Small enterprises, farmers still languish in neglect
The implementation of stimulus packages for small and medium enterprises, the agriculture sector and underprivileged professionals and businesses is still weak because of lukewarm response from banks although they were unveiled more than a year ago.
The lacklustre execution of the three packages has had an adverse impact on the recovery of the economy from the pandemic-induced slowdown, bankers say.
The government has rolled out 23 bailout packages since March to help various sectors of the economy absorb the coronavirus shock. The majority of the packages were declared in April.
The total amount under financial assistance stands at Tk 124,053 crore, which is 4.44 per cent of the gross domestic product. Of the sum, the central bank has come up with Tk 87,750 crore in the form of seven packages.
The central bank has formed a stimulus package worth Tk 20,000 crore for CMSMEs (cottage, micro, small and medium enterprises). Under the package, loans are given at 9 per cent.
Of the rate, 4 per cent is borne by the borrowers and 5 per cent by the government. Banks disbursed 58 per cent of the fund as of January 28, data from the central bank showed.
The central bank had earlier asked lenders to implement the package by September last year, a target lenders could not meet, prompting the BB to extend the deadline several times.
It has recently asked banks to implement the package by March this year.
Some banks have shown reluctance to disburse loans from the fund as the majority of CMSME clients are not running business in an organised manner, a central banker said.
"Lenders don't know whether they would be able to recover the loans," said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
He, however, said banks had already taken initiatives to disburse loans to CMSMEs.
Banks are also far from reaching the disbursement deadline for farm loans under the stimulus package of Tk 5,000 crore.
When the package was announced in the form of a refinance scheme, the central bank asked banks to distribute it by September last year. But banks performed poorly, forcing the central bank to push back the deadline twice.
On December 29, banks were asked to reach the target by March 31 this year. They distributed Tk 3,466 crore as of January, which is 69 per cent of the package.
Forty-three banks signed participation agreements with the central bank to disburse loans from the fund dedicated to reviving the agriculture sector. Of them, 16 banks lent less than 30 per cent of the funds they were given the responsibility to disburse.
The central bank has repeatedly asked banks to expedite the disbursement, but some of them did not take the issue with the utmost importance, the BB official said.
The BB now plans to re-allocate the undisbursed portion of the 16 banks to the lenders that fared well, he said.
Banks gave out 47 per cent of Tk 3,000 crore package introduced for the marginal businesses and farmers as of January 31.
The BB asked banks to give out the fund through microfinance institutions (MFIs), but MFIs are not interested given the lower interest rate, another central banker said.
Under the package, the BB provides the fund to banks at 1 per cent interest rate. MFIs get the fund from banks at 3.5 per cent interest and are allowed to charge its clients a maximum of 9 per cent interest.
MFIs charge about 24 per cent interest on their regular loans as their cost of operation is high.
Some banks and MFIs are being forced to disburse the loans due to the central bank's pressure, the BB official said, adding that the central bank should have considered the issue of the interest rate when it announced the package.
The situation is completely opposite for the stimulus package for the large industries and the service sector.
As much as 92 per cent of the Tk 33,000-crore package was disbursed by January 21.
The central bank has expanded the fund size to Tk 40,000 crore to cater to the industries located in the economic zones, export processing zones and hi-tech parks.
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