Seminar Report

Uttaron– SME & Farmer Service,

And Pre Launching Discussion on SME Card

The Seminar on Uttaron– SME & Farmer Service, with an special focus to Promote Sustainable & Inclusive Finance for SME & Farmer and Pre Launching Discussion on SME Card was held on 9th February, 2020 at United Nation Industrial Development Organization (UNIDO), Bangladesh Office, IDB Bhaban, Begum Rokeya Sharani, Sher-e- Bangla Nagar, Agargaon, Dhaka-1207, Bangladesh at 2 PM.

The Seminar was jointly organized by UNIDO, NRB Bank and Aurora.

The Seminar was Chaired by Dr. Tm Tajul Islam, former Consultant, the World Bank.

Participants:

  1. Tm Tajul Islam, Former Consultant, The World Bank
  2. Khondoker Morshed Millat, General Manager, Sustainable Finance Department, Bangladesh Bank
  3. Zaki Uz Zaman, UNIDO Country Representative, Bangladesh
  4. Ali Sabet, Team Leader, PRISM Bangladesh
  5. Barrister Moksadul Islam, Advocate, Bangladesh Supreme Court
  6. Ashraful Alam, Country Project Coordinator, UNCDF
  7. Rezaul Karim Siddique, Mati o Manush, Bangladesh Television
  8. Mir Emdad Ali, Sonali Din, ATN Bangla
  9. Julhas Alam, Bureau Chief, Associated Press
  10. TIM Zahid, Policy Advisor, BRAC Ultra Poor Graduation Program
  11. Khurshed Alam, Deputy Managing Director, NRB Bank
  12. Md. Zakaria, Sr. Program Officer, CIRDAB
  13. Quamruzzaman, Team Leader- Uttaron, MD & CEO, Aurora
  14. Ferdous Jahan Khan Urmi, Asstt. Director, Aurora
  15. ATM Zamal Uddin, Head of SME Banking, NRB Bank
  16. Shakhaout Hossain, CEO, Studio Wash
  17. Arpita Chowdhury Rupa, CEO, BizNext Plus

Dr. Tm Tajul Islam, the Chair of the Seminar, welcomed the participants and opened the meeting for discussion.

Speakers at the Seminar said millions of Small and Medium Enterprises (SMEs) including Micro and Cottage Enterprises that have remained out of the formal Bank Finance need a big pus with proper backing from the larger financial institutions. They said introduction of an SME Smart Card like bank debit card could be an option to begin with.

Experts from Bangladesh Bank, UNIDO, UNCDF, EU GoB Funded PRISM Bangladesh- Technical Assistance Project, BRAC Ultra Poor Graduation Program, BSAFE Foundation, Media (Bangladesh Television, ATN Bangla, Associated Press), Bangladesh Supreme Court, Legal Steps, CIRDAP, NRB Bank, Biznext Plus, and Aurora attended the Seminar.

As the Chief Guest, Khondoker Morshed Millat, General Manager, Sustainable Finance Department of Bangladesh Bank (BB), said that SMEs are playing a vital role in balanced sustainable growth of Bangladesh economy, employment generation, contribution of export earnings, etc. Regarding Uttaron, he emphasized to define the benefit of all stakeholders and develop a product so that every stakeholder can see their role and benefits. For SME Smart Card, he suggested to engage the SME and Special Program Department (SMESPD) and Banking Regulation and Policy Department (BRPD) for their approval and notification to the Payment System Department (PSD) for loan limit regarding this kind of an innovative financial product. He also emphasized to change the mindset of the stakeholders and establish a total football approach to ensure better service for the small business enterprises. Any coordinated and collaborative effort to bring them under an integrated approach will get support from the Central Bank. He said Bangladesh Bank is ready to discuss the possibilities to extend their supports to the ambition of bringing the vital Small, Micro and Cottage Enterprises under a greater financial regime. He also talked about Credit Guarantee Scheme in this regards.

The Experts said currently only 35% of the Country’s 7 millions SMEs can avail of formal banking financial service and the rest remains untapped despite huge potential of the sector. There is a complete lack of coordination in this sector. The country’s burgeoning Small, Micro and Cottage Enterprises terribly lag behind in the case of financial inclusion by the formal banking channel. So, there is a need to prepare the under served, less advantaged, women, youth and after all the pro poor people of the country.

Ali Sabet, Team Leader, EU GoB Funded PRISM Bangladesh, Technical Assistance Project

expressed his concern regarding the complete lack of coordination among Government, Universities and Industries and the concerned stakeholders in this sector. This is just because of mind set. Everyone is working in isolation. There need a push also. He is very optimistic in devising a way for the SMEs so that they come under an inclusive financial regime.

He also suggested to develop an Special Vehicle Company (Aurora) with sponsorship from the Private Banks for better managerial, technical and financial supports to the Small, Micro and Cottage Enterprises. He ensured the participants to assist the piloting of the project.

Ashraful Alam, Country Project Coordinator of UNCDF suggested to create a win win situation, who is getting what for all the stakeholders of the platform and how the Business Eco System will be benefited. This initiative should be designed as market led approach for its sustainability rather than just like a project, because after the project everything falls down, because it is grant led, project approach. He also gave an example of UNCDF portfolio based program in Gimbabua which is like a mutual fund for SME financing and also talked about the small capital of Dhaka Stock Exchange. He talked about the digital economy and emphasized on the use of technology would assist enabling business environment and increase the business efficiency. Then he said about capacity building, and  business skill for the SMEs and the revenue model of Aurora, where Aurora will be on at least at Break Even. He also said Bangladesh Bank should come up with their Credit Gurantee Scheme, etc. He also said that banks should come forward with specific products ideas that would benefit SMEs, with special focus on women and youth.

