Accepting digital payments through personal retail accounts could pave the way for local cottage, micro, small and medium enterprises (CMSMEs) to avail loans from official banking channels, according to experts.
In November 2020, Bangladesh Bank issued a circular enabling micro and underprivileged businesses that have accounts with banks, mobile financial service and payment service providers to open personal retail accounts without a trade license.
"Although the sector covers 90 per cent of the country's economic activities and employs more than 1.4 crore people, about 60 per cent of CMSMEs do not have access to finance from banks and other financial institutions," said Shah Zia-Ul Haque, an additional director of the central bank.
But if CMSMEs use digital platforms for their transactions, it would leave a record or footprint that can be leveraged to get loans from banks, he added.
Haque was speaking at a workshop on personal retail accounts at The Westin Dhaka yesterday.
Micro businesses can open personal retail accounts with banks by fulfilling the full-fledged KYC (Know Your Customer) requirements.
However, the monthly outstanding balance cannot cross Tk 10 lakh in their respective account if a micro business opens it by filling up an e-KYC.
The central bank also allowed clients to open accounts by filling up simplified e-KYCs, where only national identification cards have to be submitted.
Initially, banks will be able to provide up to Tk 1 lakh loans to CMSMEs under the facility, which will be introduced when transactions through personal retail accounts gain popularity.
"And the central bank will provide necessary guidelines in this regard," Haque said.
Muhommad Badiuzzaman Dider, a director of Bangladesh Bank, said if banks and other financial intuitions provide loans to small vendors, they will be equally benefited by expanding their market.
M Rashed Al Hasan, senior project officer for the financial sector at Asian Development Bank, Md Khurshid Alam, an executive director of the central bank, Rafeza Akhter Kanta, additional director, also spoke at the event.
