Written by The Banking Post
BRAC Bank has unveiled plans to transform itself into a “complete financial partner” for cottage, micro, small and medium enterprises (CMSMEs), rolling out technology-driven products and the industry’s lowest lending rate to revitalise the segment amid an economic slowdown.
The bank recently launched a campaign titled “SME Means BRAC Bank”, offering loans at 13.75 per cent—the lowest-ever in CMSME financing in Bangladesh.
“We want to make CMSMEs vibrant again and firmly establish our leadership in this space,” said Syed Abdul Momen, additional managing director and head of SME banking at BRAC Bank, in an interview. “This is not just publicity—we are backing it with action.”
To meet evolving needs, the bank has introduced Prabartan, a financing solution for online vendors, and BizPay, a new transaction banking platform designed to retain entrepreneurs within the bank’s ecosystem by providing a full suite of services.
“In fact, we want to become a complete financial partner for CMSMEs,” Momen said, adding that too often entrepreneurs shift funds to other banks after receiving loans.
Over the past two decades, BRAC Bank has pioneered CMSME financing, proving the segment can be profitable despite high supervisory costs. Its success has prompted many peers to follow suit, Momen noted.
The bank is also leveraging technology to cut red tape. Its electronic loan application proposal (eLAP), introduced last year, has reduced processing time and costs by digitising borrower data. Plans are underway to develop an AI-driven credit scorecard, which could eventually approve loans without physical verification.
Still, regulatory and profitability challenges remain. CMSMEs are considered cost-intensive, with lower margins compared to corporate lending. The removal of a provisioning benefit has also raised barriers: banks must now keep a 1 per cent provision against CMSME loans, up from 0.25 per cent earlier.
“This will certainly discourage lenders,” Momen warned. “If we want easy access to funds for CMSMEs, banks need additional incentives.”
Founded 24 years ago by the late Sir Fazle Hasan Abed to provide collateral-free loans to small businesses, BRAC Bank today derives nearly half of its loan portfolio from the CMSME sector.
