Although being a 20-years old market in Bangladesh financial sector, Suppply Chain Finance is yet to produce desired yield ascribing to some reasons. Firstly, there is a lack of understanding about the concept of supply chain finance and its products despite its immense potential in Bangladesh market. Corporate entities show indifference in backing up their suppliers, which is why suppliers have to take the fund at high rate. Also, here in case of non-payment of corporates, the supplier becomes delinquent to the banks, which is an unusual scenario in otherwise traditional loan products.
Reverse factoring, which is broadly applied in other parts of the world, has yet to get broader acceptability in Bangladesh market. However, the most crucial challenge is, supply chain finance is yet to be recognized as “a separate product” at regulatory level. It is still treated under the policy of Short Term Revolving Loan. However, some commendable initiatives such as Digital Supply Chain Finance Platform is taking place in the local market that breaths fresh air in this innovative product category. Also, there is a talk in the industry about the policy-making in regulatory level which will be the big push for this mode of financing.
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