Interest subsidy for CMSMEs

Make the loan distribution procedure less complex

In a bid to revitalise the country’s small and medium enterprises sector, the government came up with a commendable initiative to provide an interest subsidy at 5 percent for a period of a maximum of one year as the banks are instructed to disburse funds from stimulus packages.

According to Bangladesh Bank (BB), all borrowers from CMSMEs will pay interest rate at 4 percent out of the 9 percent under the stimulus package, while the remaining 5 percent will be paid by the government as interest subsidy to the banks and NBFIs concerned.

The Central Bank should take necessary 

steps to make the loan distribution

procedure less complex

This measure will encourage more entrepreneurs to be involved with this sector and create employment opportunities. The Central Bank should give more emphasis to make this sector vibrant and the loan distribution procedure less complex. Microfinance institutions should get involved in this process so that CMSMEs can get timely loans.

The government and Central Bank have implemented various strategies to offer monetary support to the sector. However, in the long run a sustainable approach has become the need of the hour so that CMSMEs can run smoothly in the market on their own and this will ultimately lead to trifling intervention from the government.

The dilemmas of the CMSME sector are nothing new and without proper sustainable approach, the effects of short-term government interventions will disintegrate. Therefore, it is exigent that an all-inclusive tactic is implemented, which will combine both short and long-term interferences from the government and furthermore adequate support from the private sector to the CMSMEs as part of the sustainable business paradigm.