Bank-client relationship was not the only criterion for disbursements from the stimulus package, rather the loans could be given based on books of accounts as per the circular, Bangladesh Bank Deputy Governor Abu Farah Md Nasser said on Wednesday, reports UNB.
He was speaking at the 9th Financial Sector Development Working Committee (FSDWC) meeting organised virtually by Business Initiative Leading Development (BUILD).
Nasser and NKA Mobin, acting President of Dhaka Chamber of Commerce and Industry (DCCI), co-chaired the meeting.
Nasser also observed that currently banks like Brac Bank were improving the modalities of SME banking.
He said Credit Guarantee Scheme (CGS) was implemented for collateral-free loans and in each division of the country, collateral-free lending was prioritised.
He said authorities were directed to give 10 per cent collateral-free loans to the women entrepreneurs.
Some eight per cent of the total loans had to be disbursed for the women entrepreneurs at the interest rate of five per cent and one per cent incentive announced for both women entrepreneurs and banks for recognising good borrowers, said Nasser.
He informed the meeting that the Ministry of Industries was requested to bring alternatives for trade licences for the cottage, micro, and small enterprises so that the trade licence issue in lending could be resolved.
The deputy governor said Bangladesh Bank introduced a new scheme of Tk 5.0 billion (500 crore) collateral-free loans through agent banking, mobile financial services (MFS), and bank sub-branches to provide finance to the rural and ultra-poor individuals and businesses.
He said the scheme would follow the model of Leno financing to process loan applications in the shortest possible time and funding at the grassroots level.
He said the central bank implemented policies in such a way that it would ensure liquidity support of banks and reduce the burden of cost of funds for the private sector, especially cottage, micro, small, and medium enterprises (CMSMEs).
He also mentioned the initiative of the central bank and World Bank in setting up an independent entity as a payment gateway for CMSMEs.
He emphasized the proactive initiatives of Bangladesh Bank and the country's scheduled banks that up to June 2020 Tk 2430 billion (2,43,000 crore) had been disbursed to the SMEs by Banks.
BUILD CEO Ferdaus Ara Begum highlighted the implementation status of the last 8th FSDWC meeting and praised Bangladesh Bank (BB) for taking initiatives for supporting implementation of 15 out of the 20 recommendations proposed by BUILD in the earlier meeting.
These are fortnightly monitoring, increase in stimulus package volume, separate arrangements for cottage and micro traders, separate allocation for women, extension of the loan repayment period, collateral-free loan, credit guarantee scheme and expansion of agent banking, and considering alternatives for trade licence for E-commerce.
She raised the need for a comprehensive database for CMSMEs supported by the SME Foundation, A2I, and Bangladesh Bank and thanked Bangladesh Bank for increasing the limit of MFIs for disbursing loans for the low income group.
NKA Mobin said the CMSME definition would help deal with the challenges of CMSME financing and all the organisations related to CMSME development could be brought under a single umbrella.
He referred to the DCCI survey conducted in 2021 on its members which revealed that 45 per cent of the applicants were not allowed by the banks to get stimulus package loans and half of the approved loans had not been disbursed on time.
Md. Kamran Hasnain, Research Associate, BUILD, delivered a presentation on Redesigning COVID Stimulus Linking to Employment, Consumption & Investment for Next Round Support.
He shared insights from the preliminary findings of the BUILD-UNIDO survey conducted in March-July, 2021.
According to the survey findings, only six per cent of vulnerable SMEs received stimulus packages while 36 per cent of Asian firms received them.
All SMEs & large firms faced loss of sales, while resilient Asian large firms witnessed positive sales growth.
It indicates a lack of consumer demand in Bangladesh during March to July 2021.
The survey also found that layoff was higher in SMEs than large industries in both country and regional contexts.
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