EBL plans new loan products for start-ups
M. Khorshed Anowar, Deputy Managing Director and Head of Retail and SME, Eastern Bank Limited (EBL) tells The Business Standard that the bank is concentrating to increase its financing using digital mechanism by increasing footprint of supply chain financing. Some exciting new products are on the cards, he adds.
M. Khorshed Anowar, Deputy Managing Director and Head of Retail and SME, Eastern Bank Limited (EBL) tells The Business Standard that the bank is concentrating to increase its financing using digital mechanism by increasing footprint of supply chain financing. Some exciting new products are on the cards, he adds.
What role did EBL play to help SMEs?
The COVID-19 pandemic gave birth to a crisis of completely different magnitude and one that required responses of unprecedented scale. The countrywide lockdown that was imposed in late March of 2020 seized all business and economic activities impacting livelihoods of the entire population. All businesses regardless of the scale, industry and sector were heavily impacted due to the disruption.
While large corporations usually have adequate buffer to just stay afloat during such crunch periods, the same is not the case for the SMEs who have to rely on flow of working capital to keep business running.
Amid lack of liquidity and cash-flow most SMEs were looking at bleak and uncertain future as there is no indication when the economy might get back to business as usual. Given the uncertainty around the initial stages of the pandemic and the lockdown, EBL recognized the impediments that SMEs would be facing and took initiatives to stand by the side of the SME customers
EBL was one of the few banks which could achieve stimulus disbursement target before stipulated deadline.
While many financial institutions were uncomfortable to roll out stimulus loans for the CMSMEs, EBL achieved around 104% of the disbursement target set by the Central Bank. Moreover, EBL did not take any property as collateral against majority of the disbursed loans.
Repayment has been deferred three times as per Bangladesh Bank guidelines. During the first lockdown, EBL's dedicated team was active on digital platform running awareness campaigns targeted for SMEs' business operations and management.
Does EBL focus on any specific sector in SMEs?
EBL's primary focus is to extend loans to SME's involved in manufacturing. This is because the extent of value addition of companies involved in manufacturing is higher than others.
EBL is the first bank to execute ERP integrated state-of-the-art digital platform powered by VEEFIN, which is an end-to-end supply chain financing solution. In addition, EBL also focuses on extending convenient financing to women entrepreneurs. It has dedicated SME loan product for women entrepreneurs called EBL Mukti under which a woman entrepreneur can avail loan up to Tk 50 lakh in relaxed terms.
What is the position of SMEs in EBL loan portfolio?
With innovative and tailor-made financial solutions, EBL has placed a strong position for itself in SME financing in Bangladesh. Over the past few years our excellent track record, special products, and the ability to innovate and keep pace with the fast changing industry have made EBL the undisputable market leader in prudent SME financing. EBL currently has around 16 need-based SME loan products where most of the loans are collateral free, keeping in mind the unavailability of collateral for such SME customers to get financing.
Moreover EBL takes pride by having the highest unsecured loan product in the industry for the SME clients. Around 17% of the total loans has been given to the SME sector.
What is the future plan of EBL to support SMEs?
EBL is concentrating to increase its financing using digital mechanism by increasing footprint of supply chain financing. Furthermore, there are some exciting new products in the cards which will hit the market very soon. One such product will target innovative start-ups offering unique product/services. Being one of the top financial service providers of the country, EBL shoulders the responsibility of having an impact to tackle climate change and minimize environmental degradation. As such EBL never extends financing to companies who are operating by violating environmental compliance standards. For businesses that require DOE clearance, valid DOE clearance certificate is also mandatory for availing loan from EBL.
EBL has continued its efforts to providing stimulus loans to SMEs from the government announced package. Furthermore, EBL is also extending stimulus loans in co-ordination with SME Foundation.
Extending finance to SMEs has not only been limited to stimulus packages. EBL is also providing loans under other SME products to credit-worthy SMEs at very competitive rates.
Our bank's primary objective is to introduce new loan products which will allow us to accommodate most of the financing requirements of SMEs. EBL maintains regular communication with clients and practices robust screening and monitoring of clients. This enables EBL to grow sustainably without compromising portfolio quality.