The Cottage, Micro, Small, and Medium Enterprise (CMSME) sector in Bangladesh continues to face significant financial challenges, with loans to women entrepreneurs falling well below target and non-performing assets on the rise. Data from the central bank’s CMSME Financing Report for the January-March 2026 quarter highlights persistent hurdles, despite policy support aimed at encouraging women-led businesses.
As of March 2026, outstanding loans to women entrepreneurs represented only 7.28% of the total CMSME portfolio. This figure remains significantly below Bangladesh Bank’s 15% target, even though it marked a slight increase of 0.57 percentage points from the previous quarter and 0.83 percentage points year-on-year.
Persistent Barriers for Women Entrepreneurs
Bangladesh Bank has introduced various initiatives to support women entrepreneurs, including refinancing schemes and concessional lending. However, the central bank’s report indicates that many still struggle to access finance. These difficulties stem from several factors, such as collateral requirements, limited business scale, inadequate financial capacity, and restricted access to banking services. Addressing these systemic barriers is crucial for fostering women’s economic power.
Broader CMSME Sector Challenges
The overall CMSME sector experienced a decline in total outstanding loans, which stood at Tk2.98 lakh crore by the end of March 2026. This represents a 5.15% decrease from the previous quarter and a 1.35% drop year-on-year. The sector accounted for 15.87% of total bank credit, falling short of Bangladesh Bank’s 25.50% target.
Loan disbursement during the January-March quarter reached Tk52,107.72 crore, distributed among 386,453 enterprises. This marked an 8.98% increase in disbursement and a 19.37% rise in the number of borrowers compared to the same period a year earlier. Despite the increase in borrowers and disbursed amounts, the classified loan ratio within the CMSME sector escalated to 26.04% at the end of March, up from 24.03% three months prior. The overall banking sector’s non-performing loan ratio also increased to 32.26% during this period.
Imbalanced Loan Portfolio and Sector Targets
The central bank’s report also revealed an unbalanced CMSME loan portfolio. Cottage, micro, and small enterprises received 68.68% of total CMSME loans, surpassing the regulator’s minimum target of 50%. In contrast, the manufacturing sector received only 34.96% of total CMSME financing, falling short of its 40% minimum target. The trade sector, however, exceeded its maximum allowable allocation at 44.93%, while the service sector met its 20.11% benchmark. These findings align with broader discussions about how government programs aim to close the MSME funding gap across various regions.
Bangladesh Bank has emphasized the importance of strengthening loan recovery, improving monitoring, and increasing financing for productive sectors. These measures are considered crucial for sustaining CMSME growth and addressing the persistent access barriers faced by entrepreneurs, particularly women, in obtaining adequate capital.
Frequently asked questions
What is the current status of loans for women entrepreneurs in Bangladesh?
As of March 2026, outstanding loans to women entrepreneurs in Bangladesh’s Cottage, Micro, Small, and Medium Enterprise (CMSME) sector accounted for only 7.28% of the total portfolio, significantly below the central bank’s 15% target.
What challenges do women entrepreneurs face in accessing finance?
Women entrepreneurs in Bangladesh face difficulties accessing finance due to collateral requirements, limited business scale, inadequate financial capacity, and restricted access to banking services.
What is the classified loan ratio in Bangladesh's CMSME sector?
The classified loan ratio in the CMSME sector rose to 26.04% by the end of March 2026, an increase from 24.03% three months earlier, according to the central bank report.
What are Bangladesh Bank's recommendations for CMSME growth?
Bangladesh Bank recommends strengthening loan recovery, improving monitoring, and increasing financing for productive sectors to sustain growth within the Cottage, Micro, Small, and Medium Enterprise (CMSME) sector.
