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The Bangladesh Small and Cottage Industries Corporation (BSCIC) mulls establishing a separate specialised bank to help grow the country's cottage, micro, small and medium enterprises (CMSMEs) sector.
The BSCIC has already sought the Ministry of Industries' (MoI) consent and necessary support to this effect.
According to the SME policy, the BSCIC can set up a specialised SME bank.
"Support access to finance in SME-related innovations and introduce 'SME Bank' in the country," the SME Policy 2019 mentioned.
"We do have the capability to run a bank, and under the SME policy we can launch a bank," Mushtaq Hossain, the BSCIC chairman, told The Financial Express.
He said the MoI asked the BSCIC to conduct a feasibility study with a qualified firm to ensure whether the agency can really run a bank or not.
"We are now trying to get Tk 20 million fund for the feasibility study."
Mr Hasan noted that small businesses are suffering while seeking bank loan and other services, as big commercial banks do not provide loans to CMSMEs.
"So, they have to run their business by taking loans from various NGOs and individuals at high interest rates. As a result, it becomes difficult for them to survive."
The BSCIC chairman said the entity can train 20,000 entrepreneurs every year, and support them with easy loans to operate business without facing hassles or being defaulters.
The entity has received Tk one billion funds from the government to provide loans to CMSMEs.
The BSCIC has increased loan ceiling from own fund up to five times to help these businesses recover from Covid-19 fallout.
The small business firms under CMSME category can now avail Tk 10 million as loan for setting up and running business.
"The BSCIC board could approve the highest of Tk two million," according to the BSCIC letter, sent to its estates across the country on February 11.
The BSCIC director (industrial development and extension) can now approve loan proposals of up to Tk two million from the previous Tk one million.
The BSCIC regional directors can now disburse up to Tk one million from the previous Tk 5,00,000, and district offices can approve Tk 5,00,000 from Tk 2,00,000.
The entity started providing loans to small firms in 2015. Currently, it has Tk 330 million outstanding loans until December 2020, and its loan recovery rate is 96 per cent.
The BSCIC chairman said small entrepreneurs always pay their loans back.
"If we can launch a bank, we will be successful and help SME sector grow," he added.
At present, the number of MSMEs is about 7.8 million, and they contribute about 25 per cent to the country's gross domestic product (GDP), as per the Asian Development Bank (ADB) 2015 data.
The BSCIC provides medium- and long-term loans to small industries, either directly or through a consortium of commercial banks.
The agency also provides assistance in all other matters relating to development and expansion of small and cottage industries (SCIs).
The BSCIC is the official body that monitors development of self-employment, cottage industries and small enterprises.
It also provides statistics on types of enterprises, their activities and number of people employed by these.