INSPIRED Component 3

Component 3 – Introducing Sustainable Improvements to SME Access to Appropriate and Affordable Banking

Objectives

The main objective of INSPIRED Component 3 is to introduce sustainable improvements in SME access to appropriate and affordable banking through knowledge transfer including training of Bangladesh Bank Training Academy (BBTA) and Bangladesh Institute of Bank Management (BIBM), aiming at capacity building of the entire banking industry in SME banking, thus stimulating growth and reducing poverty.

We aim to strengthen the two Bangladesh training institutions and the commercial banking system’s capacity by designing and delivery of specific training on SME banking services, as well as improve awareness of the Bangladeshi financial sector policy makers and regulators of the special needs of SME financing and how best to serve these needs.

Beneficiaries & partners

  • Bangladesh Bank
  • Bangladesh Bank Training Academy
  • Bangladesh Institute of Bank Management
  • All Commercial Banks

BBTA

Six Executive Management Officials of BBTA have been selected to oversee the training developments of selected training programmes in various topics related to SME banking for the selected commercial banks and specific departments within the Central Bank. Other external potential trainers are also being selected from the nominated commercial banks and Bangladesh Bank for specific Train-the-trainer programmes.

Some of the main intervention relates to the following activities:

  •  Assessment of administrative and management structures of BBTA & BIBM
  • Strengthening of the working relationship between BBTA and BIBM though signing of a Memorandum of Understanding between BBTA and BIBM
  • Training needs assessments
  • Development of a Human Resource Development Plan and Organizational Development Strategy for
  • Development of Training Operations Manual
  • Familiarisation of designated SME faculty members with SMEs through filed visits to SMEs and commercial banks
  • study visits
  • Development and delivery of identified training programmes using train-the-trainer approach.

Development of Training Programmes

Specific training programmes that relate to SME lending and bank inspection requirements of the Central Bank have been identified, out of which number of training programmes have already been completed and other will be delivered during the remaining project’s lifetime.

List of recently completed training programme:

  • SME Lending Practices & regulatory Framework
  • Risk Management with Specific Focus on SME Business Lines of Credit Institutions –Train The Trainer
  • Overview of the Supervisory Process &Legal Framework of Bank Supervision:On-Site & Off-Site Supervision
  • Workshop on Training Manual System
  • Training on Course Design & delivery
  • SME Foundation  Training

BIBM

Eight faculty members of BIBM have been dedicated to course development and training in various topics related to SME Banking. In addition 10 external trainers from commercial banks have been selected. The total of 18 trainers represent good blend of academics and practitioners. All trainers have been subjected to a “train-the-trainers” programme as the training needs are huge.

As with BBTA, some of the main areas of intervention for BIBM include:

  • Assessment of administrative and management structures of BBTA & BIBM
  • Strengthening of the working relationship between BBTA and BIBM though signing of a Memorandum of Understanding between BBTA and BIBM
  • Training needs assessments
  • Development of a Human Resource Development Plan and Organizational Development Strategy for
  • Development of Training Operations Manual
  • Familiarisation of designated SME faculty members with SMEs through filed visits to SMEs and commercial banks
  • Study visits
  • Development and delivery of identified training programmes using train-the-trainer approach.

Development of Training Programmes

The first programme “SME credit risk management” was held on October 2012. Sector specific credit risk management programmes have also been developed; for instance for the garment and the agro processing sectors. Examples of other training courses which have been developed and delivered include:

  • SME Credit Risk Management: Agro Machinery& Agro Processing
  • SME Credit Risk Management: Garment & Leather Sector
  • SME Delinquency Management
  • SME Product Development and Marketing

Specific Seminars for the CEOs and Senior Management of the Banking Sector

A number of hindrances for further specific training exposure to SME banking relate to the constraints within the banking sector in several areas. Examples include the very long SME loan processing time in certain banks; lack of credit approval authorities and procedures that results in less optimal risk management systems; lack of ability to measure SME banking profitability and to manage the loan portfolio, & Managing bad debts that is a high-risk factor within all banks.

At least ten areas of hindrances have been identified and seminars are being designed, as joint activities of BBTA and BIBM, targeting senior management of the commercial banks and Bangladesh Bank in order to create awareness. Subsequent decisions by the banks’ management to adjust strategies for facilitating a further increase in the SME loan portfolio and banking services of the country will be foreseen.

The high-level seminars include: 

  • SME Banking Strategy
  • Credit Policy & Loan Origination Procedure
  • SME Credit Scoring
  • SME Loan Business Process Reengineering
  • SME Access to Finance for Women Entrepreneurs
  • SME Credit Guarantee Scheme
  • SME Delinquency Management Doctrine
  • The Role of Central Banks and Financial Institutions in Promoting SMEs
  • Enhancing SME Access to Bank Financing in Bangladesh: Problems and the ways forward
  • “Best practice” indicators/benchmarks for SME financing development