FBCCI to set up a virtual bank, MFI, and university

Conventional banks in Bangladesh, mostly owned by business owners, do not disburse unsecured loans. That is why many small and marginal entrepreneurs do not get bank loans. 

To this end, the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) wants to set up a virtual bank of its own to disburse unsecured mortgage-free loans to small and medium entrepreneurs.

“Many small and medium entrepreneurs do not get bank loans failing to meet collateral requirements. FBCCI has taken initiative to set up a bank to provide loan facilities to them on easy terms,” stated Sheikh Fazle Fahim, FBCCI president.

In April last year, the government implemented a Tk20,000 crore stimulus package for the cottage, micro, small and medium enterprises (CMSMEs) through banks, but traders and researchers have been saying that CMSMEs are not getting the loan facility as most of them fail to fulfill requirements.

According to Bangladesh Bank data, as of 30 March, 91,434 entrepreneurs received loans worth Tk14,465 crore from the package, and most of them operate at a medium level. 

A direct bank or a virtual bank is a bank without any branch network that offers its services remotely via online banking and telephone banking or through an independent banking agent network and may also provide access via ATMs, mail, and mobile. 

Direct banks reduce the significant costs of maintaining a branch network.

Various government agencies including Bangladesh Army, Border Guard Bangladesh, Bangladesh Police, and Ansar-VDP had been issued licenses for separate banks earlier, but no bank has ever been established with the ownership of any business organization.

The government had also established Basic Bank as a 100% loan disbursing company to cater to small and medium enterprises in the country, but the bank has been termed as one of the ‘most risky banks’ in the country following loan fraud allegations of around Tk4,000 crore.

The apex trade body also wants to set up a microfinance institute (MFI) to disburse microcredit to new marginal and micro-level entrepreneurs on easy terms and facilitate various types of insurance for traders.

"Unsecured loans that the bank will disburse will be insured. We will also establish an insurance company to provide other types of insurance required in the business," added Fahim. 

Additionally, the organization has already initiated the process of establishing a university and a medical college under its own ownership, already establishing dialogue at the concerned levels and getting a name clearance. 

The institution will run through industry-university collaboration to develop the necessary human resources for the industrial sector.