BB relaxes rules of stimulus loans for large borrowers

The central bank yesterday relaxed the rules of the Tk 30,000 crore stimulus package for large corporate entities in the industrial and service sectors as it allowed banks to disburse loans to the pandemic-hit borrowers in phases.

On April 12, the Bangladesh Bank had said that a large borrower of the two sectors would avail a maximum of 30 per cent of their outstanding working capital as of December 2019.

It had set the repayment tenure of the loan at the highest one year and made available the financing for just once for a borrower.

But the banking watchdog yesterday said lenders would be allowed to disburse loans in phases in the second and third year during the tenure of the package.

The duration of the stimulus package has remained the same at three years.

The latest instruction would help banks lend to many borrowers in the first year of the package, according to a central bank notice.

Under the stimulus package, banks will get an interest subsidy of 4.50 per cent on disbursed loans, which the end-users will avail at 9 per cent.

As of June 18, 75 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, secured approval from the BB to borrow nearly Tk 2,080 crore combined.

"The economic fallout has kicked up a storm in the financial sector. But it is hoped that there would be a gradual recovery out of the crisis from the second half this year. So, the decision will yield good results for the industrial and service sectors," said a central bank official.

In addition, banks would get a room to judge the behaviour of the borrowers before extending any further credit facility to them.

The banking regulator has formed a refinance scheme of Tk 15,000 crore for the implementation of the stimulus package smoothly, giving a huge relief to the cash-strapped banking sector.

Under the refinance scheme, lenders will get funds in the form of working capital at 4 per cent interest from the BB. In order to receive funds from the refinance scheme, banks will have to give at least 50 per cent of each loan from their own coffer.