The Bangladesh Bank has issued a letter, asking banks’ managing directors to oversee the implementation of the entire package by upcoming 31 December
The central bank of Bangladesh has become stricter in implementing the stimulus package meant for cottage, micro, small and medium enterprises (CMSMEs) affected by the Covid-19 pandemic.
The Bangladesh Bank's SME and Special Programmes Department on Wednesday issued a letter, asking banks' managing directors to oversee the implementation of the entire package by 31 December.
The letter, undersigned by General Manager Husne Ara Shikha, said the package will have to be implemented on time under the supervision of the banks' managing directors.
Of the stimulus package announced in April this year for the economic recovery, Tk20,000 crore was earmarked for the CMSME sector hit hard by the Covid shocks.
Although the package was supposed to be implemented by October last, the banks failed to do so. In that month, they released only a little more than Tk6,000 crore.
Meanwhile, the ratio of lending to the CMSME trading sector has also been increased.
Banks will now be able to disburse, to the sector, up to 35% of their total loans. The central bank hopes it will increase the disbursement of loans. Earlier this rate was 30%.
By the end of November, the banks had implemented about half the package intended for CMSMEs, worth Tk9,900 crore.
Asked if the remaining half would be implemented by this month, Syed Mahbubur Rahman – a former chairman of the Association of Bankers (ABB) and managing director of Mutual Trust Bank – said the implementation will not be too difficult as the central bank has given some leeway in terms of loan disbursement.
He expressed optimism that increasing the rate of loan disbursement would raise the amount of loan release to the trading sector.
Almost the whole of the package, if not 100%, can be distributed by December since 50% of it has already been implemented, he added.
However, a possible second wave of Covid-19 could hamper the implementation, he expressed concern, explaining that maybe banks will be ready with loans but will find no customer available to take that.
However, banks will try their best to implement the package, Mahbubur added.
Central bank sources said if, for some reason, the Tk20,000 crore cannot be released by December, the time may be extended conditionally.