Banking

BRAC Bank is the fourth largest SME bank in the world, with 429 unit offices across the country, exclusively catering to growing entrepreneurs. Today, with over 10,000 crores of loans disbursed till date, it is the country's largest SME financier. Since its inception in 2001, it has disbursed nearly Tk 14,000 crore among three lakh entrepreneurs across the country. Islam said interest rates for SME loans are high due to high cost of funds and monitoring. Non-bank financial institutions also have a strong presence in SME lending. Shafique-ul-Azam, managing director of Midas Financing Ltd, a leading non-bank financial institution, said they need a maximum of 10 days to complete a loan process. "We need more time as we have to collect reports from Bangladesh Bank's Credit Information Bureau about the applicant on whether he or she has borrowed money from any other bank or institution." He said they only ask for papers that really matter. "For any businessman, we seek the trade licence, record of six month's sales and papers if he runs his business on rented house. We do not want to discourage them." "We even help applicants process the application, as many still find it hard just to complete the form," he said. Azam said his institution gives up to 5 percent rebate on interest to entrepreneurs who make timely repayment. "I think we are unique in this regard. We see banks give incentives to people who do not make payment regularly." Unlike many banks and non-bank financial institutions, Midas provides up to a six-month grace period to borrowers to help them generate money. "We give them time on the basis of the project. For example, a poultry farmer will not be able generate profits in the following month of a loan. In that case, we give them three-month grace period, when he will only pay interest," Azam said. In the last three months, Midas disbursed TK 101 crore among SMEs, taking its total loan outstanding to Tk 400 crore in the sector.