The Bangladesh Bank, the apex regulatory authority for the country’s monetary policy and financial system, is putting emphasis on the manufacturing sector instead of trading,in SME loan disbursement, aiming to create employment opportunity with attaining more economic prosperity.
Besides, the service sector has also been stressed for SME loans in a policy adopted by the central bank.
According to the policy, the banks and non-bank financial institutions have been instructed to reconcile the ratio of SME loan disbursement within 2021, where manufacture sector would have to get minimum 50 percent, and service sector minimum 15 percent of the total.
SME Loan to trading sector has to be less than 35 percent within the time.
Besides, the central bank instructions to the bank and financial institutions say, the SME loans have to be raised to minimum 25 percent of the total disbursement by 2021 with a view to promoting small and medium entrepreneurs.
However, currently the entities, banks and financial institutions, are being more forced to comply with the instructions, though the initiative was taken earlier, BB sources said.
Jaid Bakht, a research director of Bangladesh Institute Development Studies believes the country could yet produce sufficient manufacturers, but the number of them increases gradually. Still, traders are occupying the majority and seek the loan, he told Bangladesh Post.
He however, suggested motivation of the young to becoming skilled entrepreneur and training them so that the country gets quality production and manufacture.
He hopes the initiative of Bangladesh Bank will boost economy by increasing production, employment generation and GDP growth.
However, according to a recently released central bank report, banks and non-bank financial institutions disbursed Tk 36,419.55 crore in loans to the SME sector in the first quarter (January to March) of the year 2018.
In this period, SME loans to entrepreneurs associated with the trade sector received Tk 17,534.21 crore that is 48.15 percent of the total SME loan while manufacturing sector got 33.88 percent and service sector got the rest 17.98 percent.
However, the BB report shows, loan to trade sector declined and other sectors especially manufacturing was raised in ratio though they are still lower in amount.
The statistics shows, the number of beneficiary entrepreneurs associated with the trade sector fell by 23.8 per cent to 1,19,423 in the first quarter from 1,56,740 a year ago.
On the other hand, entrepreneurs associated with the manufacturing sector received 28.16 per cent, or Tk 2,711 crore, higher loans from banks and NBFIs.
The entities disbursed Tk 12,337 crore to the manufacturing sector in the quarter, whereas the loan disbursement figure was Tk 9,626 crore in January-March last year.
Besides, SME loans to the service sector increased by 48.37 percent to Tk 6,548.02 crore.