FBCCI goes out to bat for cottage and micro enterprises
The country's apex trade body yesterday called for relaxing the terms and conditions for disbursing loans from the government-announced bailout package such that every sector, especially the cottage, micro and small businesses, can receive funds on time.
The country has many cottage and small enterprises that are yet to come under the formal banking coverage but those have been badly affected by the coronavirus pandemic, said the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
For example, it said, there are some 46 lakh units of grocery shops and cottage industries in different districts but their owners can barely fulfil the conditions of the banks to take funds from the stimulus package.
"The central bank and scheduled banks should reach out to them with easy rules so that they too are benefitted by the bailout package," said FBCCI President Sheikh Fazle Fahim.
The terms and conditions should be relaxed for large businesses as well, he said, while addressing businesspeople and bankers via a virtual conference on "roadmap to stimulus loan execution".
On April 5, Prime Minister Sheikh Hasina unveiled a Tk 20,000 crore package for the cottage, micro, small and medium enterprises (CMSMEs), and another Tk 30,000 crore for the industries and service sector companies.
The loan proposals should be executed on time because the enterprises are in trouble, Fahim said, while calling for quick assessment of documents.
"But at the same time, everybody should be careful so that the banks don't fall in trouble while saving the industries," he added.
While the FBCCI demanded easy access to loan from the bailout package by all sectors, bankers called for the formation of a credit guarantee scheme through which the banks can recover the loans that bear risks.
The proposed credit guarantee scheme will protect the banks in loan recovery through insurance. For instance, if any small or large enterprise owners fail to repay the loans timely, the banks will recover the amount from the credit guarantee scheme through insurers.
Banks would be able to manage the funds as they have adequate liquidity now, said Ali Reza Iftekhar, chairman of Association of Bankers, Bangladesh.
"But banks are worried about the risks associated with loan recovery," he said.
Md Abdus Salam Azad, managing director of Janata Bank, said his bank will grant loans to micro or small enterprises and especially to female entrepreneurs if they can provide proper documents.
If any media outlets come up with proper documents his bank will disburse loans to them as well, he said.
The credit guarantee scheme is particularly needed for the cottage and micro industries as the majority of those enterprises do not have adequate financial strength, said Selim RF Hussain, managing director of Brac Bank.
Of the bank's total clients, 47 per cent are CMSMEs, he added.
Cottage and micro enterprises will have to be treated on an urgent basis as they are going through a rough patch now due to the pandemic, said Md Shafiqul Islam, managing director of the SME Foundation.
Of the total businesses registered with the SME Foundation, 80 per cent are cottage and micro and 1 per cent are small enterprises.
"We should not put a lot of burden on banks so that the ill-fated banking sector does not go through further crisis," said Mashrur Reaz, chairman of Policy Exchange, a think-tank.
Loans should be disbursed on a priority basis to the worst affected sectors like the aviation and retail businesses, he added. Munir Hossain, a director of the FBCCI, suggested the banks open separate help desks in their branches such that the clients do not face hassles while taking loans from the bailout package.
"There is no liquidity crisis in the banking sector now," said Kazi Akramuddin Ahmed, a former FBCCI president.
Shafiul Islam Mohiuddin and Mir Nasir Hossain, two former FBCCI presidents, also spoke.