Home ›› 01 Aug 2022 ›› Back
Loans for big industries – introduced under the stimulus package to help Bangladesh’s economy recover from the Covid shock – have been fully disbursed in the second phase, but this is not the case for cottage, micro, small and medium enterprises (CMSME).
The banks did not implement even 80 per cent of the incentives announced for the CMSME sector in both phases from FY21 to FY22. Moreover, when comparing the phases, data from the Bangladesh Bank shows this disbursement has actually dropped in the 2nd phase.
During the first phase, banks disbursed Tk 15,387 crore or 76.93 per cent of the Tk 20,000 crore incentive package announced for the CMSMEs in FY21. In the second phase, banks disbursed Tk 14,754 crore to this sector, which is only 73.77 per cent of the Tk 20,000 crore target.
So, the total loan disbursement to CMSMEs actually declined by Tk 633 crore when compared year on year.
Speaking to The Business Post, a senior official of the central bank said, “Banks had some problems with getting the right customers for disbursing the loans from the incentive package in the first phase. The banks had some shortcomings as well.
“Besides, due to the high Covid-19 infections, the banks had issues with loan disbursements.”
The official continued, “In the second phase, a new problem arose, that is, the loan disbursed in the first phase did not have a satisfactory recovery level. As a result, banks became somewhat cautious in lending.
“The government also announced a subsidy on loan interests under the incentive package. However, it imposed a condition requiring banks to carry out inspection on 10 per cent of the loan seekers. But many banks could not do it properly, so they reduced their disbursements.”
Bangladesh Bank Spokesperson Serajul Islam said, “The number of enterprises affected by Covid-19 pandemic was less in the second phase compared to first phase. It was a major cause for reduced disbursement in FY22.”
Echoing the same, UCB Bank’s Head of SME Mohsinur Rahman said, “The number of new customers affected by Covid-19 was slightly less in the second phase compared to the first one. This issue might have caused the disbursement in FY22 to go down.
“I believe the number of new customers affected by the pandemic will be even less in the third phase.”
Dutch Bangla Bank’s Head of SME Md Aminul Islam said, “A large portion of the SME enterprises are trading businesses. But the guidelines say that more than 30 per cent of the loan from the package cannot be given to such borrowers.
“If this quota can be increased, and the customers who got loans in the first and second phases are allowed to get loans again, the implementation of the third phase will be much higher.”
On July 24, the central bank yet again set a target of Tk 20,000 crore for the third phase, which will be implemented in the ongoing FY23.
