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In a recent article in The Daily Star, Bijon Islam, CEO of LightCastle Partners, addresses key barriers that prevent small and medium enterprises (SMEs) in Bangladesh from accessing capital. Titled “How Innovation in Technology and Instruments Can Solve Access to Capital for Small Businesses,” his piece draws from his experience in promoting economic growth through collaborations with development partners, corporations, and SMEs.
Islam explains that limited collateral, lack of formal credit histories, and reliance on traditional metrics often keep SMEs outside the formal banking system. To bridge these gaps, he advocates for alternative credit assessment methods that offer a more accurate view of an SME’s financial health. Integrating these methods could allow lenders to evaluate businesses without requiring traditional banking history.
Technology, especially fintech, emerges as a vital solution to address these issues. Digital platforms such as micro-loans, peer-to-peer lending, and crowdfunding provide practical ways to reach underserved SMEs, particularly in remote areas. These tools help reduce operational costs for lenders while also extending critical financing to businesses without access to traditional banks.
For these advances to take root, Islam emphasizes the need for supportive policy frameworks. Streamlining regulations, protecting data privacy, and encouraging private-sector investment are essential steps. A supportive regulatory environment would enable fintech companies to scale up their services and increase financial inclusion for SMEs.
Additionally, Islam stresses the importance of financial literacy and business training for SME owners. Enhancing entrepreneurs’ financial knowledge equips them to manage funds effectively and attract investors, helping build resilience and sustainable growth.
The article closes with a vision for an inclusive, technology-enabled financial ecosystem. By combining digital innovation, supportive policies, and targeted financial education, Bangladesh could foster an economic landscape that empowers SMEs and boosts national growth.
For the full analysis, read the article on The Daily Star from here.
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