No or expired trade licence, a lack of guarantor, banks' aversion to lending to women, a lack of business financials and transaction history, insufficient business knowledge, and weak business plan are among the key reasons for rejection of women's bank loan applications in Bangladesh, a study has found.
According to the study titled "Assessing the current ecosystem of financial products for women in Bangladesh", 40% to 50% of loan applications by women entrepreneurs in the country get rejected owing to a lack of required documents.
Fahmid Kaisar, business consultant of LightCastle Partners, presented the study paper at a webinar themed "Innovations in financial services: are we addressing the financial needs and inclusion challenges of women", organised by Aspire to Innovate (a2i) project under the ICT Division on Wednesday. The Business Standard was the media partner of the programme.
Fahmid Kaisar put forward a set of recommendations for the regulatory agencies as well as service providers to ensure increased lending to women entrepreneurs.
He urged regulators to incentivise financial institutions upon meeting disbursement targets set for female entrepreneurs and encourage them to set up female-friendly branches.
He also recommended that financial institutions facilitate capacity development programmes for women entrepreneurs, market products according to beneficiary types, and introduce digital accounting to small and medium entrepreneurs.
He urged microfinance institutions to provide preferential rates to women who are directly involved in the business, adding this will encourage women to actively take ownership of their participation.
Financial inclusion of women is necessary for improving gender equity, increasing women's empowerment and asset ownership, Fahmid said, adding it will also help better financial management.
Addressing the online seminar, Jayasree Bagchi, director of the Financial Inclusion Department of the Bangladesh Bank, said the central bank has taken many initiatives to facilitate women entrepreneurs.
The financial sector has a target of raising the ratio of CMSME loans to women entrepreneurs against the total CMSME loans to 15% by 2024, he mentioned. Also, a separate desk has been set up for women in each branch of banks. A startup fund of Tk500 crore is being launched for new women entrepreneurs.
Rezaul Hossain, managing director and CEO of mobile financial service provider upay, asked for concerted efforts by four sectors – cellphone, internet, smartphone and financial institutions – for digital finance.
Sonia Bashir Kabir, managing director of SBK Tech Venture, said women entrepreneurs should be taught why they need bank loans. "Many small entrepreneurs are afraid of taking loans from banks. This fear must be overcome. Products should be offered to women," she said.
Nahid Sharmin, gender specialist of the a2i Programme moderated the webinar, also addressed by Bipasha S Hossain of Swisscontact Bangladesh.