Lengthy procedures slow disbursement of stimulus for MSME

Published : 29 Jul 2020 09:49 PM | Updated : 07 Sep 2020 09:57 PM

"Most of cottage, micro, small and medium (CMSME) entrepreneurs are yet to get the benefit of announced stimulus package. Existing complex documentation process and lengthy procedures are some of the reasons behind this slow disbursement", speakers observed at a webinar on Wednesday .

They said the organisations like BSCIC, SME Foundation, PKSF etc. may be utilized to reach the stimulus to the rural part of the country.

Dhaka Chamber of Commerce and Industries (DCCI) organised the webinar titled “CMSME’s Access to Finance and the Way forward”. 

Abu Farah Md. Naser, Executive Director, Bangladesh Bank joined the webinar as chief guest.  

Abu Farah Md. Naser, Executive Director, Bangladesh Bank said that 20 thousand crore taka stimulus is for 3 year term so that the source of fund can run smoothly. If the stimulus rolls out for three years its effective amount will be 60 thousand taka. 

He said, in terms of handling small entrepreneurs risks of loan classification is very low. He said credit guaranty scheme will ease the access to finance specially for the CMSMEs and he termed it as a primary initiative. He suggested the entrepreneurs to keep their marketing chain active. Bangladesh Bank will consider whether lending as working capital can be treated as term loan. 

He also said that other non-banking institutions may be included to disburse stimulus. Answering to a question of DCCI President, he told that Bangladesh Bank eased capital requirements for the startups so that they can get loan easily.   

 In his welcome speech, DCCI President Shams Mahmud said the Cottage, Micro, Small and Medium Enterprises (CMSME) sector represents 13 million business entities in Bangladesh which constitutes about 35.49% employment in the country. 

But the prevailing Covid 19-led crisis affects the sector adversely. For the revival of this sector government announced a stimulus of Taka 20 thousand crore. But many entrepreneurs are facing challenges in getting loans from the package due to various difficulties. 

He also said that non-banking channel can be useful for disbursing loans to CMSMEs. Moreover, definition of SMEs needs to be unified in all policies.   

 N K A Mobin, FCA, FCS, Senior Vice President, DCCI presented a power point on SME Development Department of DCCI. He said CMSME sector in the country is contributing 25% of our GDP and 35.5% of total employment. CMSMEs’ contribution to export earnings is ranging from 75% to 80%, he said.