Women entrepreneurs kept away from loans

Women entrepreneurs are still lagging behind in access to SME (small and medium enterprise) financing due to reluctance of banks.

Total SME loan in the banking sector stood at Tk 7,44,102 crore as of September 2017 of which women borrowers enjoyed only 3.5 percent or Tk 26,400 crore, according to Bangladesh Bank data.

Loan disbursement to female clients has been reducing gradually despite the various loan products for women entrepreneurs with 9 percent interest rate.

Women entrepreneurs got only 2.81 percent of total SME loan of Tk 1,23,046 crore disbursed up to September last year. The share of female borrowers in SME loan was 3.78 percent in 2016, down from 3.9 percent in 2014, central bank data shows.

High default loan and fund diversion mainly accounted for reluctance of banks in disbursing SME loan to female borrowers, said Mahbuba Ahsan, deputy general manager of SME division of Sonali Bank.

Sonali Bank found many cases of fund diversion among women entrepreneurs, she claimed.

She said, lack of confidence in women entrepreneurs also accounted for reasons that make banks reluctant to finance them as the success rate is very low among female borrowers.

Female borrowers started their business full of energy but they often could not continue for long due to the non-cooperation of their family and society, she said. As a result, business started to decline in the middle of their journey turning them into a defaulter, she added.

The default loan rate in SME loan surged to 16.59 percent in September last year when the industry average default loan was within 10 percent.

The default rate in SME loan was 3.88 percent in 2011 when banks were in the initial stage of SME financing.

The recovery rate has also been declining gradually. The SME loan recovery came down to 54.41 percent last year which was 70.41 percent in 2011, central bank data shows.

Although banks are reluctant to finance women entrepreneurs on the ground of high default rate, one female entrepreneur experienced something different when she put forward a proposal for a loan to Sonali Bank.

Sajida Islam Parul is a small entrepreneur who has been running a handicraft business for three years with a showroom at her father's house in the city. She went to Shegunbagicha branch of Sonali Bank recently for a SME loan to expand her business. Although she is eligible for collateral-free SME loan of Tk 10 lakh, the respective branch was trying to persuade her to get property mortgage.

State-owned banks have a variety of SME products for women entrepreneurs but employees are reluctant to give loans under this product just to avoid risk, said Parul.

She said, many women entrepreneurs do not even have an idea about the facilities that they can avail because of a lack of promotional activities from the bank's end.

“For instance, when I proposed for a loan, the bank did not show willingness to support me; rather they discouraged me to take the product,” she had said. “Finally, I convinced the respected authority of the branch to at least start the procedure of taking collateral-free loan. If the higher authorities do not allow me to get the loan I will think about another option then,” she had said. 

Sonali Bank disbursed SME loan of Tk 15.31 crore to 335 women entrepreneurs last year against the annual disbursement target of Tk 153 crore, according to the bank statement.

In 2016, the bank disbursed SME loan of only Tk 13 crore to women entrepreneurs against the target of Tk 100 crore.

Sonali Bank is sitting on a huge deposit of over Tk 1 lakh crore as of December last year against which the size of loan portfolio was Tk 38,000 crore. Of the total loan only 10 percent or Tk 4,185 crore was made up of SME last year.

The number of business firms headed by women entrepreneurs against which loans were given stood at 4,01,700 as of September last year which was 9.34 percent of total SME institutions of 42,96,399.

Bangladesh Bank organised the “Banker-SME Women Entrepreneurs Gathering and Product Showcasing Fair-2018” on the occasion of International Women's Day. The fair will take place from March 8 to 10 at Bangladesh Shishu Academy in the city.