Corporate borrowers focused for bank lending: Experts
More than 75 percent of bank lending in Bangladesh continues to flow to large corporate borrowers, leaving SMEs and other underserved businesses with limited access to finance, experts said at a roundtable on Monday.
“Bangladesh’s financial system remains heavily skewed towards large corporate borrowers, limiting access to finance for SMEs, rural entrepreneurs, and other underserved groups,” said Mohammed Nurul Amin, chairman of Bangladesh Krishi Bank.
He said that 75-80 percent of bank lending continues to flow to the corporate sector, creating a structural imbalance that has persisted for years.
He made the comment at the event on “Access to Finance in Bangladesh: Building a More Conducive Financial System for the Private Sector”, organised by Policy Exchange Bangladesh (PEB) and the Metropolitan Chamber of Commerce and Industry (MCCI) at the chamber’s office in the city.
While large businesses enjoy easier access to credit, many small entrepreneurs, traders and informal businesses struggle to enter the formal banking system, he said.
To improve financial inclusion, Amin urged banks to expand invoice financing, or factoring, allowing suppliers to obtain financing against confirmed purchase orders or invoices without relying on traditional collateral.
Delivering the keynote address, Shams Zaman, country managing partner of PricewaterhouseCoopers Bangladesh Pvt Ltd (PwC), said credible resolution of distressed assets is essential to restoring confidence and reviving credit growth.
He also stressed the need to develop long-term sources of capital beyond the banking sector, proposing that the Guarantee Window be transformed into an autonomous, professionally managed institution to help diversify the country’s financial system.
Farooq Ahmed, secretary-general and CEO of MCCI, also addressed the event.
Moderating the discussion, M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said the Bangladesh Business Climate Index has consistently identified access to finance as the weakest aspect of the country’s business environment, prompting the roundtable to focus on practical reforms to improve financing for businesses.
Syed Mohammad Kamal, president of the American Chamber of Commerce in Bangladesh (AmCham), said SMEs lack the institutional support available to large firms, requiring coordinated action by the central bank, the judiciary and other stakeholders.
Farooq Ahmed, secretary-general and CEO of MCCI, also addressed the event.
Participants called for coordinated action among Bangladesh Bank, financial institutions, policymakers and the private sector to expand credit access and strengthen financial inclusion.
The recommendations from the roundtable are expected to feed into a more inclusive and growth-oriented financial system for the private sector.
