Aiming to be grassroots entrepreneurs’ complete financial partner

Tareq Refat Ullah Khan, Managing Director & CEO (Current Charge), BRAC Bank

The Daily Star (TDS): How does your bank currently support small and medium-sized enterprises (SMEs)?

Tareq Refat Ullah Khan (TRUK): Since cottage, micro, small, and medium enterprises (CMSMEs) lack collateral, most banks are usually discouraged from providing them with financing support due to the risks involved in unsecured credit. Against this stark reality, BRAC Bank, the country's only SME-focused bank, remains true to its strong commitment to ensuring easy access to credit for grassroots entrepreneurs.

Today, BRAC Bank is the largest collateral-free CMSME financier in Bangladesh, with more than 85% of our small business loans provided without any mortgage. Since our inception in 2001, we have served around 20 lakh CMSMEs and disbursed BDT 200,000 crore in loans. But our goal is greater than being a lender; we aim to be the complete financial partner of grassroots entrepreneurs.

We provide transactional and cash management services, foreign trade financing facilities, and a wide range of products and services to cater to every financial need of CMSMEs. We facilitate market access by connecting CMSMEs with one another to support their supply and value chains, thereby broadening their market opportunities. BRAC Bank offers comprehensive banking and financing support to women-led CMSMEs under its women banking proposition 'TARA'. We are proud to be the first bank in Bangladesh in the process of introducing an "SME Innovation Lab".

TDS: How does your bank reach SMEs in rural and hard-to-reach areas?

TRUK: BRAC Bank operates 446 SME Unit Offices, 191 branches, 80 sub-branches, 1,123 Agent Banking Outlets, and 330 ATMs across the country to cater to the daily banking needs of CMSME customers. This extensive network allows us to maintain a physical presence in many rural and remote areas, bringing banking services to the very doorsteps of SMEs. We have over 3,000 dedicated Relationship Officers engaged in SME banking services, fostering relationships and addressing all the banking needs of CMSMEs. Sixty per cent of our total SME loans are disbursed in rural areas—this represents the highest rural penetration among local private banks.

TDS: What additional measures can banks take to better support SMEs, and what plans does your bank have in this regard?

TRUK: Banks should adopt a clear agenda to serve the CMSME (Cottage, Micro, Small, and Medium Enterprise) segment by tailoring products to meet their specific banking needs. Beyond financing, banks can invest in capacity building, networking opportunities, and market access facilitation to support the long-term sustainability of smallholder businesses. CMSMEs often require a hands-on, relationship-driven approach, which demands significant investment and ecosystem development through skilled human resources—a model BRAC Bank has embraced and one that can serve as an example for others in the industry.

BRAC Bank is in ongoing dialogue with Bangladesh Bank to promote more inclusive banking services. Drawing from our extensive experience in serving the CMSME sector, we recognise the need for specific policy reforms to ensure that CMSMEs have access to convenient, tailored banking solutions. At the same time, such reforms would encourage greater participation from banks in financing this vital segment, creating a more supportive and sustainable ecosystem for small businesses across the country.

We are working towards a more simplified and convenient onboarding process for CMSMEs to access financial services, by leveraging technology. BRAC Bank is actively investing in digitisation to minimise manual interventions within the existing regulatory framework. To support CMSMEs' banking needs, we have introduced a Digital Loan Origination Solution (eLAP) for CMSMEs and are facilitating ASTHA & Corpnet for convenient B2B transactions. However, we believe that CMSME-friendly policy reforms by the central bank and various government agencies would further empower CMSMEs in accessing banking services and enhance the ease of doing business. In my opinion, the key policy reform agenda that can be immediately addressed by the Government and Bangladesh Bank includes:

•   Simplification of required legal documentation for CMSME loans, potentially based on loan ceilings.

•   Immediate introduction of e-KYC for CMSMEs operating as proprietorship-based entities to facilitate faster onboarding into the banking system.

•   Enabling the Credit Guarantee Scheme for all CMSMEs and simplifying the enrolment process.

•   Online issuance of Trade Licences for a five-year tenure, with the platform being API-driven for use by banks and financial institutions.

•   Allowing Bangladesh Bank's CIB records to be accessed instantly by banks.

•   Implementing paperless digital signatures in place of wet signatures.

TDS: What kind of support do you need from the government to facilitate your efforts in assisting SMEs?

TRUK: The CMSME sector requires a number of reforms that various government agencies should implement. These reforms will enhance CMSMEs' access to banking services and may include, but are not limited to:

•   Establishing a one-stop online service portal for the issuance of trade licences and other business-specific permits for starting a business,

•   Digitisation of the account opening process and digital signature implementation,

•   Simplification of the Credit Guarantee Scheme,

•   Opening API access to the Credit Information Bureau,

•   Providing tax rebates to banks on income earned from CMSME financing,

•   Introducing separate tax slabs for CMSME businesses and offering rebates for transactions through banking channels,

•   Recognising Electronic Fund Transfer instructions as Negotiable Instruments, and

•   Encouraging digital storage of customer information.