Traders’ demand for loans is higher while loan disbursement in manufacturing and service sectors is not as expected
Traders will get 30% from the Tk20,000 crore stimulus package for small ventures in a bid to expedite their recovery from the Covid-19 fallout.
The Bangladesh Bank came up with the decision Wednesday as enterprise owners' demand for loans is higher while disbursements in manufacturing and service sectors are not at the desired level.
The loan ratio has been increased to 30% from the existing 20% to meet the needs of virus-hit entrepreneurs, said the circular. The remaining 70% will have to be disbursed in the manufacturing and service sectors.
However, the total annual loan, including from the low-cost stimulus package, to the small traders should not cross 30%, the circular added.
The Bangladesh Bank said despite significant loan disbursements to industries and services under the CMSME sector affected by the virus, the progress of stimulus package implementation is not as expected.
In this situation, traders and their organisations have requested to increase their allocation.
According to the Bangladesh Bank, only Tk5,882 crore or 29.41%, loans have been disbursed under the package until 30 September, while the central bank set October 31 as the deadline for completing disbursements under the stimulus package.
The Bangladesh Bank issued a circular in April to provide low-cost working capital to the small ventures to revitalise economic activities offsetting the virus fallout.
The central bank stipulates that 50% of the Tk20,000 crore fund will be distributed to the manufacturing sector, 30% to the services sector and 20% to the trading sector. The government will subsidy 5% interest of this loan at 9% interest, while the borrowers will bear the remaining 4%.