Role of SMEs
SMEs are the driving force behind any growing economy like Bangladesh. When the country is suffering from scarcity of investment, the SMEs are showing great enthusiasm to invest more, though they are facing hurdles due to the fact that the commercial banks and non-bank financial institutions (NBFIs) charge high interest rate on loans.
In many cases, effective interest goes beyond 18 percent. Private banks and non-bank financial institutions (NBFIs) are charging 15 to 20 percent, while state owned commercial banks' rate ranges between 12 to 13 percent. Though Bangladesh Bank facilitates refinancing scheme at 5% rate of interest, banks and non-bank financial institutions are imprudently charging such high rates.
Of course, the supervision cost of SME loans is high but that leaves no excuses for banks since they are giving agricultural loans at a lower rate, which have the similar supervision cost. Because of the nervous mood of the businessmen in the last few years, especially during the caretaker government, the banks are now piled up with idle money amounting to about 30,000 crore taka. The banks can make use of this money facilitating the SMEs, which will boost our export business.
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