Lending in the second round of six stimulus packages under the Bangladesh Bank has fallen short of the target by a big margin in the first six months of the current fiscal year because of a fall in demand from borrowers with many small businesses turning around from pandemic-induced losses.
Industry insiders say disbursements under bailout packages in the first phase were much higher as many clients were in need of emergency financial support when the pandemic was at its pick.
The situation has now completely changed all together with Covid-19 turning the corner and many small businesses recovering. That is why, the implementation of the economic bailout schemes is running at a slow pace, they add.
However, Bangladesh Bank officials said banks are showing less interest in giving out loans in the second phase as the finance ministry slowed down the release of interest subsidies after the central bank had received allegations of misuse of stimulus loans in the first round.
In the first six months of FY22, banks disbursed Tk13,974 crore against the target of Tk64,000 crore from six stimulus packages under the central bank.
Covid-hit industries and service providers received only Tk8,958 crore in working capital, which was only 21.83% of the target.
The Bangladesh Bank has set a target to disburse Tk33,000 crore in the current fiscal year in the sector. As of December last year, only 906 industries availed loan facilities. In the last fiscal year, the government announced a loan package amounting to Tk40,000 crore for this sector.
The total disbursements among 4,200 business entities stood at Tk41,661 crore.
To tackle pandemic fallout, the government has so far announced 28 stimulus packages amounting to a combined fund of more than Tk1.87 lakh crore. Later, the central bank added the export development fund involving $500 million to it.
The Bangladesh Bank is directly involved in 10 stimulus packages. Two packages have been fully implemented, while the remaining eight are under implementation this fiscal year.
According to the latest data, the central bank has a target to disburse Tk20,000 crore in working capital among small and medium enterprises. But only Tk4,247 crore was disbursed in July-December, which was 21.23% of the target. The number of beneficiaries was 30,941.
Under the stimulus package, the Bangladesh Bank has also set a credit guarantee scheme of Tk2,000 crore for the cottage, micro and small businesses in the current financial year. The disbursement under the scheme stood at only Tk32.55 lakh.
Meanwhile, in the light of a slow pace of disbursements, on 30 December, the Bangladesh Bank decided to increase the extent of credit guarantee against loans to cottage, micro, small and medium enterprises (CMSMEs) to bring more under it. Banks now can lend a minimum amount of Tk25,000 and a maximum of Tk1 crore that the central bank will give a credit guarantee for.
The central bank has set a target for the Tk5,000 crore package in the Pre-Shipment Credit Refinance Scheme. The number of beneficiaries under this package so far is 67 business entities that received loans amounting to Tk504 crore, which was 10% of the target.
In the six months, only Tk233 crore was disbursed from the Tk3,000 crore refinancing scheme set up for low-income professional farmers and small businessmen.