Disbursement for small and medium enterprises is way lower than that for larger industries
Banks have so far disbursed Tk46,253 crore under the Bangladesh Bank-supervised eight incentive packages among the ones announced by the government to offset the economic losses caused by Covid-19 pandemic.
During her address to the nation on March 26 last, Prime Minister Sheikh Hasina first announced a Tk5,000-crore incentive package to pay wages to garment workers.
Afterwards, she announced total Tk85,750-crore easy loan under eight packages. Within these six months, around 54% of the packages have been disbursed among different beneficiaries.
According to the latest data from the central bank, about Tk25,648 crore was disbursed till September 20 under a loan package of Tk33,000 crore for affected industries and the services sector. The distribution rate is about 78%.
Though the package disbursement rate for large industries is satisfactory, the same for small and medium enterprises is not.
As of August 31, only around 20% of the Tk20,000-crore working capital loan was distributed in favour of 11,183 affected small (including cottage industries) and medium enterprises.
Ahsan H Mansur, executive director of Policy Research Institute, told The Business Standard, "The SME sector is crying for loans from the very beginning of the stimulus package formation. But now, we see big industries are reaping benefits from it while SMEs are lagging behind."
Bank executives said they have already approved a significant amount of loans for SMEs but the disbursement process is being delayed due to a lack of proper documentation.
Ataur Rahman Prodhan, managing director and CEO of Sonali Bank, said a lack of information database for small, cottage and medium enterprises has hampered the disbursement of loans in the CMSME sector.
Making a proposal to amend the existing registration law, he said the same mortgaged property has to be mortgaged repeatedly, causing problems in disbursing the loans.
Meanwhile, under the Tk5,000-crore agricultural refinancing package, loans worth Tk1,095 crore were distributed among 46,804 farmers or farms till August 31, with the disbursement rate being around 22%.
Meanwhile, the Tk5,000-crore package for the payment of salaries and allowances to the workers of export-oriented industrial establishments has fully implemented.
So far, Tk1.11 crore has been disbursed out of the Tk5,000 crore for refinancing the pre-shipment sector.
As of August 31, loan worth Tk1,078 crore (or nearly 36%) was disbursed to 14,956 farmers and small traders under the Tk3,000-crore refinancing package for low-income professionals, farmers and small traders.
Under the Tk12,650-crore Export Development Fund, Tk9,328 crore has so far been disbursed among 1,361 borrowers, at a disbursement rate of over 73%.
Besides, the government has not yet started disbursing Tk2,000 crore in subsidy for the suspended interest on commercial bank loans during the April-May period.
Regarding this package, the Bangladesh Bank has said a requisition letter will be sent to the finance ministry after receiving applications from all banks. Interest or profit subsidy will be provided under the incentive package subject to payment from the finance ministry.
Nazrul Islam, general manager of the Bangladesh Bank's Banking Regulation and Policy Department (BRPD), said this at a meeting held on the Zoom platform on September 22. The meeting was held with Md Ashadul Islam, senior secretary of Financial Institutions Division, in the chair.
The meeting was attended by senior officials of the Financial Institutions Division and managing directors of all commercial and specialised banks.
Md Ashadul Islam directed the managing directors of all commercial and specialised banks to disburse 100% of the loan package for the CMSME sector.
According to the information revealed at the meeting, Sonali Bank achieved nearly 78% of its loan target while Janata Bank over 93%, Agrani Bank more than 66%, Rupali Bank over 37% and Basic Bank 32%.
The Sonali Bank managing director said it will be possible to disburse 100% of the loan within the stipulated time. He strongly opined that there is no need to extend the rescheduling time under the 2% down payment.
Md ObayedUllahAl Masud, managing director and CEO of Rupali Bank, said CMSME customers did not come to the bank during the coronavirus situation and, so, the bank could not reach them too.
Janata Bank Managing Director and CEO Md Abdus Salam Azad said they could not go door-to-door of the grassroots and rural CMSME customers during the early days of the pandemic. Due to the lack of awareness about the government packages, they could not get loans at a higher rate.
However, Janata Bank will meet its loan disbursement target in the CMSME sector by next October, he said.
Other decisions taken at the meeting were that the Bangladesh Bank and commercial banks would take steps to provide benefits to good customers under BRPD-15 without extending the loan rescheduling time under 2% down payment.
In addition, banks will have to reduce the rate of non-performing loans to single digits, cooperate with good customers and take all possible measures to recover loans from defaulters.