Loan disbursement by banks and non-bank financial institutions to small and medium enterprises declined in 2018 for the first time since the introduction of the SME loan policy in 2010 amid a severe liquidity crisis in the country’s banking sector.
According to Bangladesh Bank data, loan disbursement to SMEs by banks and NBFIs fell by 1.42 per cent or Tk 2,301 crore in last year compared with that a year ago.
In 2018, SMEs received Tk 1,59,510.09 crore against their receipt of Tk 1,61,811 crore in the year of 2017.
‘It’s mainly because of the ongoing liquidity crisis in the country’s banking sector that has slowed down loan disbursement in every sector,’ Association of Bankers Bangladesh chairman Syed Mahbubur Rahman told New Age.
‘Because of the ongoing liquidity crisis the private sector credit growth also declined sharply,’ Mahbubur, also the managing director of Dhaka Bank, said.
Besides, banks were giving preference to the priority projects considering the liquidity crisis and high rate of non-performing loans in the SME sector, he said.
He, however, said that he did not see any sign of immediate improvement in the liquidity situation in banks.
Due to the liquidity crisis, the private sector credit growth declined to a 53-month low at 12.52 per cent in February this year.
Bangladesh Bank officials said that low deposit growth in the banking sector along with advance deposit ratio adjustment-centric moves of the banks fuelled liquidity crisis in the banking sector.
They said all the factors held back banks from increasing SME loan disbursement.
SME entrepreneurs urged that the banks should give emphasis on the SME sector in terms of loan sanctioning considering its labour intensive nature and the sector’s contribution to the economy.
If the small and medium entrepreneurs get less priority, the government’s aim for the inclusive economy would become affected as well, they said.
Of Tk 1,59,510.09 crore disbursed to SMEs, trade segment received the highest Tk 66,936.21 crore, manufacturing Tk 55,739.61 crore and service sector received Tk 36,834.25 crore.
Of the disbursed amount, woman entrepreneurs received Tk 5,517.09 crore in last year.
As per the central bank regulations, banks are supposed to disburse 20 per cent of their entire loans to the SME sector. Banks will have to raise the percentage to 25 per cent by the year of 2021.
In 2016, loan disbursement to SMEs was Tk 1,41,935 crore.
SME loan disbursement was Tk 53,197 crore In 2011, Tk 69,753 crore in 2012, Tk 85,323 crore in 2013, Tk 1,00,910 crore in 2014 and Tk 1,15,870 crore in 2015.
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