Credit towards Laptop for University Students Sukamal Sinha Choudhury General Manager SME & Special Programmes Department Bangladesh Bank

Why it is Important for Students to have a Laptop? Laptop is indispensible for each student. Laptop becomes a student’s assistance for thinking, drawing, writing, reading, analyzing, calculating, connecting, collaborating, producing, researching, presenting, sharing, exchanging, creating, meeting, coordinating, evaluating, programming, socializing and even learning. Laptop can bring students in knowledge economy and knowledge society.

Why it is Important for Students to have a Laptop? Laptop makes student life easy and organized. The student now-a-days instead of carrying number of books and notebooks, simply have a laptop and enjoy a number of benefits. The life has become organized and structured as compare to previous students who did not own the laptop. We need to help all our students take advantage of this new tools and systems to educate themselves in order to get the lay of the 21st century land.

Credit towards Laptop for University Students Today, we shall emphasis on strategy of distributing laptop to university students through credit. In other countries, all the students are using laptop. In our country, students of financially sound families are using laptop. But, financially disadvantageous students of universities of our country are not yet using laptops individually. This indicates that we are lagging far behind. Giving credit is a way to distribute laptop; but, there are a number of ways how students can get laptop.

Government’s Policy Government of Bangladesh has given emphasis and priority on IT sector, which has been clearly mentioned in revised ICT Policy, 2009. To implement ICT policy and prioritize present Government’s mission and vision of digital Bangladesh, all students must be equipped with laptop. The proposed program is aligned with national ICT policy’s action plan- Social Equity Productivity Education and Research Employment Generation Universal Access to ICT

Digital Bangladesh Priorities This Program will help realizing directly the following Key Strategy Priorities for Digital Bangladesh and indirectly the others: Ensuring a Network Security - Equitable Access for All Revitalizing Key Service Sector - 21st Century Education Ensuring a Strong Support Framework Inclusive Banking and Access to Finance Indomitable Youth Enablers of Digital Bangladesh]

Different ways of Distributing Laptop Through Credit Program according to Banker-Customer Relationship. Universities may think over of taking program of laptop distribution with communication and collaboration with different Financial Institutions, Finance Companies, Laptop Manufacturing and Marketing Companies. Obviously, some excellent ways may be developed through communication and cooperation. Practically, Bajaj finance and other finance companies in India , Dell.com in USA and other companies in different countries are providing laptop to students with easy monthly installments. Why, we can not use such strategy in Bangladesh?

Different ways of Distributing Laptop Development of Special Credit Guarantee Scheme (CGS) and provide financing for laptop. Government or any other national or international organization may provide a fund against which a refinance scheme may be launched. Government and other related organizations, universities may try to get the fund from international organizations.

Laptop Credit Program Policy of Bangladesh Bank Banks and NBFIs policy, credit products in Bangladesh Few examples of Bangladeshi Banks Some credit products of banks outside Bangladesh which may come to our good lessons Modalities and recommendations of the proposed Program.

Policy of Bangladesh Bank There is no restriction in Bangladesh Bank Policy for giving credit to students for purchasing laptop. There is no preferential scheme in BB. Banks and NBFIs may finance for laptop with preferential terms and conditions. Financially backward and meritorious students may be distributed laptop under banks’ CSR activities. Government, Ministry, Department may think over this. Each and every bank has it’s CSR department and recently a new department on CSR has been opened in Bangladesh Bank.

Banks and NBFIs Policy and Credit Products Each and Every bank has it’s separate policy Some banks are financing for laptop under special credit product designed for laptop financing- Example : Digital Loan-of a Bangladeshi Private Commercial Bank Purpose: To purchase laptop/computer Loan Limit: BDT 25 Thousand-1.00 Lac Tenure : 1-3 Years Minimum Down payment : 50% This scheme may not attract students .

Banks and NBFIs policy and Credit Products Some banks are financing for laptop under consumer credit- This scheme will not be suitable for students. Some banks are financing for laptop under their prevailing education loan This does not cover only financing to laptop. So, it will not be suitable for students only desirous to purchase laptop.

Some Cross Country examples Some banks of other countries are designing attractive credit products for financing of laptop to students. Example of 2 banks of India are given below- 1. Central Bank of India- Purpose : Purchase personal computer and laptop with accessories Eligibility: All individuals including students, professionals and permanent salaried persons including staff members of banks Quantum of Loan: Need based up to 80% of cost subject to maximum of Rs. 1.00 Lac Margin : 20% Security: Hypothecation of assets and acceptable third party guarantee. Repayment : 36-60 Months Rate of Interest : Bank Rate + 5% Processing Fee : Rs.100 per proposal.

Some Cross Country Examples 2. Bank of Baroda- Provides finance to- A branded PC/Laptop, Finance available for Hardware (Reputed brand)- Up to Rs. 1.00 Lac Finance available for software- Up to Rs. 20 Thousands Repayment- Hardware- 60 Months Software – 24 Months Margin- 25% Security- The computer/ laptop to be hypothecated to the bank. Third party guarantee required if loan exceeds Rs. 50 thousands. These two product seems to be a bit better due to good terms and conditions and may be accepted by the borrowers.

Major Impediments Bank’s reluctance towards such types of financing. Some banks perception is that amount of money is too small for them to lend profitably. Lack of collateral. Lack of initiatives, communication, coordination and collaboration among different stakeholders. Lacking special financing/refinancing scheme and absence of credit guarantee fund for securing the credit. Banks and Financing Institutions are not specially working for making lucrative credit products. Absence of strong monitoring & supervision system from respective authorities.

Modalities and Recommendations of the Proposed Program Banks and NBFIs will develop attractive and acceptable credit product so that students come forward to have credit for laptop. Rate of interest to be lower Moratorium period should be reasonable Margin should be convenient for students No collateral; however, with personal security/third party security preferably by the academic institutions Bangladesh Bank as a regulator will issue directives to all Banks and NBFIs to create special product with acceptable terms and conditions for laptop financing to students. However, the credit must be secured with a credit guarantee fund arranged by government. Bangladesh Bank may think over of policy modifications if necessary. Ministry of Education, Ministry of ICT, UGC, different universities will communicate and collaborate with different leading finance companies, computer manufacturing companies, and computer business companies to make a special arrangement for distributing laptops to students, even the arrangement may be on credit purchase, amount repayable with easy monthly installments with no or minimum rate of interest.

Modalities & Recommendations of the Proposed Program Government may come with a fund from its own or from other national or international organizations and form Credit Guarantee Fund and provide credit for laptop purchase. Even Refinance Scheme also may be suitable. Financially backward and meritorious students may be given facility under CSR scheme of different banks and other profit making organizations. Meritorious students are given stipends or scholarships by government and other organizations. Without giving in cash authority may think over to distribute laptop.

Modalities & Recommendations of the Proposed Program A committee may be formed with representatives from Prime Minister’s Office, Ministry of ICT, Ministry of Education, UGC and Bangladesh Bank to review the overall issue, detect problems, make recommendations and frame detailed operational modalities and make a comprehensive report and submit the report to Prime Minister’s office or the ICT ministry. ICT ministry may monitor and follow up the overall activities from time to time.

Final Call for SME Initiatives I shall call to all present here to motivate students to be an entrepreneur- because at present there is enormous opportunities and facilities from the Government , entrepreneur organizations, Banks & NBFIs, and finally Bangladesh Bank to cooperate and help the new entrepreneurs under SME programs and make a sound base for employment generation, poverty reduction, women empowerment and economic development. Obviously, our students will not only hunt for jobs rather become entrepreneurs and provide employment to others.

Thank you