Small and medium enterprises will now enjoy an interest subsidy at 5 percent for a period of maximum one year as the banks are instructed to disburse funds from stimulus packages to support the sector, hit hard by Covid-19.
During the period, all borrowers from CMSMEs will pay interest rate at 4 percent out of the 9 per cent under the stimulus package, while the remaining 5 per cent will be paid by the government as interest subsidy to the banks and NBFIs concerned, according to Bangladesh Bank (BB).
Recently, the central bank has revised its stimulus package (second phase) policy for the cottage, micro, small and medium enterprises (CMSMEs) that have been struggling to survive amid the Covid-19 pandemic, sources said.
Under the revised policy, BB has fixed the annual target for a Tk 200 billion financial package, considering the net outstanding of CMSME loans as on December 31, 2020 instead of gross outstanding of the same calendar year.
The central bank has fixed the net outstanding after deducting the amounts of non-performing loans (NPLs) and interest suspense of the CMSME loans of banks and non-banking financial institutions (NBFIs), said a BB official.
"BB has amended the target fixation process for the CMSMEs' package in line with the stakeholders' demand and requirements," said the BB official.
He said such a decision will help the banks and NBFIs to implement the second phase of the stimulus package for CMSMEs that employ around 35 percent of the country's total workforce.
Besides, BB had already allowed the banks and NBFIs to provide loans to cottage, micro and small (CMS) enterprises as working capital along with term loans under the package.
"Such steps will also help the lenders such as banks and NGFLs implement stimulus packages," he added.
In line with BB policy, now the borrowers, who availed assistance from the first phase of the package, would not be eligible for the second phase.
But loans of the borrowers will be continued in line with the 'bank-customer' relationship, paying 9 per cent interest rate instead of 4 per cent earlier, according to the central bank.
In the first phase, the banks and NBFIs disbursed Tk 153.87 billion of the stimulus package until June 30 last, according to BB's latest monitoring report on the package.
The disbursed amount was nearly 77 per cent of the total Tk 200 billion fund for the sector.
A total of 97,814 Covid-19-affected CMSMEs across the country benefited through receiving the low-cost loans under the just-concluded first phase of the package.
Meanwhile, BB has already sent limits to the scheduled banks and NBFIs for execution of the second phase of the stimulus package for CMSMEs to facilitate recovery of the Covid-19 hit economy.
"As per our policy, we've also asked the banks and NBFIs to submit their branch-wise targeted distribution lists as early as possible because it will help strengthen monitoring and supervision for implementation of the package properly," said the BB official.
CMSMEs play an important role in economic growth as well as generate 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 over 13.16 million people.
CMSMEs together represent 99.84 percent of the total enterprises in the country.