Bankers prefer to finance women SME entrepreneurs

Bankers prefer to finance women in small and medium enterprise (SME) sector, terming them as good and model entrepreneurs who barely default on loans.

The bankers expressed this willingness while speaking at the inaugural session of the "Banker-SME Women Entrepreneur Conference and Product Fair 2020" at the Bangladesh Bank Training Academy in Dhaka on Thursday.

"We prefer to finance women entrepreneurs because the repayment of loans from them is the best and default loans are very low," said Ali Reza Iftekhar, chairman of the Association of Bankers, Bangladesh (ABB).

He also appealed to the government to reduce or exempt taxes for women entrepreneurs.

Iftekhar, also the managing director of Eastern Bank Limited, further said there is a need for a dedicated SME bank and requested the central bank to mull it over.

Mominul Islam, chairman of the Bangladesh Leasing and Finance Companies Association and managing director of IPDC Finance, said women entrepreneurs are far behind the desired target for loan disbursement.

"I am facing a number of practical problems – women entrepreneurs of cottage and small industries sectors are basically very informal entrepreneurs. When they want to avail loans, the absence of a trade licence becomes an issue.

"It even takes a year to get a trade licence. A rule might be established allowing a female entrepreneur one year to obtain a trade licence after getting a loan," he suggested.

He also said policy decisions could be taken to make sure that the women entrepreneurs who are running their business from home can avail trade licence with their residential addresses.

Currently, a commercial address is required to get a trade licence.

Responding to these comments and recommendations, Industries Minister Nurul Majid Mahmud Humayun said the government has already taken up an initiative to ease the procedure of getting trade licences for SMEs.

Central bank Governor Fazle Kabir said since Bangladesh aims to become a developing country within 2024, before that, they want SME loans to make up 25 percent of total loans.

Currently, the SME loans make up nearly 21 percent of total loans. 

Senior Member of the Planning Commission Dr Shamsul Alam said only 4 percent of the total loans were distributed to women entrepreneurs, adding this percentage has to be increased further.

"If the Bangladesh Bank sends any recommendations for developing this sector, we will add that to the eighth five-year plan," he added.

Selima Ahmed, president of the Bangladesh Women Chamber of Commerce and Industry told The Business Standard that most of the women entrepreneurs in rural areas are out of the reach of financing from banks.

She added that this should be looked after.

Among others, SM Moniruzzaman, deputy governor of the Bangladesh Bank, and Lila Rashid, general manager of SME and Special Programs Department also spoke at the event.

The SME and Special Programmes Department of the Bangladesh Bank has been regularly organising this conference and the fair for the last seven years to ensure women's participation in the financial sector. 

The fair, which will start at the Bangladesh Institute of Bank Management, will run till March 8, from 10am to 5pm every day. It is open for all.

Women entrepreneurs are showcasing their products at the stalls of the banks they received the loans from.