Banks fail to disburse over 50pc of stimulus funds to small businesses
A full recovery of the economy from the coronavirus crisis is still uncertain as more than half the funds from stimulus package for the cottage, micro, small and medium enterprises (CMSMEs) remain undisbursed.
Bangladesh Bank had approved Tk 99.46 billion worth of loans for the small entrepreneurs from the Tk 200 billion stimulus package for them until Nov 30, but the banks disbursed Tk 82.18 billion, according to a recent finance ministry report.
However, big entrepreneurs have already finished taking loans from their Tk 330 billion stimulus package announced by the government to help them recover from the losses due to the pandemic, reports bdnews24.com.
The central bank, which is supplying half the funds of the packages, blames the bank’s lack of interest in disbursing loans among small businesses despite repeated reminders for the difference in the scenarios of the big and small business sectors.
The interest rate is 9 per cent for both packages. The entrepreneurs need to repay 4 per cent interest on their own while the government is subsidising the remaining 5 per cent.
The government report on creating jobs and revival of the rural economy says that the finance ministry is not happy at all about the pace of work to disburse loans among the CMSMEs.
Although the central bank took liabilities of the small loans, the banks have failed to fulfil the target to disburse funds among the CMSMEs, which is “unfortunate”, Finance Secretary Abdur Rouf Talukder said in the report presented in the second meeting on the implementation of the packages in Dhaka on Dec 3.
About 56,600 small entrepreneurs have received loans from the incentives for the CMSMEs. The picture is “more frustrating” in the other packages for the small businesses, with only Tk 1 billion or 1.5 billion disbursed from some of them.
All the six coronavirus packages are related to creating jobs and revival of rural economy. They are: Tk 32 billion loans through five sate-owned banks, Tk 50 billion agricultural refinancing scheme, another Tk 30 billion refinancing programme for the farmers and small businesses, Tk 12.57 billion direct cash help for the poor, the Tk 200 billion for CMSMEs, and Tk 20 billion loan liability programme for the CMSMEs.
Different groups of businesses, including the Federation of Bangladesh Chamber of Commerce and Industries, have expressed frustration over the lack of loans for the small entrepreneurs.
Around 6 million proprietors of small entities, who began business with a maximum capital of Tk 20,000, are struggling for survival and their families are suffering as well, said Bangladesh Shop Owners Association President Helal Uddin.
He said these businesses have not seen the money announced through the stimulus packages. “The banks are busy with big industrialists, who default on trillions of takas,” Helal said.
FBCCI President Sheikh Fazle Fahim said he wonders why the banks do not want to give loans to the small entrepreneurs though this type of businesses tends to default less.
“The banks should stand beside all,” he said.
Large businesses can cover losses because they work in multiple sectors, but the small businesses do not have that option, pointed out AB Mirza Azizul Islam, a former caretaker government adviser.
“They can’t turn around and contribute to the economy without the help of the government. So they must get help this must happen quickly,” he said.
Mohammad Shams-Ul Islam, managing director of state-owned Agrani Bank, however, claimed that the disbursement of funds among the small businesses has gained pace.
“Initially, the banks were bust with the exporting sectors, and then the large industries. Small loan disbursement has gained pace. Expected progress will be achieved in December,” he said.
The deadline for completing the disbursement of funds among the CMSMEs has been extended to December 31 after the banks missed the first deadline on September 30.
Serajul Islam, spokesman for the Bangladesh Bank, also hopes that most of the loans for the CMSMEs will be disbursed in December.
“All the banks have been asked to assign a separate desk for this. The central bank has also strengthened monitoring,” he said.