On December 8, 2024, Innovision Consulting hosted the inaugural Bank-Borrowers’ Dialogue in Bhairab, Kishoreganj, engaging 26 MSMEs from the Footwear sector. This event, organized under the PRABRIDDHI project commissioned by Swisscontact, aimed to address the barriers preventing MSMEs from accessing formal financial systems and foster a collaborative dialogue between MSMEs and financial institutions.
Micro, Small, and Medium Enterprises (MSMEs) are key contributors to economic growth, employment, and innovation. They account for a significant share of GDP and support millions of livelihoods, especially in developing economies. However, persistent challenges—such as limited access to finance, inadequate infrastructure, and low financial literacy—hinder their potential. Addressing these barriers through capacity building, financial inclusion programs, and policy support is critical to unlocking MSMEs’ growth and promoting inclusive economic development.
The PRABRIDDHI project (2020–2025), funded by the Governments of Bangladesh and Switzerland, focuses on Local Economic Development (LED) and aims to anchor sustainable growth initiatives nationally. As part of this project, Innovision Consulting supports financial inclusion for MSMEs in key sectors, including Footwear, Light Engineering, ICT Freelancing, Women-Owned Small and Medium Enterprises (WSMEs), and Tourism.
The Bank-Borrowers’ Dialogue is part of Innovision’s broader efforts to break barriers preventing MSMEs from engaging with formal financial channels. The initiative also seeks to understand why financial institutions face difficulties integrating MSMEs into their services.
Key Challenges Identified
- Fear and Misconceptions About Banking Systems: Many MSMEs perceive banks as rigid and overly procedural, which discourages informal businesses from seeking formal financial support.
- Limited Awareness of Financial Products: MSMEs often prefer working capital loans, unaware of other SME-friendly loan options with lower interest rates due to insufficient communication by financial institutions.
- Incomplete Documentation: Many MSMEs lack essential business documents, such as trade licenses or tax records, creating significant hurdles for loan processing.
- Dependence on Informal Lending Channels: Due to accessibility, MSMEs frequently rely on informal lenders, exposing them to higher interest rates and default risks.
Innovision’s Proposed Solutions to Enhance Financial Inclusion
Based on these findings, Innovision Consulting has proposed several actionable interventions:
- Training Programs: Educating MSMEs on business documentation, financial product navigation, and preparing effective credit proposals.
- Financial Inclusion Corners: Establishing support hubs within sector-specific associations to disseminate financial information.
- MSME Help Desks: Setting up dedicated desks at bank branches to guide MSMEs through credit proposal preparation and loan applications.
Innovision Consulting believes these interventions will pave the way for greater financial inclusion of MSMEs, ensuring their long-term growth and resilience while contributing to broader economic development.