Md. Quamruzzaman, Team Leader, Uttaron, and CEO of Aurora emphasized on establishing a Business Incubation Center with special focus on Media & PR, Market/ Business linkage, Mentorship, Coaching, Advisory Services, Venture Investment and Skill Training for the Small, Micro and Cottage Enterprise owners. Md. Quamruzzaman discussed about SME Platform to develop SME & Farmer Service. He also highlighted the constraints in promoting business entrepreneurship in Bangladesh. He specifically mentioned the lack of business development support with investment service as the major constraints to improving the livelihoods of small entrepreneurs. He proposed a Business Model where banks with the loan collection supports from Corporates, MFIs/NGOs, Cooperatives can give loans directly to the borrowers and thus ensure business development service, and fix up a lower rate of interest.

Dr. Zaki Uz Zaman, UNIDO Country Representative of Bangladesh gave a brief about UNIDO and its activities. He thanked  Uttaron and Aurora for organizing such an important Seminar and gave his opinion that Uttaron could be a very good SME Platform, as the major stakeholders have experience people involved with the SME development, specially for sustainable and inclusive finance for the small, micro and cottage enterprise.

Barrister Moksadul Islam, Advocate, bangldesh Supreme Court focused on SME policies and legal issues. He also emphasized on collecting SME circulars. Rezaul Karim Siddique, Anchor, Mati o Manush, Bangladesh Television, emphasized on Business Skills, and Entrepreneurship assistance.

TIM Zahid Hossain, Policy Advisor of BRAC Ultra Poor Graduation Program, in his key note presentation, said their experience in providing supports to the country’s poorest section of people has a tremendous positive impact. He said people who are involved with the SMEs, specially small, micro and cottage enterprises could be helped by linking them with the formal banking channel. “With Mentorship, Coaching, Advisory Service in preparing Business plan, risk management, skill training on book keeping, advanced technology, etc., assistance in raw material procurement, the SMEs would be better equipped to repay their loans,” he observed. He also pointed out that small, micro and cottage enterprise owners and farmers mostly take loan/ money from MFIs/NGOs, and individual loan providers, but if they are connected with the formal financial institutes like banks and other non banking financial institutions, their contribution to the economy would be greater.

Khurshed Alam, Deputy Managing Director, NRB Bank gave a brief about the opportunities and challenges of accessing formal finance. He said that they are ready to roll out new loan product for the SMEs, specially for the small, micro and cottage enterprise owners and farmers. He said, if they get policy supports from the Government, his NRB bank would be able to take more proactive and beyond lending approach for the small business enterprises. But as per his concern, the limit of lower interest rate could be a major challenge.

Kbd. Md. Zakaria, Sr. Program Officer of CIRDAP presented an appraisal of Aurora & Co. and its activities.

The speakers of the Seminar agreed that the introduction of an SME Smart Card that would be used by the SME owners and even by the farmers could bring a revolutionary impact in Bangladesh economy. They emphasized to prepare a business plan for this service.

An important recommendation came from the seminar that Aurora could provide advisory services for SME owners, and Farmers, and also create a linkage between Bank/Financial institutions and SME owners,.

Recommendations:

  1. A Multi Stakeholder SME Platform will be created under Uttaron, led by Special Vehicle Company (Aurora) and the Economy will be Platform based Economy
  2. Aurora will prepare a Business Plan for this concept
  3. Engage BRPD, SMESPD and PSD for Policy Support
  4. Undertake a Pilot Project with NRB Bank and Launch SME Card
  5. Prepare a Project Proposal for Bangladesh Bank or selected well know donor
  6. Digitization of SMEs for Innovative financing and cost cut
  7. Initiate Innovative Financing like small capital of Dhaka Stock Exchange
  8. Register an Special Vehicle Company
  9. The Project should focus on Small, Micro and Cottage Enterprise and Farmers

Next meeting will be held in April.

The Chairman thanked the participants for their valuable contribution and concluded the seminra.

 

(Dr. Tm Tajul Islam)

Chairman

 

 

Copies Forwarded to:

  1. Khondoker Morshed Millat, General Manager, Sustainable Finance Department, Bangladesh Bank
  2. Zaki Uz Zaman, UNIDO Country Representative, Bangladesh
  3. Ali Sabet, Team Leader, PRISM Bangladesh
  4. Barrister Moksadul Islam, Advocate, Bangladesh Supreme Court
  5. Ashraful Alam, Country Project Coordinator, UNCDF
  6. Rezaul Karim Siddique, Mati o Manush, Bangladesh Television
  7. Mir Emdad Ali, Sonali Din, ATN Bangla
  8. Julhas Alam, Bureau Chief, Associated Press
  9. TIM Zahid, Policy Advisor, BRAC Ultra Poor Graduation Program
  10. Khurshed Alam, Deputy Managing Director, NRB Bank
  11. Md. Zakaria, Sr. Program Officer, CIRDAB
  12. Quamruzzaman, Team Leader- Uttaron (An SME Platform), MD & CEO, Aurora
  13. Ferdous Jahan Khan Urmi, Asstt. Director, Aurora
  14. ATM Zamal Uddin, Head of SME Banking, NRB Bank
  15. Shakhaout Hossain, CEO, Studio Wash
  16. Arpita Chowdhury Rupa, CEO, BizNext Plus
  17. Office file