IT IS, rather, disconcerting that financial services for women is declining at a time when the government is celebrating increased women’s participation in the formal economic sector. The disbursement of SME loans by banks and non-bank financial institutions to women, as New Age reported on Wednesday, declined by 10.71 per cent in 2017 compared with that in 2016. During the same period, SME loan disbursement to male entrepreneur increased by about 15 per cent. In general, they are not considered eligible for more loans by the banks and NBFIs. The rising gender gap in SME loan disbursement is particularly shocking because women entrepreneurs are consistently showing a good track record in loan repayment. According to the latest Bangladesh Bank data, loan repayment by female entrepreneurs increased by Tk 1632.96 crore in 2017, which is a 51 per cent rise in loan repayment than 2016. In light of their performance, it is not understandable why the financial institutions have chosen to deprioritise women entrepreneurs as borrowers.
Researchers, bankers, SME specialists and women right activists identified a number of reasons behind the sharp gender gap in loan disbursement. They claimed that it is primarily because of a biased mentality that women’s applications for financial assistance do not get approved as often as expected. Besides, there are other procedural flaws that make it hard for women to apply for loans such as securing collateral against a loan. According to a study conducted by the International Finance Corporation of the World Bank Group, more than 60 per cent of the women entrepreneurs’ demands for finance in the SME sector are not met by the banks and NBFIs. The study also found that state-owned commercial banks provide only 5 per cent of the total finance to women SME entrepreneurs. Female entrepreneurs cannot also get loans in crucial times when they plan to expand their businesses. Moreover, as the SME Foundation suggested, women entrepreneurs face serious problems when it comes to producing a guarantor for the loans. In some cases, it is particularly difficult as the financial institutions expect husband as guarantor and majority of the husbands refuse to act as their guarantor. Therefore, it is not surprising that there exists a gender disparity in SME loan disbursement. This disparity seriously challenges the incumbents’ much celebrated rhetoric of women’s empowerment.
In order for the political party in power to prove its true commitment to ensure women’s equality, it must ensure a loan disbursement procedure that acknowledges the prevailing gender biases and include mechanisms to help women entrepreneurs to overcome these obstacles. In doing so, it may consider relaxing the collateral rules of banks for women entrepreneurs and introduce a provision that would make it mandatory for each branch of banks to issue loans to a minimum number of female entrepreneurs. Meanwhile, women’s rights activist must continue to mobilise support for a more inclusive banking sector.
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