and other underserved businesses with limited financial access, experts stressed during a recent roundtable discussion.
Mohammed Nurul Amin, chairman of Bangladesh Krishi Bank, highlighted that the financial system in Bangladesh is heavily biased towards large corporations, with 75 to 80 percent of bank lending directed towards this sector, creating a long-standing structural imbalance.
The discussion, titled “Access to Finance in Bangladesh: Building a More Conducive Financial System for the Private Sector,” was organized by Policy Exchange Bangladesh (PEB) and the Metropolitan Chamber of Commerce and Industry (MCCI) at the chamber’s office in Gulshan, Dhaka.
While large corporations find it easier to secure credit, small entrepreneurs, traders, and informal businesses face challenges in accessing formal banking services, Amin noted. To enhance financial inclusion, he proposed expanding invoice financing and establishing a national collateral registry to streamline lending processes and reduce fraud.
Syed Abdul Momen, head of SME at BRAC Bank, emphasized that the banking sector’s historical focus on large corporates has hindered SMEs’ access to credit. Momen suggested that banks should prioritize assessing borrowers based on cash flow rather than collateral, citing BRAC Bank’s experience with SME loans.
Shams Mahmud, managing director of Shasha Denims Ltd, raised concerns about rising production costs for exporters due to factors such as increased gas prices, electricity tariffs, wages, and taxes. He highlighted challenges in obtaining bank guarantees and offshore financing, attributing potential disruptions in business operations to regulatory uncertainties and banking delays.
Syed Mohammad Kamal, president of the American Chamber of Commerce in Bangladesh (AmCham), called for coordinated efforts by various stakeholders to provide institutional support for SMEs, underscoring the need for a robust financial ecosystem to facilitate SME finance.
Andalib Mirza, head of multinational wholesale banking at HSBC Bangladesh, identified limited digital data and weak financial verification as obstacles, particularly for non-garment companies lacking export records.
Shams Zaman, country managing partner of PricewaterhouseCoopers Bangladesh Pvt Ltd (PwC), emphasized the importance of resolving distressed assets to boost credit growth and proposed transforming the Guarantee Window into an autonomous institution to diversify the financial system.
M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, moderated the discussion, focusing on practical reforms to address the country’s weak business climate in terms of financial access. Farooq Ahmed, secretary-general and CEO of MCCI, also delivered remarks during the event.