Commercial banks are delaying to disburse loans from the stimulus package for the cottage, micro and small enterprises (CMS) in the name of inspection, entrepreneurs of the sectors alleged.
The entrepreneurs are getting frustrated and losing confidence as they are not getting loans from the package timely, although the announcement of the stimulus package was praised by them, they said.
They also said no alternative way but to disburse loans for the sector properly for resurgence of the losses caused by the ongoing Covid-19 pandemic and recovering country’s economy.
Barrister Nihad Kabir, President of the MCCI, said, “Entrepreneurs of the sector are being demoralized for delaying disbursement of the package loans, although the announcement of the stimulus package was praised by the business community.”
Urging to bring reforms in the existing policies for the implementation of the incentive package, Abul Kasem Khan, Chairman of BUILD, said, the businesses, deserve the loans, are not getting.
Besides, we have to think about the small entrepreneurs, who are out of the banking channel, he added.
He further said proper utilization and timely disbursement of the package loans will help to turn the business around. “But the banks are not realizing it. Rather, they are killing time in the name of inspection,” he alleged.
Recently, State Minister for Labour and Employment Munnujan Sufian on behalf of raw jute exporters has issued a letter to the Finance Secretary to immediate disburse the loan announced by the government at subsidized rate.
“Some banks are refusing to disburse loan from incentive package to jute exporters who are badly affected by Covid-19 fallout,” Munnujan said.
Besides, Commerce Ministry also advocated for allocating fresh loan to tea exporters as tea sector’s businessmen are also badly affected by the pandemic.
“The local tea sector badly needs the government announced loan under incentive package as working capital. If banks do not provide necessary funds to tea exporters many of them will not be able to survive,” a letter, signed by deputy secretary Mohammad Mostafa Haider to finance secretary read.
Businesses said that many of the commercial banks so far have shown their unwillingness to distribute loans from the stimulus package because of the current 9 percent lending cap and specially in financing CMSMEs because of the high operational cost for SME loans.
Upon the introduction of the credit guarantee scheme, the bank can get up to 30 percent portfolio guarantee cap of their CMS working capital portfolio where an individual or a company will get 80 percent coverage of a credit given by the banks.
Therefore, banks will avail the fund from the scheme if loans get unpaid by the borrower as per the agreement. As a result, banks will be interested in disbursing the working capital loans to the CMSMEs under the COVID-19 stimulus package.
Under this 30 percent portfolio of CMSME loan, 70 percent will be covered by the manufacturing and service sector (Cottage, micro and small) and rest 30 percent for trading sector.
This bar can shrink the CGS operation as in the CMS sector as a large number of business in the trading sector.
