Experts call for enhancing SME Foundation’s capacity

Experts have urged the government to take long-term plans and allocate adequate funds to enhance the capacity of the Small and Medium Enterprise (SME) Foundation as its loan recovery rate is around 99%.

SME Foundation Chairperson Dr Md Masudur Rahman said, "The SME Foundation started its activities with an endowment fund of Tk200 crore. It is running on the interest of that Tk200 crore. No more money was allocated after that. It is difficult to work with about one crore entrepreneurs with this fund. Yet we are working. We have made good progress in the last 13 years."

"If the SME sector, the main driving force of the country's economy, could not be taken forward, it would be difficult to build a developed Bangladesh by 2041 as per the government's target. Therefore, it is necessary to increase the SME Foundation's capacity, especially its financial capacity," he said at the signing ceremony of an agreement between the SME Foundation and banks and financial institutions for disbursement of Tk200 crore loan for the cottage, micro, small and medium enterprise (CMSME) sector on Thursday.

Planning Minister MA Mannan attended the programme as the chief guest.

He said, "I came to know that 99% of the loans disbursed through the SME Foundation have been recovered. Why not increase the fund if there is no default loan?"

"A certain amount of money needs to be allocated for the SME Foundation in the budget every year. I am drawing the attention of the Ministry of Finance in this regard."

He also said it was necessary to set up regional offices of the SME Foundation.

At the event, State Minister for Industries Kamal Ahmed Majumder said Prime Minister Sheikh Hasina announced a Tk20,000 crore incentive loan for the CMSME sector at the beginning of the Covid-19 epidemic, but it has not been fully implemented. Instead of giving loan to those who need it, the country's banks give loans to people who launder money abroad.

He said, "Inequality in the society should be reduced. Those who are now becoming rich fast and gathering wealth need to be slowed down. The progress of smaller entities need to be given more importance. Currently, the situation seems similar to that in the Pakistan-era when all the wealth was accumulated in the hands of only 22 families."

He said in order to truly develop the SME sector, it is necessary to increase the number of separate SME villages for SME entrepreneurs and sales outlets for their products.

Brac Bank Managing Director Selim Reza Farhad Hussain said the SME Foundation needs to be strengthened to provide the marginal entrepreneurs more opportunities.

Ali Reza Iftekhar, managing director of Eastern Bank Limited and chairman of Association of Bankers, Bangladesh, said the SME business is a sustainable one. No bank has faced any problem with loans given in this sector.

Addressing senior officials of banks and financial institutions, SME Foundation Managing Director Dr Md Mafizur Rahman said entrepreneurs should be treated well.

"A number of entrepreneurs said the banks ignored them. They said they were not dressed well and could not talk beautifully. That is why when they went to the banks, they were ignored," said Mafizur.

State Minister for ICT Zunaid Ahmed Palak, Industries Secretary Zakia Sultana, IPDC Finance Managing Director Mominul Islam, Bank Asia Limited President and Managing Director Md Arfan Ali also spoke at the programme.

CMSME loans at 4% interest

The SME Foundation disbursed Tk100 crore loan to the CMSME entrepreneurs in FY2021 under the second phase of the government's incentives to improve the marginalised people's living standards. In the current financial year, the Finance Division has allocated another Tk200 crore for the SME Foundation. 

The SME Foundation will distribute this loan at 4% interest among the small and medium entrepreneurs to offset the loss caused by the Covid-19 pandemic. An entrepreneur can get Tk1-50 lakh from the foundation. To disburse the loans, the SME Foundation has signed an agreement with 15 banks and three financial institutions.

The government has decided to disburse this Tk200 crore loan by 31 December, 2021. 

The institutions through which the loan will be disbursed are – Bank Asia Limited, BASIC Bank Limited, Brac Bank Ltd, Dhaka Bank Limited, The City Bank Limited, Mutual Trust Bank Limited, NRB Commercial Limited, Premier Bank Limited, Social Islami Bank Limited, One Bank Limited, Prime Bank Limited, United Commercial Bank Limited, Eastern Bank Limited, Southeast Bank Limited, Rajshahi Krishi Unnayan Bank, IDLC Finance Ltd, UPDC Finance Ltd, and LankaBangla Finance Limited.