Capital market has potentials to fund small business
Dominant and structured sectors, like readymade garments, are enjoying their access to banking services, and a larger portion of their allocated stimulus loans has already been disbursed
Micro businesses are the ones to miss out on the government's stimulus loan packages the most because of a dependence on banks for its disbursement. But, microfinance institutions have a big role to play for supporting the economic turnaround of the grassroots people engaged in micro business activities across Bangladesh.
Dominant and structured sectors, like readymade garments, are enjoying their access to banking services, and a larger portion of their allocated stimulus loans has already been disbursed.
But, the micro entrepreneurs in rural Bangladesh, and even in urban areas, mostly lack the necessary access and preparedness to avail the stimulus loans from banks. That is why the disbursement rate of the stimulus loans is too low in the SME sector.
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Brac accelerated its lending to its microfinance programme members, mostly yet to be bankable ones. For funding its microfinance programme, Brac recently applied to the regulators concerned for issuance of Tk1,350 crore zero coupon bonds.
The growing capital market has potential to finance the extreme micro entrepreneurs through funding the programmes.
Bonds can make the capital market as the third funding window for microfinance providers after programme members' deposit and loans. Also, the capital market and a diversified group of institutional investors will get more investment options.
