BIN wall threatens CMSME credit as NBR rejects bank plea

Millions of small businesses are facing a new barrier to bank finance as lenders tighten account opening and loan disbursement over a mandatory Business Identification Number (BIN) requirement, raising fears of a credit squeeze across Bangladesh’s vast CMSME sector.

The Association of Bankers, Bangladesh (ABB), representing the chief executives of commercial banks, has urged the National Board of Revenue (NBR) to exempt cottage, micro and small entrepreneurs from the requirement, warning that its abrupt enforcement could disrupt the flow of institutional credit.

The NBR has rejected the plea, saying banks have no legal scope to waive a requirement imposed under the Value Added Tax and Supplementary Duty Act, 2012.

The standoff has left millions of entrepreneurs caught between tax compliance and access to finance, with many small businesses either lacking BINs or needing additional time to complete registration.
A senior NBR official said the requirement was imposed under the law and applied equally to all businesses, regardless of size.

"The objective is to bring businesses into the formal tax structure and expand the VAT base," the official said.

The ABB, however, argues that enforcing the provision without a transition period could choke credit to the CMSME sector, which accounts for the overwhelming majority of the country's economic units and provides employment to more than 30 million people.

The bankers' body raised the issue with the NBR chairman in a letter on August 17, seeking three measures.

First, it requested exemption of cottage, micro and small entrepreneurs from submitting proof of BIN registration when opening bank accounts or obtaining loans and other credit facilities. 

Second, it sought a reasonable extension for CMSME customers to submit their BINs. Third, it proposed phased BIN formalisation aligned with trade licences or business registration, with existing banking records accepted as supporting evidence where necessary.

The NBR rejected the requests in a September 17 response, citing clauses (k) and (kh) of sub-section (3) of Section 4 of the VAT and Supplementary Duty Act, 2012.

Under the law, proof of BIN registration is mandatory for opening and operating current or Short-Term Deposit (STD) accounts at banks and financial institutions and for obtaining loans.

The NBR said the requirement was a legal obligation and therefore there was no scope to consider the ABB's application.

It also instructed that businesses that had previously opened accounts without BINs should be encouraged to obtain VAT registration promptly and that BINs should be mandatorily verified when new accounts are opened.

Banking sources said lenders had become more cautious in opening business accounts and processing loan applications because of the stricter compliance requirement.

According to Bangladesh Bureau of Statistics (BBS) data, Bangladesh has around 11.7 million economic units, nearly 99 per cent of which are cottage, micro, small and medium enterprises.

The country has around 6.631 million micro enterprises, 4.533 million cottage enterprises, 492,000 small enterprises and 36,000 medium enterprises. Large enterprises number fewer than 9,000.

CMSMEs employ more than 30 million people, accounting for around 85 per cent of industrial-sector employment. Their contribution to GDP is estimated at between 25 per cent and 32 per cent, depending on the methodology used.

Yet a significant portion of these businesses remains outside the BIN registration system.

An SME entrepreneur said sudden enforcement could push financially vulnerable businesses away from formal banking rather than bringing them into the formal economy.

He called for a phased implementation, allowing temporary relaxation while entrepreneurs complete BIN registration.

The mandatory BIN requirement was introduced as part of the government's drive to widen the VAT net in the current fiscal year.

Finance Minister Amir Khosru Mahmud Chowdhury proposed linking business bank-account opening with VAT registration in the budget. The provision was subsequently incorporated into the Finance Bill.