Eight banks yet to disburse a single taka

Eight out of 56 banks in Bangladesh are yet to disburse a single taka to the cottage, micro, small and medium enterprises (CMSMEs) under the second phase of stimulus package.

Five of the eight – Bank Al Falah, Habib Bank, State Bank of India, Citibank NA and HSBC – are foreign banks, and the remaining three – Shimanto Bank, Probashi Kallyan Bank, and Bangladesh Commerce Bank – are local.

The government had offered a fresh stimulus package of Tk 20,000 crore for CMSMEs in the second phase.

Of the total amount, the abovementioned eight banks have a total target – given by the central bank – to disburse Tk 127 crore by the end of this fiscal year, but they never disbursed anything to any such client in the last eight months.

Under such circumstances, the central bank in a meeting on Thursday warned these eight banks, and asked them to fulfill their respective targets within the deadline, said a senior official of the Bangladesh Bank.

Central bank Governor Fazle Kabir presided over the meeting, and managing directors and CEOs of most of the banks were present there, he added.

The regulator had set Shimanto Bank’s CMSME loan disbursement target at Tk 10 crore for FY22. The bank’s Managing Director and CEO Muklesur Rahman told The Business Post that the bank is disbursing loans slowly, and will fulfill the target within this FY.

Meanwhile, the loan disbursements of Union Bank, Eastern Bank, Commercial Bank of Ceylon PLC, IFIC Bank, Rupali Bank, Southeast Bank, First Security Islami Bank, Exim Bank and NRB Bank are still below 10 per cent of their respective targets, reveal latest data from the central bank.

36.8% of target achieved till Feb

During the July-February period of this FY, 48 of the 56 banks disbursed Tk 7,117.34 crore from the Tk 20,000 crore stimulus package for CMSMEs, which is only 36.80 per cent of the target.

Commenting on the issue, Bangladesh Bank’s Executive Director and spokesperson Md Serajul Islam said, “The central bank governor – in Thursday’s meeting – warned banks over their slow disbursement of stimulus fund in the CMSME sector, and asked them to speed up the process.”

Rajshahi Krishi Unnayan Bank, Brac Bank and Uttara Bank disbursed over 70 per cent of their respective targets during the July-February period of this FY.

Meanwhile, Bank Asia, Bangladesh Krishi Bank, Mutual Trust Bank, Shahjalal Islami Bank and Woori Bank disbursed over 60 per cent of their respective targets set by the central bank.

Brac Bank disbursed at Tk 1,033.79 crore in the same eight-month period, which is 73.84 per cent of its target for this FY. Brac Bank Managing Director and CEO Selim RF Hussain said the bank has already disbursed most of the target set by the regulator.

Hussain, also the chairman of the Association of Bankers Bangladesh (ABB), claimed that small loans are a loss-making product, and this is the reason behind the slow disbursement. “The lenders will fulfill their target by this fiscal year,” he added.

The banks had previously disbursed around Tk 15,000 crore, which was 75 per cent of the first phase stimulus loans.

In line with a government directive, the Bangladesh Bank published a policy on April 13, 2020, laying out guidelines for banks and financial institutions on providing working capital to the CMSMEs affected by the Covid-19 pandemic, capping the interest rate at 9 per cent.

Of the interest, the government bears 5 per cent as subsidy, and the remaining 4 per cent will be borne by borrowers.