BB created fund of Tk 2000 cr for Credit Guaranty Scheme

Industry Desk: Bangladesh Bank Deputy Governor Abu Farah Md Nasser yesterday said that proper utilization of Credit Guarantee Scheme is inevitable for revival of Cottage Micro Small and Medium Enterprises (CMSMEs).
He said although the Bangladesh Bank has created a fund of Tk 2000 crore for Credit Guaranty Scheme with a view to giving collateral free loan specially to the CMSMEs, but out of that amount only Tk 192 crore has been disbursed till yesterday, which is not so much encouraging.
“Whereas proper utilization of this credit guarantee scheme is inevitable for the revival of CMSMEs,” said Abu Farah Md. Nasser while addressing a workshop titled “Issues and Opportunities of CMSME Lending” as the chief guest organized by Dhaka Chamber of Commerce & Industry (DCCI) yesterday. Speakers at the workshop said if CMSMEs could be termed as the engine of economy, then CMSME financing is the fuel of that engine, said a press release.
The central bank deputy governor also said that to reach out to the CMSMEs, banks should think of establishing more sub-branches across the country rather creating agent banking because creating sub-branches help cut extra administrative cost.
“We are going through a tough time due to the Ukraine-Russia war and at this time if we try to control interest rate forcibly, it may create recession,” he added.
He said the manufacturing and service sector should get priority in getting loans right at this moment to control inflation, considering the global scenario.
Nasser also urged the experts to think over developing online market place and block chain to create alternative for traditional loan system.
Mentioning that the Bangladesh Bank has identified a total 19 clusters, he urged all the banks to give CMSME loan under these clusters. Later he said that to create a Digital Bank (special focus to CMSMEs) is in the planning of Bangladesh Bank.
DCCI President Rizwan Rahman said that CMSME sector plays an important role in making the economy grow, but due to lack of policy support and financial support, the potentials of this sector could not be utilized fully.
Commercial banks and financial institutions sometime feel risky to give loans to CMSMEs. Till 2022, some 73.77 percent of the stimulus or Tk 147.46 billion has been disbursed, but most of those went to medium enterprises.
Rizwan also said that regulators should give CMSMEs more access to information and communication technology, financial assistance so that they can have the ability of manufacturing a lot and competitiveness in supply chain process.
Md. Jaker Hossain, Director, SME and Special Programmes Department of Bangladesh Bank presented the keynote paper. He said CMSMEs contribution to GDP is now 25 percent and in 2024 it will be around 32 percent. By the year 2027, it will reach to 40 percent.
So, there is no scope for growth without CMSME, he said. He also said that the Bangladesh Bank has a plan to disburse 50 percent of total loan to cottage, micro and small while 15 percent at least to women CMSME entrepreneurs.
Md. Nazeem Satter, General Manager, SME Foundation in his separate keynote paper highlighted that there are more than 7.8 million CMSMEs across the country.
He said only banks are not sufficient to ensure loan for CMSMEs rather alternative capacity of MFIs, NGO Foundation, Karmasangsthan Bank, BSCIC, and SME Foundation could be utilized.
“Both banks and clients have to be reasonable for a successful loan agreement. Bank should be pro-active and on the other side client should be ready with all necessary documents,” he added.