Coronavirus stimulus package remains elusive for businesses as banks take tedious approach to clear key procedural hurdle to advance the package designed to provide economic relief to workers and industries battered by the coronavirus outbreak.
The government announced Tk 1,03,117 crore stimulus package as economic responses to support the emergency health care services, food security, protect jobs and recover the loss of the economy, caused by Covid-19.
The package is supposed to be distributed by the banking sector under the guidance of Bangladesh Bank.
FBCCI, the country’s apex trade body, on the other day came down heavily on banks, as they do not cooperate with entrepreneurs in implementing the government’s stimulus package.
“While many banks have come forward to allocate funds from the stimulus package, there is reluctance among some other banks. We propose that the government withdraw deposits from those banks that will not cooperate in the implementation of the package,” FBCCI chief said this addressing an official, virtual post-budget press conference at their Federation Bhaban in Motijheel of the capital.
“Banks which are cooperating to implement the stimulus package should be entitled to tax benefits and government deposits can also be increased for those banks,” he said.
“The central bank has already relaxed several conditions of the stimulus package so that banks can disburse loan in a shortest possible time as per the need of the businesses. But banks seem to be tedious in approving loans,” an official of Bangladesh told The New Nation on Tuesday seeking anonymity.
He said also said that the central bank has already taken a number of quick steps by using the monetary policy tools in order to ease liquidity in the banking sector to support these stimulus schemes.
“The banks should change their attitude and they should respond quickly to disburse the stimulus money for the businesses. Otherwise, the economy will suffer and more jobs will be lost,” Abdus Salam Murshedy, President of the Exporters Association of Bangladesh (EAB) told The New Nation.
He cited that the coronavirus crisis has put most economic sectors under serious strains. In this situation, businesses especially small and medium enterprises need working capital to maintain their operation and save jobs. “The banks should play a pro-active role by adopting easy ways to help the country’s cottage, micro, small and medium enterprises (CMSME) get their share from the package of Tk 20,000 crore,” he said.
Sources said the central bank has approved Tk 8,000 crore as loan to enterprises under the package and of the amount, Tk 6,000 crore so far disbursed by commercial banks.
Besides, another Tk 5,000 crore package offered to export-oriented industries for paying worker’s wages and salaries has already been utilized.
Insiders said, only 75 large companies so far got approval from the central bank to receive low-cost loans under a Tk 30,000 package dedicated to big borrowers in the industrial and service sector.
But, Tk 20,000 crore low-cost fund for CMSME under the stimulus package is yet to be utilized because of banks’ apathy in providing loans to CMSME.
“The scheme pose additional risk management and administrative responsibilities on the banks. So, we have to assume all aspects of risk before loan approval and disbursements of the funds under the package,” a Senior Executive of a private commercial bank told The New Nation yesterday preferring anonymity.
He said providing loans to the CMSME also involve higher risk, as default rates are even higher in these areas of business.
“The package has failed to generate demand due to entry barriers for the private sector enterprises. The loan approval and disbursement under the package is still unsatisfactory. A big push is needed so that entrepreneurs can get the funds to make a turnaround from the ongoing economic fallout brought on by the coronavirus pandemic,” Dr Ahsan H, executive director at the Policy Research Institute of Bangladesh told the New Nation.
