Banks and Non-Bank Financial Institutions (NBFIs) will get time till 31 December. Earlier, the deadline was 30 November
The central bank has further extended the timeline to allocate the fund for the cottage, micro, small and medium enterprise (CMSME) under the incentive package as banks and financial institutions failed to make significant headway.
According to the new timeframe, banks and Non-Bank Financial Institutions (NBFIs) will get time till 31 December. Earlier, the deadline was 30 November.
The Bangladesh Bank's SME and Special Programmes Department issued a circular in this regard on Thursday.
The financial institutions failed to implement loan disbursement by 31 October under the Tk20,000 crore stimulus package for the CMSME sector which was announced in April.
At the end of September, the amount of credits distributed under the package was only Tk6,346 crore and did not exceed 50% by the end of October. As on 31 October, the total amount given out was Tk8,643 crore.
The central bank extended the deadline in response to criticism from various quarters and requests from banks.
In addition, it also relaxed some conditions for loan disbursement by banks and NBFIs.
The financial institutions have been allowed to increase credit limits in the trading sub-sector.
According to the circular, a large portion of the loans allocated to the CMSME sector under the incentive package is being used in business.
As the demand for credit in the CMSME sector is rising, banks and NBFIs will be able to disburse credits up to 35% of their annual credit limit to the trading sub-sector.
The disbursements in the trading sub-sectors can be increased to 35% only on the condition that such distribution in the manufacturing and services sub-sectors cannot be reduced below 65% of the loans disbursed annually.
Presently, under the incentive package, 30% loan is given to the trading sub-sector and 60% to the manufacturing and services sub-sectors.
Earlier, the total allocation of annual loans in the manufacturing and services sub-sectors under the stimulus package was fixed at 50% and 30% respectively, aggregating a total of 80%, while 20% went to the trading sub-sector.