Commercial banks need to develop appropriate financing facilities for start-up projects, with collateral requirements often failing to capture the value of innovative enterprises, speakers said at a seminar organised by the Bangladesh Institute of Bank Management (BIBM).
The seminar, titled “Start-up Financing in Bangladesh: Can Commercial Banks Play a Significant Role?”, was held on Monday at BIBM Auditorium in Mirpur, Dhaka, said a press release.
BIBM Executive Committee Chairman and Bangladesh Bank Deputy Governor Habibur Rahman attended as chief guest and emphasised the importance of creating a supportive financial environment for innovative and emerging enterprises.
A keynote paper was presented by a BIBM research team comprising Associate Professors Mosharref Hossain and Shamsun Nahar Momotaz, Assistant Professor Tahmina Rahman, Lecturer Benazir Ishaque, and Prime Bank SME Banking Head Mohsinur Rahman.
BIBM Director General Ezazul Islam, who chaired the session, said start-ups often require a different approach to financing as their value may not be adequately reflected in conventional collateral or current cash flows. Their potential may instead depend on ideas, technology, data, human capital, intellectual property and future growth prospects.
He stressed, however, that adopting a different approach should not mean compromising prudent banking practices. Banks need to strengthen their capacity to assess start-ups through better financial and transaction data, specialised appraisal expertise and relationship-based banking.
Ezazul also observed that appropriate risk-sharing mechanisms such as credit guarantees, refinancing facilities and co-financing arrangements could enable commercial banks to play a greater role in start-up financing. Stronger linkages among banks, incubators, investors and public-sector programmes could help bridge the gap between innovation and bankability.
He emphasised that building a sustainable start-up financing ecosystem would require coordinated efforts by commercial banks, Bangladesh Bank, government agencies, investors and entrepreneurs.
The ultimate objective should be to establish a financing pathway through which promising start-ups can gradually move from idea-stage support to sustainable commercial financing as their business models mature, he said.
