Experts call for promoting loans through fintech

Experts at a roundtable have called for providing loans through financial service providers such as bkash and Nagad to facilitate access to finance for micro-entrepreneurs.

"A large portion of people still have no access to bank finance due to numerous limitations. Fintech can play an important role to include them," said Md Nazeem Hasan Satter, general manager of the SME Foundation, at the event organised by the Bangladesh Institute of Capital Market in Dhaka on Monday.

"In the case of micro-entrepreneur financing, realising the disbursed amount is the fact," said Md Shaminoor, executive vice-president of Bank Asia.

He believes lending through fintech might reduce costs, but loan recovery costs would be higher. 

Providing credit through financial service providers is still new in Bangladesh.

Recently, City Bank and bkash jointly launched such a service. It provides Tk500-20,000 loans with a three-month repayment period, where clients need not go to the bank or anywhere.

Professor Dr MA Baqui Khalily, former executive director of the Institute of Microfinance, Md Mezbaul Haque, general managers of the Bangladesh bank and Professor Dr Mahmuda Akhtar, executive president of the BICM, among others, were present at the event titled "Access to finance for micro-enterprises in Bangladesh: Can financial technology be the answer?".

In the programme, Dr Md Shahadatullah khan, managing director and chief executive officer of Progoti Systems Limited, presented the keynote, in which he said the micro and small entrepreneurs were not used to maintain business books, bank accounts or other business records. 

"Most of them are unable to comply with collateral requirements. Besides, going for a bank loan is also a matter of fear for them as it takes a huge time."

In cases of financing through fintech, lenders can manage automated credit scoring and have a reduced risk of defaulting loans. Using bkash, Nagad like fintech was easier for the entrepreneurs, where their transactions are recorded digitally.

The lenders also can provide such services with low operating costs and can give client-centric customised products.

On the other hand, borrowers can use business profiles and transaction data as collateral and get loans quickly. They will also get confidence with the simple application process, believes Shahadatullah Khan.

Syed Abdul Momen, deputy managing director of Brac Bank, urged the authorities concerned, policymakers, and industry insiders to promote financing services through fintech so that small entrepreneurs can save money and time.