Three more stimulus package guidelines arrive

The central bank yesterday published guidelines to allow banks to get down to implement the government's stimulus packages to the agriculture sector, the cottage, micro, small and medium enterprises and export-oriented firms.  

On April 5, Prime Minister Sheikh Hasina unveiled a Tk 20,000 crore package for the cottage, micro, small and medium enterprises (CMSME).

She also announced that the Bangladesh Bank will introduce a new loan facility system titled pre-shipment Credit Refinance Scheme involving Tk 5,000 crore.

On Sunday, the prime minister announced a new stimulus package of Tk 5,000 crore for small and medium farmers.

This led the BB to publish three separate guidelines on the three packages yesterday for the implementation of the schemes.

From the Tk 20,000-crore working capital loans for the cottage, micro, small and medium enterprises (CMSMEs), commercial banks will provide the credit from their own resources to the industries or business entities concerned on the basis of bank-client relationship.

The working capital will be given at 9 per cent interest rate. Of the interest rate, 4 per cent will be borne by the borrowers and 5 per cent by the government, according to one guideline.

A bank or financial institution will be able to disburse a maximum 10 per cent of their outstanding loans as of December 31 last year in the CMSME sector in a single fiscal year under the package.

Banks and financial institutions would inform the SME and Special Programmes Department of the central bank about their respective ceiling within three months.

If needed, the BB can increase or decrease the ceiling in order to cover as many entrepreneurs as possible, the guideline said. 

The lenders would not get the subsidy for the amount of loans or investments that cross the ceiling.

Manufacturing and services subsectors would get priority under the package. Business and trade-based micro and small firms would also be eligible.

Manufacturing, services and trade-based firms would receive respectively 50 per cent, 30 per cent and 20 per cent of the annual loans. 

At least 15 per cent of the loans will have to be given to the borrowers based in rural areas. At least 5 per cent of the loans will go to women entrepreneurs.

Cottage, micro and small industries will account for at least 70 per cent of the loans and the rest will go to medium enterprises.

The tenure of the package will be three years. A single firm will be able to receive the subsidised loan for only one year.

The pre-shipment credit refinance scheme is aimed at helping local exporters continue to ship products.

The tenure of the scheme is three years and the fund will be a revolving one, another guideline said. 

Banks will borrow money from the funds at 3 per cent interest rate and can charge the end-borrowers a maximum 6 per cent.

A maximum of 10 per cent of the commercial invoice value of exported consignment will be eligible for the scheme.

A single client may use the facility multiple times but they have to be availed in a single year.

The BB published also guideline on the stimulus package dedicated to small and medium businesses and entrepreneurs in the farm sector.

The affected clients of banks can receive an additional 20 per cent of their existing credit ceiling under the scheme.

In case of new borrowers, banks will fix the credit ceiling through scrutiny. Loans taken under the scheme can't be used to adjust the old credit of the clients.

The tenure for the loans will be 18 months, including a grace period of six months at both banks and clients' ends.

Banks will borrow from the refinancing scheme at 1 per cent interest rate, which they will lend at 4 per cent.