Proper utilisation of the credit guarantee scheme is inevitable for the revival of cottage, micro, small and medium enterprises (CMSMEs), said Bangladesh Bank Deputy Governor Abu Farah Md Nasser today.

The BB has created a fund of Tk 2,000 crore as a credit guaranty scheme with a view to giving collateral-free loans, especially to CMSMEs. But of the sum, only Tk 192 crore has been disbursed as of yesterday.

"This is disappointing. Proper utilisation of the credit guarantee scheme is inevitable for the revival of CMSMEs," said Nasser.

He made the comments at a workshop titled "Issues and Opportunities of CMSME Lending" organised by the Dhaka Chamber of Commerce & Industry (DCCI).

Nasser also said in order to reach out to CMSMEs, banks should think of establishing more sub-branches across the country rather than creating agent banking.

"This is because creating sub-branches help cut extra administrative cost."

"We are going through a tough time due to the Russia-Ukraine war. If we try to control the interest rate forcibly at this time, it may create a recession."

The deputy governor said the manufacturing and service sectors should get priority in getting loans right at this moment to control inflation, considering the global scenario.

He urged experts to think about developing an online marketplace and using blockchain to create an alternative to the traditional loan system.

The central bank identified 19 clusters and Nasser urged all banks to give CMSME loans under the clusters.

DCCI President Rizwan Rahman said the CMSME sector plays important role in helping the economy grow but due to a lack of policy support and financial support, "we can't fully utilise this sector."

"Commercial banks and financial institutions sometimes feel risky to give loans to CMSMEs."

As of 2022, some 73.77 per cent of the stimulus package of Tk 14,746 crore has been disbursed but most of it went to medium enterprises.

"Regulators should give CMSMEs more access to information and communication technology and financial assistance so that they can have the ability to manufacture a lot and competitiveness in a supply chain process."

CMSMEs contribution to GDP is 25 per cent now, and in 2024, it will be around 32 per cent and reach 40 per cent by 2027, according to Md Jaker Hossain, director of the SME and Special Programmes Department of the BB, while presenting the keynote paper.

"So, there is no scope of growth without CMSMEs."

If an entrepreneur seeks a loan under the stipulated threshold with proper documentation, banks have no other choice but to sanction the loan, he said, adding that the central bank plans to disburse 50 per cent of the total loan to cottage, micro and small industries and at least 15 per cent among women-run CMSMEs. 

In Bangladesh, there are more than 7.8 million CMSMEs.

"Only banks are not sufficient to ensure loans for CMSMEs. We may utilise the alternative capacity of microfinance institutions, the NGO Foundation, Karmasangsthan Bank, the BSCIC, and the SME Foundation," said Md Nazeem Satter, general manager of the SME Foundation, while making a presentation.

"Both banks and clients have to be responsible for a successful loan agreement. Banks should be proactive. On the other hand, clients should be ready with all necessary documents."

He said there are more than 10,000 branches of banks in the country and if the country can utilise them, there will be no need for a specialised bank for SMEs.

"We need to go for target financing to create an ecosystem."