Policy reforms necessary for full financial inclusion

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Policies and regulations for both banks and non-banks need to be improved to accelerate financial inclusion since it will lead to private sector investment in the industry and enhance the credit history of small businesses, according to experts.

"We are emphasising on the development of smaller businesses within our plans for full financial inclusion. Our economy is moving very fast and that's the reason we should address a number of the problems faced by smaller businesses," said Md Ashadul Islam, senior secretary of the finance division.

Islam made the comments during the keynote session of the "Action-framing conference: transforming financial market for small businesses". The function, held at the Radisson Blu Water Garden hotel in Dhaka yesterday, was organised within the Business Finance for the indegent in Bangladesh (BFP-B) programme.

The BFP-B, a financial sector reform programme funded by the UKAid and managed by Nathan Associates London Ltd, aims to create Economic opportunities for smaller businesses in Bangladesh.

Nathan Associates previously caused the federal government, regulators, commercial finance institutions, and technology companies on a number of occasions in Bangladesh.

Small-scale entrepreneurs have no idea how exactly to manage their finances despite having an excellent scope to expand businesses, said Islam.

During his presentation, BFP-B team leader Feisal Hussain said that the programme plays a essential role in assisting policy and regulation reforms.

In addition, it triggers investments to finance micro, small and medium businesses, he added.

According to Hussain, about 75 per cent of smaller businesses in Bangladesh are yet to take pleasure from services from the formal financial sector.

However, finance institutions have little incentives to serve small businesses as capital constraints, conservative boards and a harsh regulatory environment discourage investment in the high-risk sector.

In some cases, smaller businesses usually do not choose formal financial services as they are not well-informed, Hussain said.

The BFP-B invested 25 million pounds in Bangladesh through the entire last seven years to create financial opportunities for small businesses by changing the behaviour of market influencers in the financial sector, said Eamon Cassidy, managing director of Nathan Associates.

The full total number of small to medium enterprises (SME) in the united states is estimated to be about eight million. SMEs take into account 25 per cent of Bangladesh's GDP and employ over 50 per cent of the working population, said Ahmed Jamal, a deputy governor of the Bangladesh Bank.

The central bank has taken several initiatives to facilitate the growth of SMEs through special funding schemes and the expansion of SME-focused institutions, he added.
Source: https://www.thedailystar.net

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