Access to finance is a major challenge for businesses and small and medium entrepreneurs are its worst sufferers. Banks give out all the money to large borrowers, refusing the small ones. This is why a large number of entrepreneurs do not get loans.
There are some reasons as to why small entrepreneurs do not get loans.
Banks do not value small customers as much as they value the large ones. A banker is given a loan disbursement target, but they are not told who to give the loans or who need them more. As a result, instead of going to many small customers, a banker chooses one big customer and fulfils the target. In this way, bank loans remain elusive for small entrepreneurs.
Currently, another problem has come to the fore – small and medium enterprises both being under a single definition in the law.
Since the two terms have the same definition, banks meet their quota by lending money to medium industries. The same thing happens in the case of disbursing government incentives.
The central bank can provide a solution to this problem by specifying sector-wise loan disbursal rates for banks, which every bank must comply with. For example, the central bank may provide a guideline saying 20% of a bank's total loans has to be given to large customers, 20% to medium entrepreneurs, 20% to small entrepreneurs, and 20% to very small entrepreneurs, and that large borrowers will not get loans from the share of the smaller ones.
This will help small enterprises have more access to loans.
The other findings of the CPD survey are also true.
Not only businessmen but all people are victims of corruption. Everyone has to get involved in corruption – businesses resort to corruption to get their work done easily, government officials get involved in corruption to satisfy their personal interests. And this is happening mainly because of a lack of accountability.
The government should have an independent body that will ensure accountability of various agencies. It can play a big role in eliminating red-tapism. It can also ensure accountability of the business community.
We have to take measures so that no one can get away with the crime.
Rizwan Rahman is the President of Dhaka Chamber of Commerce and Industry
TBS Senior Reporter Abbas Uddin Noyon spoke to Rizwan Rahman over the phone.