This last and final seminar (last implementation activity) of the project was, in fact, the concluding seminar by bringing most of the elements that had been discussed during the previous seminars. It has been the project’s observation, by having had consultations with many stakeholders, that the key reason for the lack of a faster development in SME banking penetration has been FI managements’ perception that SME banking is not adequately profitable.
Consequently, it was deemed necessary to conduct a day seminar for selected participants, i.e. decision makers within FIs and Bangladesh Bank to discuss how to overcome the perception of low profitability of SME banking, and closely related to that, how to make SME banking more profitable. This approach addressed the previous seminar areas, complemented with some other important aspects of making SME banking profitable, namely:
- How to measure and manage SME banking profitability on the level of: customers (total), customer segments, distribution channels, geography, and on bank corporate level; and
- How to organise SME banking at all bank levels.
The overall objective of the seminar was for the target group – senior management of Bangladesh Bank, senior management of SME banking in commercial banks, and NBFIs, selected ministries, such as Ministry of Industries, SME Foundation, and other organisations with interest for financial inclusion – to identify what could be done to make SME banking profitable for the commercial banks and NBFIs.
The seminar was successfully launched and completed by Mr. K.A.M Majedur Rahman, SSTE, with the support of Mr. Mohammad Iqbal Hossain, JSTE, which was held at the Auditorium of BBTA, on 18th June 2015, with 270 participants comprising of mid to senior officials from Bangladesh Bank, commercial banks and NBFIs, as well as members from number of organisations with interest for financial inclusion working for SMEs.
The project, once more, had the privilege to have the direct engagement of Honourable Governor of Bangladesh Bank who graced the event as Chief Guest, as well as Honourable EU Ambassador and Head of EU Delegation to Bangladesh as Special Guest.
Honourable Governor started his keynote address by first thanking the INSPIRED Project Component 3 for its timely, well thought out and need based seminar series organised for streamlining SME Banking approach and SME banking education in Bangladesh. “I am indeed happy to have been able to join this concluding seminar. You all know that European Union has been and is continuing to be an important development partner for Bangladesh’s development initiatives. This flagship project of the EU in the SME sector has rightly targeted the SME Banking approach, SME Banking education and training, Business Advisory services through Grant Scheme and improvement in the regulatory and policy areas”, noted the Honourable Governor. He went on by stating that the “banks and NBFIs must come up with appropriate profiling, need based identification and design of product and service offerings, delivery channel(s) and tools. Designing a profitable business models for MSMEs and women entrepreneurs calls for delivering a value proposition that offers complete business solution of the target market”. Honourable Governor then called upon banks and NBFIs to look into their current business model and perhaps do benchmarking exercise with local and international counterparts to build a robust and profitable business model to serve the MSME segment; and think of packaging a value proposition combining several services both financial and non-financial to offer long term relationship to the target customers.
In his keynote address, Honourable Ambassador began by ‘putting on record the gratitude of the European Union to the Honourable Governor for his constant availability for the project’s implementation activities and the wisdom he has brought to the Project’. He then elaborated on the ‘importance of SMEs as the key driver of a sustainable and inclusive growth; and this is what Bangladesh needs to win its war against poverty’. “Despite these simple economic realities, we have to note as a fact that the banking sector is often shy to open its credit lines to the SMEs. The reasons for that are multiple, from high management costs to lack of guarantee, altogether allegedly resulting in low profitability for the banking institutions. And this is not the only bottleneck that SMEs are facing: access to technology is another one. And so is lack of skilled labour and limited access to information related to business opportunities. This is true in many developing countries but still in Bangladesh it sounds a little bit of a paradox that SMEs are still struggling against such adversity”, said the Honourable Ambassador. He then touched base upon a number of paradoxes and the gaps that need to be bridged, and describing the “INSPIRED Component 3 Project as a catalyst for creating conducive environment through better dissemination of information and encouragement to dialogue, and this would not have been possible without the personal engagement of Bangladesh Bank and his Honourable Governor”.