The country’s small, medium and other micro entrepreneurs are finally going to have loans for their businesses as the Bangladesh Bank has recently disbursed another loan amount worth Tk 100 crore.
For Cottage, Micro, Small and Medium Enterprises (CMSMEs) that are facing financial hardship in coping with the impact of the Covid-19 pandemic, this disbursement will be a relief for them, said an economist.
Against the lackluster disbursement of CMSME loan, economist Dr Atiur Rahman suggested some immediate measures, including timely disbursement of funds from the incentive package for revival of the CMSME sector that employs around 35 percent of the total workforce of the country.
“CMSMEs should be given special attention for stimulus packages. As the proper and quick disbursement of stimulus packages is a challenge, the government must take steps to reach the money timely to CMSMEs through banks and microfinance institutions,” said BB’s former governor Dr Atiur Rahman.
He said banks are not so competent, and they have also lack of experience on disbursement and recovery of loans. So, if cautionary measures are not taken, funds from incentive packages would not be reached to the actual enterprises hit hard by the Covid-19, he added.
To ensure quick and proper disbursement of loans for CMSMEs, Dr Atiur Rahman suggested using digital financial platforms to reach loans to needy CMSMEs.
Bangladesh Bank (BB) has recently disbursed a loan of Tk 100 crore to the Bangladesh Krishi Bank (BKB).
The central bank’s move came against the backdrop of sluggish trend in disbursement of money from the stimulus package announced by Prime Minister Sheikh Hasina to bring the wheels of Covid-19 hit economy on track.
A BKB official has confirmed that the central bank recently approved the fund for the CMSME sector.
“BB has approved the Tk 100 crore fund for BKB . . . we will start disbursement of loan among CMSMEs soon,” said BKB’s managing director, Md Ali Hossain Prodhania.
Talking to Bangladesh Post, he said, "We have been able to distribute loans properly and timely because all branch managers have been given proper instruction and guidance to speed up the loan disbursement".
“BKB has the capability to reach the credit to the CMSME entrepreneurs who actually need money to run their business.”
According to the central bank, Bangladesh Krishi Bank is the top performer in terms of loan disbursement under the package as it has taken special measures to reach the credit to farmers across the country.
The BKB has been able to distribute over Tk 1,570 crore till January 15, 2021 against its target of Tk 1,699 crore.
“We have been able to distribute loans properly and timely because all branch managers have been given proper instruction and guidance to speed up the loan disbursement,” Md Prodhania added.
"As a labor-intensive sector, CMSMEs get priority in getting government's support. BB has approved additional Tk 100 crore to provide CMSMEs credit support as the sector has suffered seriously during the Covid-19 pandemic," said BB's chief spokesperson Md. Serajul Islam.
The central bank also introduced electronic 'dashboard' to strengthen monitoring and supervision of credit disbursement and recovery in the CMSME sector.
“It is a digital system . . . it will help intensify monitoring and supervision on disbursement of stimulus packages closely,” said BB’s chief spokesperson.
Under the automated system, both the BB and scheduled banks are now able to supervise bank-wise different data including sanction as well as disbursement of such loans on a real time basis instead of weekly one, he said.
According to the BB, the banks and non-banking financial institutions (NBFIs) disbursed Tk 119.86 billion of the stimulus package to the smaller firms, which is nearly 60 per cent of the total allocation of Tk 200 billion.
Loans amounting to around Tk 132.43 billion were approved for 83,319 Covid-19 affected CMSMEs across the country as on February 11, the BB’s data showed.
The central bank has already ordered the banks to disburse all stimulus packages by March 31 to help revive the economy.
The order was given at a virtual meeting between the bankers and the central bank governor on January 27.
Earlier, Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman alleged that the government announced incentive packages for the CMSME sector but banks are not properly cooperating with the sector for giving the loans.
He suggested involving microfinance institutions in expediting the loan disbursement process.
The CMSMEs elevate economic growth as well as generating employment opportunities because the sector is labor-intensive and less time-consuming for production with less capital expenditure or lower establishment cost.
Out of 7.8 million enterprises in Bangladesh, 88 percent or 6.86 million are cottage enterprises that employ 13.16 million people. A further 0.11 micro enterprises create employment of 0.56 million.
CMSMEs together represent 99.84 percent of the total enterprises in the country. In aggregate, SMEs contribute 25 percent of the Bangladesh GDP.
