BB to monitor banks dragging feet on disbursing loan at 4pc interest

Bangladesh Bank has decided to beef up supervision as commercial banks are dragging their feet on disbursing loan to entrepreneurs at 4 per cent interest under an incentive package announced by the government.

The government has announced the package of Tk 20,000 crore to provide low-interest loans to Cottage, Micro, Small and Medium (CMSME) entrepreneurs to offset the impact of coronavirus.

But due to various complications, commercial banks are not disbursing loans. Banks have been directed to provide information on disbursement of loans on a fortnightly basis instead of a monthly basis and the BB has issued a circular in this regard on Monday.

According to the circular, as banks and financial institutions have not been able to accelerate the disbursement of loans in the CMSME sector, so round-the-clock supervision of loan disbursement in the CMSME sector will be strengthened.

The information regarding the loan disbursement under this package should be reported to the fortnightly basis within the next 5 days instead of every month. That is, the information of the first fortnight should be given by the 20th of the corresponding month and the information of the second fortnight should be given by the 5th of the next month, says the circular.

It may be mentioned that the central bank will refinance Tk 10,000 crore of the Tk 20,000 crore package announced by Prime Minister Sheikh Hasina to help entrepreneurs in tackling coronavirus.

However, the banks will get 9 per cent interest though affected entrepreneurs will get loans at 4 per cent interest. The remaining 5 per cent interest will be paid by the government.

Meanwhile, affected entrepreneurs have been complaining that they are not getting loans for various complications including paperwork. The MDs of the commercial banks have admitted that they are delaying the disbursement of loans after completing various procedures.

hr/wi