Speakers at a discussion meeting underscored the vital role banks can play in financing social businesses (SB) in Bangladesh.

They also identify significant barriers and recommend policy reforms. 

They came with remarks at a roundtable discussion held today (8 July) at the Bangladesh Institute of Bank Management (BIBM).

Deputy Governor of Bangladesh Bank Nurul Nahar was present in the program as the chief guest.

Keynote paper presentation on “Role of Banks in Financing Social Business in Bangladesh” was presented at the event.

The paper was prepared by a research team including Dr. Prashanta Kumar Banerjee and Dr. Md Shahid Ullah from BIBM, Dr. Mohammad Monirul Islam Sarker (also a Director at Bangladesh Bank), and Abdul Hai Khan, Executive Vice Chairman of Grameen Trust.

Among the financial sector experts Faruq M. Ahmed, Md. Ali Hossain Prodhania, Kazi Mosleh Uddin Ahmed were panel discussants.

Social businesses, defined as enterprises designed to address social problems as their primary objective with profits reinvested for social missions rather than shareholder dividends, are recognized for generating both social and financial returns.

Bangladesh Bank forms committee to investigate corruption at BIBM

Notable examples include initiatives by Grameen Group and BRAC.

However, access to finance remains a crucial barrier for the establishment and expansion of social businesses. 

Banks often face challenges in providing funds due to concerns about repayment capacity, a lack of specific Bangladesh Bank (BB) guidelines for financing SB, and the absence of tailored financial products.

Experts and bankers at the discussion suggested that banks could offer interest-free finance from their Corporate Social Responsibility (CSR) funds or provide low-interest loans to social enterprises. To facilitate this, participants recommended that Bangladesh Bank formulate clear policy guidelines and establish interest-free or low-interest refinance facilities for social businesses. 

They also urged the government to consider creating a dedicated wing under the Ministry of Commerce for social business and offering fiscal incentives like tax rebates.

Healthcare, environmental issues, and education were identified as the most critical priority sectors for social business intervention in Bangladesh.