75 firms get BB nod to borrow funds from stimulus package

Seventy-five companies, including some large groups, have secured approval from the central bank to receive low-cost loans under the stimulus package dedicated to big borrowers in the industrial and service sector.

Banks have begun applying to the central bank from May 4, seeking consent so that the companies can get the funds as they set off to make a turnaround from the ongoing economic fallout brought on by the coronavirus pandemic.

The companies, which include Bangladesh Steel Re-Rolling Mills (BSRM), the largest steel-maker in the country, GPH Ispat, another steel-maker, Runner Automobiles and Shanta Holdings, have bagged approval to borrow nearly Tk 2,080 crore from the Tk 30,000-crore stimulus package.

The central bank took a decision on April 12 to introduce the stimulus package, allowing banks to get an interest subsidy of 4.50 per cent on disbursed loans, which the end-users will get at 9 per cent.

The banking regulator later formed a refinance scheme of Tk 15,000 crore for the large borrowers as well, much to the relief of the cash-strapped banking sector that had been fretting about implementing the large package.

Under the refinance scheme, lenders will get funds in the form of working capital at 4 per cent interest from the BB and the end-users will get at 9 per cent.

In order to receive the refinance scheme, banks will have to give at least 50 per cent of each loan to industrial and service sector borrowers from their own sources.

BSRM got the permission to borrow Tk 17.50 crore, GPH Ispat Tk 15 crore, Runner Automobiles Tk 10 crore, Shanta Holdings Tk 25 and Ifad Autos Tk 15 crore.

The funds would be disbursed in the form of working capital and carry a maximum repayment tenure of one year.

Only 10 companies had managed approval from the central bank last month, but the affected corporate entities have taken initiatives to secure the loans since the beginning of June.

City Bank has accepted applications from 76 corporate organisations to provide loans worth Tk 1,023 crore. Of the applicants, 18 obtained the central bank's nod to borrow a combined of Tk 350 crore, said its managing director Mashrur Arefin.

"We have selected good borrowers to offer the low-cost loans. This will help them pick up businesses," he said.

City Bank will get around Tk 500 crore from the central bank's scheme. "We will apply for this in the quickest possible time," Arefin said.

Only one bank – IFIC – has so far requested the BB for the release of the fund against its lending, said a BB official. The private commercial bank has lent Tk 4.70 crore to three companies.

"A good number of lenders have yet to disburse the funds despite receiving approval from the central bank. So, the claim from the refinance fund is still low, but it will get a tempo soon," the central banker said.

Eastern Bank has selected a good number of clients for loans amounting to Tk 985 crore, said its managing director Ali Reza Iftekhar.

The bank has obtained approval to give out Tk 354 crore in favour of 29 companies.

"The corporate entities should use the funds properly within the shortest possible of time to give a boost to their businesses," said Iftekhar, also the chairman of the Association of Bankers, Bangladesh, a forum of managing directors of private banks.

The affected companies are now submitting applications in a quick manner and the central bank is also giving feedback promptly, he said.

The banker, however, said the recovery of the companies would largely depend on bringing the pandemic under control.