BB eases loan repayment for CMSMEs

The central bank has relaxed further the loan repayment policy for the cottage, micro, small and medium enterprises (CMSMEs)
to help them expedite their recovery effort from the fallouts of Covid-19 pandemic.
The borrowers under the stimulus package will now have to repay only 15 per cent of their outstanding loans by December 31, 2021 to remain unclassified. Earlier, this ceiling was 25 per cent.
The remaining 85 per cent of the outstanding loans during the period from January to December 31 this year will be payable within one year from the date of expiry of the loan tenure, according to officials.
The decision was taken at a meeting of the bankers held at the Bangladesh Bank (BB) headhunters in Dhaka on Tuesday, with Governor Fazle Kabir in the chair.
The meeting also decided that the relaxed policy will not be applicable for the other sectors - they will have to pay 25 per cent of their outstanding loans by December 31, 2021 to remain unclassified.
The central bank will not, however, extend the loan repayment moratorium further considering the country's overall economic activities, BB spokesperson Serajul Islam told a group of reporters after the meeting.
He also said the country's foreign trade, covering export and import, has already entered into the pre-pandemic levels.
"There is no scope to extend the set timeframe," said Mr Islam, an executive director of the central bank.
Earlier on Sunday, the country's apex trade body urged the central bank to extend the loan repayment relaxation period by six more months to June 30, 2022.
The meeting also decided that the scheduled banks will have to keep an additional 1.50 per cent special general provisioning, instead of existing 2.0 per cent, against the loans of CMSMEs only.
Senior bankers welcomed the BB's latest move as it would help the labour-intensive CMSMEs sector to strengthen their recovery effort.
"This is a good initiative. It will help the CMSMEs sector to some extent," Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh (ABB), told the FE after the meeting.
At the meeting, the central bank served appreciation letters to 13 banks and four non-banking financial institutions (NBFIs) for their better implementation of the first phase of the stimulus package for the CMSMEs.
The banks and NBFIs have disbursed loans 100 per cent of the initial targets given by the central bank under the package for the CMSMEs.
These banks are BRAC, United Commercial Bank (UCB), Agrani, Uttara, Eastern, Prime, Bank Asia, Mutual Trust, Premier, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RKUB), Modhumoti and Commercial Bank of Ceylon (CBC) PLC.
The NBFIs are IDLC Finance, IPDC Finance, LankaBangla Finance and United Finance.
Forty-seven scheduled banks and seven NBFIs had disbursed Tk 41.37 billion, nearly 21 per cent of total Tk 200 billion, from the package aid for survival of the CMSMEs until December 21, according to the central bank.
At Tuesday's meeting, the scheduled banks also have been instructed to expedite disbursement of the loans under the second phase to facilitate employment generation across the country.
Managing directors (MDs) and chief executive officers (CEOs) of the scheduled banks have been instructed to enhance salaries of the entry level officers immediately.
The top bankers have also been asked to clear the accepted bills within the stipulated time frame. Otherwise, the central bank will come forward to settle the bills by debiting the current account of the banks concerned, another BB official added.
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