THE decline in loan disbursement by banks and non-bank financial institutions to small and medium enterprises in 2018 by 1.42 per cent, or Tk 23.01 billion, compared with the figure of the previous year is worrying on a couple of counts. Such a decline in SME loan disbursement, which took place for the first time after the policy on the loan for small and medium enterprises had been introduced in 2010, harms the labour-intensive nature of the sector and holds back the sector’s contribution to the national economy while it affects the government’s aim for an inclusive economy. Banks and non-bank financial institutions gave out Tk 1595.1 billion in loans to small and medium enterprises in 2018 while the amount of loan disbursed in 2017 was Tk 1618.11 billion. Of the total loan disbursed to small and medium enterprises, about Tk 669.36 billion went to the trade segment, about Tk 557.40 billion to the manufacturing segment and about Tk 368.34 billion to services sector segment. The amount of loan going to women entrepreneurs accounts for about Tk 55.17 billion. The figures also point to a couple of problems — the trade segment getting priority over the manufacturing segment, which creates more jobs and, therefore, should get more loans, and women entrepreneurs being neglected.
The loans disbursed to small and medium enterprises keep consistently running into problems as the amount disbursed in the SME sector falls below the requirement of 20 per cent of the total loans of the banks. Banks, moreover, need to increase, as the policy suggests, the percentage to 25 by 2021. If the banks fail to maintain the 20 per cent requirement now, with the government not doing anything effective, it will be difficult to achieve loans disbursed to small and medium enterprises reaching the requirement of 25 per cent of the total loans that banks give out in a year. What remains the other worry for the government to attend to is that bankers say that the decline in SME loan disbursement results from the current liquidity criss that the banking sector is faced with. It raises concern as the government keeps putting more capital into ailing banks and does not take any deterrently punitive action against the people on the board of the banks for whom the banks are mired in liquidity crisis, caused by loan scams and no recovery of a huge amount of loans in default. But the government seems not willing to lift a finger to streamline the banks in cases of SME loan disbursement. A situation like this points to the government’s preference for the rich, especially in putting money in ailing banks without taking any effective action against the people responsible for the declining banking health, and indifference towards at least the comparatively poor, who are engaged in small and medium enterprises and job creation for the unemployed.
The government, under the circumstances, must put in place a mechanism to ensure that the banks and non-bank financial institutions meet the target of their SME loan disbursement. It must also ensure that the loans disbursed to small and medium enterprises are properly segmented, putting an accent where it is needed.
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