SME loan defaults in Bangladesh
Date
2014-06
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Publisher
ARTNeT, United Nations ESCAP
Abstract
Major factors contributing to a high default rate on SME loans in Bangladesh include general strikes and blockades, high competition, lack of business capital, slow seasonal sales, and issues such as fund diversion. Providing bank officials high credit disbursement targets, especially in rural areas, also contributes to loan default. Lack of awareness regarding various fees and charges for loan processing purposes deducted at the outset was also found to be a problem. Bank data shows that despite a large amount of excess liquidity, interest rates charged on loans have not fallen.
Description
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Policy Brief
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Keywords
SMALL ENTERPRISES, ACCESS TO CREDIT, BANKING, WORKING CAPITAL, FINANCING, MICROFINANCE, POLITICAL ASPECTS, DEBT REPAYMENT, ENTREPRENEURSHIP, SOCIAL CONDITIONS