Cushioning of coronavirus blow

Government has introduced six new schemes and expanded existing four schemes along with increasing regular loan facilities for the industry and agriculture sectors to keep the economy afloat and to cushion coronavirus blow. Loan facilities of at least Tk 82 thousand and 250 crore will be disbursed on easy terms and at low interest rate. Although disbursement of loan from one or two schemes has begun, most of the schemes are yet to kick off their programmes.

The first step of distributing loan from refinancing scheme i.e. signing of agreement with the central bank is yet to start. The banks are saying that due to the ongoing holidays, formalities for loan distribution cannot be started and demand for loan is also not very much. In consequence, distribution of loan cannot be started amongst the customers from most of the schemes.

The first case of coronavirus infection was detected in the country on March 8. Due to sharp rise in the rate of infection, general holiday or informal lockdown has been going on since March 26. In order to keep the financial and industrial establishments from being adversely affected by the lockdown alive, a number of schemes were constituted in the beginning of April. In the package of Tk 82 thousand and 250 crore, the central bank is contributing Tk 52 thousand and 250 crore. Besides, the government is contributing Tk 5 thousand crore and the remaining Tk 20 thousand crore is provided by the commercial banks from their own funds. Apart from the abovementioned contributions, the central bank will provide interest in subsidies.

Ali Reza Iftekhar, the president of the Association of bankers Bangladesh (ABB) and also the Manbaging Director of Eastern Bank, said that distribution of loan as salary of workers has already begun. Distribution of loan from the remaining package cannot be started although applications for the same are being scrutinized and required documents being collected. There is enough time for distribution of loan from these funds after completing all the formalities.

In the current situation of concerns, no one will approach for loan unless factories, trades start. As those establishments are still closed, loan applications are not significant in number. However, the central bank and the commercial banks are prepared.

The Managing Director (MD) of Rupali Bank Obayed Ullah Al Masud said the central bank has fixed the ceiling for loan distribution. “We have disbursed Tk 30 crore for the salary of workers in the month of April. We are also prepared for distributing loans from other schemes. We have given Tk 300 crore to Brac for distribution amongst people with low income. However, applications are not being made for getting loan from existing capital. The demand for loan will not be created unless import-export is commenced and factories go to operations.” he hopes the customers will start to avail loan facilities very soon. He also said that in order to provide loan facilities, guarantees must be provided which cannot be done as offices are closed. Distribution of loan shall commence once everything becomes normal.

It has been learnt that a scheme of Tk 30 thousand crore has been formed for giant industries and service providers, half of which will be provided by the BB. Another scheme of Tk 20 thousand crore, including refinancing worth Tk 10 thousand crore by the BB for the SME sector has been constituted. the government will fully contribute to the scheme worth Tk 5 thousand crore for providing salary of the workers engaged in the export-oriented industries. The BB has constituted another scheme worth Tk 5 thousand crore for the agriculture sector and another scheme worth Tk 3 thousand crore for low-income people including farmers.

EDF has been expanded by an amount of Tk 12 thousand and 750 crore for the exporters and a pre-shipment fund worth Tk 5 thousand crore has also been formed. The size of three schemes for the Confederation of Micro, Small and Medium Enterprises (CMSME) has been increased further by Tk 1 thousand and 500 crore which which will be funded by the BB.

It has been learnt from the insiders that fund from the scheme worth Tk 5 thousand crore formed for paying off the salary of the workers engaged in export-oriented sector has already begun. Already, the owners of these industries have made applications seeking a disbursement of more than Tk 3 thousand crore. As a result of their application, all allocation of Tk 2 thousand crore has already been made.

Amongst other schemes, few loans have been disbursed from the fund worth Tk 30 thousand crore formed for industries and service providers. For instance, Sonali Bank has provided loan to Bangladesh Biman while Rupali Bank has provided loan to a pharmaceutical industry. A number of applications have already been made. The banks will apply till May 14 for availing refinancing worth Tk 15 thousand crore from these schemes. Signing of agreements will be followed by distribution of loan after accomplishment of different formalities. The BB and the commercial banks are yet to commence distribution of loans from other schemes. A number of conditions have been set in the circular issued by the central bank for distribution of these loans. There are a few formalities need to be completed for loans include proper stamp duty, registration and conveyance.

These formalities cannot be completed due to general holidays. Head offices of different banks have issued directives to their different branches for distributing loans from two schemes amongst farmers and people with low income. Distribution of loan cannot be started for many reasons which include closure of most of the branches due to general holidays.

The demands for pre-shipment and EDF fund have not been created as export-import is closed. Agreement has to be signed in order to distribute loan from the refinancing fund of the central bank which most of the banks are yet to accomplish.

It may be mentioned that the Prime Minister Sheikh Hasina earlier declared a stimulus package worth Tk 1 hundred crore including different loan packages.

hr/wi/teb