12 private banks fall behind loan disbursement target

Shahin Howlader

A total of 12 private banks are way behind disbursement of stimulus package loan worth Tk 20,000 crore for the entrepreneurs of Cottage, Small and Medium Enterprises declared by the government 14 months ago.

The 12 are ICB Islamic Bank, First Security Islami Bank, Global Islami Bank, NCC Bank, IFIC Bank, Bangladesh Commerce Bank, Pubali Bank, NRB Bank, Meghna Bank, Standard Bank, Al-Arafah Islami Bank and National Bank.

Among them, ICB Islamic Bank disbursed Tk 50 lakh against a Tk 20-crore target, (2.5 per cent), First Security Islami Bank Tk 55 crore against Tk 250 crore (2.5 per cent) and Global Islami Bank Tk 81 lakh against Tk 24 crore (27.80 per cent).

In April last year, the government announced the rescue plan for the entrepreneurs who were one of the hardest-hit by the Covid-19 pandemic.

While many public and private banks have implemented the disbursement of loans, the 12 banks have so far disbursed Tk 1,245.32-core of Tk 3,426.5 crore — 50 per cent less than the loan target.

According to the latest Bangladesh Bank report, 97,555 CSME entrepreneurs received loan from the stimulus fund till June 21.

As of June, banks managed to disburse Tk 14,913-crore loan which is 74.56 per cent of the total fund.

The figure shows that even nearly one and a half years after the announcement of the rescue package, Tk 5,087 crore remains undisbursed.

Khondoker Rashed Maqsood, Managing Director and CEO, Standard Bank, told The Business Post that loans in this sector are riskier since they are harder to collect from borrowers. So, they are careful about the disbursement.

“On the other hand, the method used for disbursement takes time. I have instructed our branches with various plans to release more loans in future,” he said.

Mamoon Mahmood Shah, Managing Director and CEO of NRB Bank, said: “We are trying to implement the targets given to us by the central bank. However, the deteriorating condition of the Covid-19 pandemic slowed down the loan disbursement process.”

According to Sohail RK Hussain, Managing Director and CEO, Meghna Bank, said banks are facing various problems in reaching out to borrowers due to the ongoing Covid restriction and documentation issues.

Mirza Nurul Ghani Shovon, president, National Association of Small and Cottage Industries of Bangladesh, however, ran counter to what the bankers said.

Although they are supposed to disburse 75 per cent of the incentive packages announced for the CSME sector, in reality they have not disbursed the amount, he said, adding that it won’t do if loans in other sectors are shown in the name of CSMEs.

He urged the government to look into why the banks are so reluctant to disburse the money.

Meanwhile, many institutions are on the verge of being shut due to lack of fund, said the leader.

Dhaka Chamber of Commerce and Industry president Rizwan Rahman said, “Banks are keen to lend large industries rather than small entrepreneurs under the pretext of lack of documentation, collateral and high operating costs.”

“Besides, in the industrial policy, the difference in the definition of medium and CSME entrepreneurs enables medium entrepreneurs to get more loans. In the current situation, more attention should be paid to small entrepreneurs,” he suggested.

The Bangladesh Bank former governor Saleh Uddin Ahmed said, “Small entrepreneurs need to be saved at any cost.”

Disbursement process of the fund allocated for small enterprises seems to be very slow, he said, noting that the stimulus packages have to be properly implemented.