Dr Mustafa K Mujeri, Executive Director, Institute for Inclusive Finance and Development (InM) presented the keynote speech in the SAARCFINANCE Seminar on 'Strategies of Lending for Priority Finance in the SAARC Region", held on 22 February 2019 at the Dhaka Regency Hotel and Resort. The seminar was organised by SAARCFINANCE Cell, Research Department of Bangladesh Bank.
Mr. Dasho Penjore, Governor of Royal Monetary Authority of Bhutan attended the seminar as the Chief Guest while Mr Fazle Kabir, Governor, Bangladesh Bank was the Special Guest. Mr S M Moniruzzaman, Deputy Governor of Bangladesh Bank chaired the inaugural session.
In his keynote speech, Dr. Mujeri observes that ‘’priority finance presents an exciting opportunity for the SAARC region; but we need to be clear about the problem we are trying to solve, address that, and be realistic about whether it can work for all.’’ He observes that priority finance should increasingly be directed towards promoting inclusive growth in the SAARC region by improving infrastructure and financial services, and by supporting the expansion of smaller enterprises. The focus should be on strategic investments and interventions to promote inclusive growth, help address climate change impacts, and encourage regional integration.
He further observes that, given the importance that the SAARC governments place on financial sector inclusion, state-directed priority sector lending will continue to play a large role in SAARC’s future development agenda. Many regulators’ current reliance on universal loan quotas or interest rate subsidies runs the risk of weakening system-wide asset quality, particularly when lenders, lacking the specialised experience in priority sectors, face a lending mandate. As a result, these lending requirements may also discourage market entry of new banks, particularly the foreign ones. The strengthening of priority lending along with development of alternative mechanisms and improvements in credit risk assessment infrastructure could enhance banking systems’ transmission of credit to priority sectors in the SAARC region, helping to expand access to finance while limiting economic distortions. Learn More
