Less than half of small businesses have benefited from the second round of stimulus packages, announced by the government to steer the economy from the pandemic shocks, while the loans have been fully disbursed among large companies.
In the second round during the current financial year, the target for stimulus loans for the Cottage, Micro, Small and Medium Enterprise (CMSME) industries was set at Tk20,000 crore. However, loans disbursed during the July-March period of this fiscal year were only 45.71%, or Tk9,120 crore. Although, 76.93% of the first round of stimulus loans were disbursed.
In addition, the government has launched a Tk2,000 crore credit guarantee scheme for the cottage, micro, and small (CMS) entrepreneurs under the CMSME package. However, under this scheme, a guarantee facility of only Tk89.27 crore has been given in about ten months.
For big business, back-to-back loans – known as export development fund (EDF) – are offered at 2% interest to increase the scope of importing raw materials. Tk29,750 crore was announced for the current financial year. In the meantime, Tk27,757 crore of this incentive loan has been disbursed, about 93.30% of the target.
On the slow pace of the CMSME loans, Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD), said small businesses did not get the same amount of benefits as large companies since the announcement of stimulus loans.
"In the case of small entrepreneurs, due to various obligations to fulfil bank formalities, small entrepreneurs have received comparatively fewer loans. As a result, it will be difficult for these small entrepreneurs to recover their businesses," she added.
However, due to the sluggish pace of CMSME lending, the central bank governor at a meeting with the heads of all banks last December stressed the importance of disbursement of the loans. Although banks have been asked to give importance to this issue, they have not changed the picture of loan disbursement.
So far, the government has announced a total of 28 packages to address the Covid-19 damages. In all, the amount of these packages is more than Tk1.87 lakh crore
Of working capital incentive loans for affected industrial service sector companies, only Tk11,322 crore has been disbursed in the first ten months of the current financial year, which is 34.30% of the target.
In the last financial year, a stimulus package of Tk40,000 crore was announced in this sector. In the current financial year, the target of this loan has been set at Tk33,000 crore. A total of 1,162 industries have availed the benefits during the current period.
The total loan disbursed since the inception of this package is Tk44.25 crore. And the total number of beneficiaries is 4,468 industrial establishments. At the consumer level, the interest rate is 4.50%. The government interest subsidy is 4.50%.
Asked about the sluggish pace of CMSME stimulus loans, Sirajul Islam, executive director and spokesperson of the central bank, said large loans are always high because they can be disbursed to a few institutions but lending to small entrepreneurs requires a lot of time.
However, since the governor has instructed the managing directors of all the banks to increase the CMSME loans, he hoped that the target will be met in the next two and a half months. If anyone fails, they will be fined.
Bankers say the demand for stimulus loans is much lower now. However, companies applying for the loan are also getting fewer disbursements. This is because the ministry is now releasing less for the subsidy than earlier.