The deadline for disbursing a Tk 20,000 crore stimulus package for cottage, micro, small and medium enterprises (CMSME) has been extended up to June this year as the second wave of Covid-19 has started affecting economic activities.
Bangladesh Bank (BB) issues an order in this regard on Monday.
The central bank declared the package at the directive of the government in April, 2020 to help CMSMEs cope with the economic slowdown caused by Covid-19 pandemic.
"The central bank has issued the order asking the banks to quicken the disbursement of stimulus package so that CMSMEs can successfully overcome the Covid-19 pandemic situation," said BB's chief spokesperson Serajul Islam.
Banks disbursed 72.31 per cent of the package as of March 31, 2021 according to the central bank.
Earlier, the central bank has already extended the deadline twice due to slow disbursement of loans to the SME sector, which employs around 34 percent of the country's total workforce.
Half of the package would be provided from the BB in the form of a refinance scheme.
The stimulus scheme of three-year tenure acts as a revolving fund, meaning banks would disburse money recovering those from clients.
But banks have showed a lackluster performance in the first year of the package's disbursement.
The loans will be provided at a 9 per cent interest rate. Of the interest rate, 4 per cent will be borne by the borrowers and 5 per cent by the government.
Hailing the decision to extension of the loan disbursement deadline, former BB governor Dr Atiur Rahman said CMSMEs should be given special attention to 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 institution, said Atiur Rahman.
He said banks are not so much 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, DrAtiur Rahman suggested using digital financial platform to reach loans to needy CMSMEs.
Meanwhile, the central bank has also extended the deadline of relaxed restructuring and rescheduling facilities for the tanneries.
The tanneries, which have been facing the burden of default loans for years, will be allowed to enjoy the relaxed facility until June instead of the previous deadline of March this year, according to the central bank.
A good number of loans disbursed among the tannery owners have defaulted due to their failure to repay installments on time on different grounds, according to a previous central bank notice issued in January.
The inability to repay the loans created a roadblock to the usual credit flow to the tannery sector.
Banks are allowed to offer a one-time exit policy with only a 2 per cent down payment for the tannery owners, who are unable to run their business.
