According to a study, the main factors contributing to the denial of women’s bank loan applications in Bangladesh include lack of or expired trade licenses, a lack of guarantors, banks’ reluctance to lend to women, a lack of business financials and transaction history, a lack of business knowledge, and a weak business plan.
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,” organized 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.
Many small entrepreneurs are afraid of taking loans from banks. This fear must be overcome. Products should be offered to women.Sonia Bashir Kabir
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.
In order to increase gender equity, women’s empowerment, and asset ownership, financial inclusion of women is required, according to Fahmid, who added that it will also aid in 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. Additionally, in each bank branch, a separate desk has been set up for women. A Tk. 500 crore startup fund is being introduced for emerging female 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.