Business experts at a seminar in Dhaka yesterday underscored the need for collateral-free loans along with low interest rate for the country's small and medium enterprises (SMEs) sector to benefit the national economy, according to a press release.

Describing the SMEs as 'driving force' of the national economy, they said if all financial institutions--both the private and public---come forward it will be helpful to maintaining the present trend of economic growth.

The seminar styled 'SME Financing Problem: Credit Management and Governance' jointly organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its auditorium with its president M A Momen in the chair.

SME Advisor in the Industry Ministry Dr Nuimuddin Chowdhury presented the key-note paper highlighting the obstacles and possibilities faced by the SMEs to get access to finance.

Speaking as the chief guest, Dr Mizanur Rahman Shelley, a scholar and former minister for information, said the SME sector remains as a neglected one.

"But all sorts of facilities including access to financing, collateral-free and lower interest loan have to be ensured for the sector in the greater interest of national economy," he added.

M A Momen said access to finance along with highest interest rates in Asia is one of the major problems for the

country's SME sector.

"The SME entrepreneurs are strongly in need of collateral-free loans to sustain the competitive world market," the DCCI chief said, adding that the interest rates the privatised commercial banks (PCBs) charge raised to 46.6 percent in 2005 from 39 percent in 2004, which have been hindering development of the sector.

He, however, appreciated the Brac Bank Ltd for coming up with enthusiastic collateral free scheme for financing the SME sector.

Additional Industry Secretary Dr M Ayub Mian emphasised the need for opening SME windows at all nationalised commercial banks (NCBs) to make easy access of finance to the SME beneficiaries.

Managing Director and Chief Executive Officer of Brac Bank Ltd Imran Rahman said his bank, being a non-conventional one, has been providing loans to the SME entrepreneurs considering its importance for national economy.

He, however, said 75 percent of the total borrowers of his bank are first time loan receivers.

Later, a memorandum of understanding between DCCI and Brac Bank was also signed for the next three years aiming at developing mutual beneficial cooperation to overcome any problem and strengthen economic, trade, technical and investment relations besides establishing favourable conditions for interactions between the two sides.