BB presses banks to implement stimulus for small enterprises by Aug

HM Murtuza | Published: 22:47, Jun 28,2020

 
 

A file photo shows a representative showing products to visitors at a SME Fair in Dhaka. The Bangladesh Bank is pressing the banks to complete the disbursement of Tk 20,000 crore in stimulus loans meant for the cottage, micro, small and medium entrepreneurs by August this year. — New Age photo

The Bangladesh Bank is pressing the banks to complete the disbursement of Tk 20,000 crore in stimulus loans meant for the cottage, micro, small and medium entrepreneurs by August this year.

Reluctance of the majority of the banks to issue credit to the CMSMEs was the reason for the BB’s move, a senior official of the central bank told New Age on Sunday.

As part of the move, the BB on June 21 issued a letter to all scheduled banks to submit their action plans on stimulus loan disbursement to the CMSMEs.

In the letter, the central bank has asked the banks to make loan disbursement process easier as much as possible and complete the disbursement of Tk 20,000 crore in two months.

The banks were asked to prepare their action plans outlining how they would be able to complete the disbursement of the allocated loans in two months.

Following the letter, only 18 banks submitted their action plans by June 25, the last date for the plan submission to the BB, which reflects the banks’ reluctance to issue credit to the CMSMEs.

The central bank on Sunday issued another letter to the banks, which did not submit the action plan by the timeframe, asking them to explain their failure.

The BB official also said that the central bank would take measures against the banks that would be reluctant to issue credit facility to the CMSMEs.

On the implementation of Tk 30,000 crore in stimulus loans meant for the industries and service sectors, the BB asked the banks to set up help desk to expedite the processing of application for loan worth more than Tk 100 crore.

To support businesses to fight the fallout of coronavirus outbreak in the country, the government has so far announced Tk 1.03 lakh crore in stimulus packages including the two packages and the packages are dependent mostly on banks and in the form of loans.

Of the packages, Tk 20,000 crore in stimulus package is meant for the CMSMEs. Under the package, CMSMEs would get loans at 9 per cent interest. Of the interest, the government would provide 5 percentage points interest subsidy for one year, while the rest 4 percentage points would be applicable to the borrower.

Another Tk 30,000 crore in stimulus package is designed for the industries and service sectors where the government’s interest subsidy would be half of the 9 per cent interest.

As of June 25, the BB has approved around Tk 3,000 crore in loan proposals of 140 entities, which were placed by different banks for the industries and service sectors affected by the coronavirus pandemic.

Of the sanctioned amount, City Bank received approval on around Tk 300 crore against its proposal for Tk 1.023 crore, while Eastern Bank received approval on Tk 427 crore against its proposal for Tk 981 crore.

Besides, approval for another Tk 2,000 crore in stimulus loans was underway.

Speaking about the Tk 30,000 crore in stimulus package, the BB official said that the central bank had planned to implement the package by September this year.

On Saturday, the Federation of Bangladesh Chambers of Commerce and Industry expressed its dissatisfaction over the stimulus loan disbursement situation and urged the government to withdraw deposits of the state-owned enterprises from the banks which were not implementing the stimulus package.

Chief executive of a leading private bank told New Age that the country’s apex trade body should not have made such a statement as the banks were instructed to issue loans based on bank-customer relationship and the credit risk of the stimulus would be entirely on the banks.

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