Page 70 - IBT October 2020

Incentive packages Has the government
announced Many SME clients also been idle?
The responsibility now rested on the lack proper strategies The government acknowledges the
government to provide support and for a comeback, which gap from both sides of the story. In
assistance to these marginalized entails credit risks for response to it, discussions are
sections. As such, it was ruled that Tk banks. This section of underway with the World Bank to
3,000 of the newly announced package implement a credit guarantee
The picture at a for SMEs would be given to cottage and borrowers does not scheme worth Tk 5,000 crore to
have the collateral or
glance micro enterprises in rural areas. Since organizational cover up some uncertainties on
lenders’ end. Government has also
they were previously out of the banking
The blow was very sharp for small channel, loans would be given only upon strength to decided to form a steering
and medium enterprises, exporters, fulfilling specific requirements. Women materialize committee in each district under
and farmers of the country. Soon entrepreneurs were also eligible for at transactional the leadership of the deputy
after the virus set its foot on the least 5 percent of the package. commissioner to foster
shores of the country, Prime Government will also provide interest relationship with district-level loan disbursement.
Minister Sheikh Hasina announced subsidies to beneficiaries. It will be banks. Previously, banks were required to
stimulus packages and responsible for 5 percent of the declared apply for the loan to the central
pre-shipment credits worth Tk 9 percent interest for a maximum of one bank after shipment of exported
106,117 crore to tackle the year. To prevent defaulting, banks will goods, despite exporters’
economic downturn brought on by provide loans only after painstaking willingness to avail loans before
the pandemic, of which Tk 20,000 assessment of applicant’s current Tk 7,700 crore meant for paying the shipment. This would cause
crore was meant for SMEs and Tk financial condition, previous record, and wages were disbursed within time. unnecessary delay and hinder
5,000 crore for agriculture sector. bank-client relationship. While the SMEs, farmers and activities in the exporting sector.
The responsibility was given to the Due importance was also given to the exporters are going through To smoothen the implementation
country's scheduled banks. farming sector which received an shortage of funds, large industries of the stimulus scheme, the central
However, due to lack of central incentive package worth Tk 5,000 crore. and service sectors have been given bank ruled that banks will have to
bank’s initiatives and banks’ Under this stimulus package, farmers are the lion’s share. Perhaps, unlike the apply for loans to the central bank
negligence, the disbursement has required to pay a maximum of 4 percent story about the Tortoise and the within seven days after they fund
been going out at a snail’s pace. interest on loans taken. The loan will be Hare, this time the Hare will win export sector clients.
As of August 31, only 17.5 and valid for 18 months, with a 6-month the race. Why would they not?
9.53 percent of the relief packages grace period. On the other hand, the After all, they have bagged all the
meant for SMEs and the country's export sector received stimulus support from the lenders. As of Who is responsible-
agriculture sector respectively have packages in the forms of pre-shipment now, this section of the economy virus or us?
been executed. Moreover, whether credit and workers’ salary package. has received 72.85 percent of the If I had a fortune teller in front of
the loans have reached the Tk 30,000 crore worth fiscal me right now, I know for sure
targeted people is yet unknown to lifeline allotted for them. what I would have asked. ‘When
the central bank. However, there The truth will the pandemic end?’ But
seemed to be no reluctance in An insight into the having a fortune teller seems like
executing the package announced behind the veil a distant dream now, as social
for large industries and service The figures look quite satisfactory. These reasons distancing is still a must. But as a
sectors. The rate of interest on the all point towards a swift recovery from What could the reason behind this nation, the timeline of the
loan for these industries were also the economic slough as long as the real discrepancy be? Lending money to pandemic should not be our key
set at only 2 percent. picture stays behind closed curtains. small and medium enterprises concern. Rather proper
A higher number of workers in the Despite repeated notices to banks and involves high acquisition and implementation of policies to
SME and agriculture segment were non-bank financial institutions to maintenance costs to avail proper make sure we secure our future as
traded off for more profitable disburse the fund for SMEs by October, information and data. Many SME much as possible should be the
business with a large borrower so far only Tk 4,120 crore has been clients also lack proper strategies first task at hand. The V-shaped
segment. A statistic might make received by 11,183 borrowers. The for a comeback, which entails economic recovery will turn into
the scenario clearer. Dhaka bank deadline for loan disbursement among credit risks for banks. This section reality only if roadblocks to an
has been entrusted to disburse Tk farmers has already been crossed. But of borrowers does not have the equal and effective
758 crore as large loans to only only a little more than 20 percent of the collateral or organizational implementation of all financial
257 clients, while 3,100 clients total package has reached the prime strength to materialize schemes is addressed. Otherwise,
have been enlisted as eligible for drivers of our economy. The exporting transactional relationship with inequality would slowly corrode all
SME loans worth Tk 250 crore. A sector has been a little lucky in this banks. On top of it, the recent flood the progress we have made so far.
report by the International Labor regard. Although the current figure of worsened the situation, as many The question we need to ask
Organization mentions about a pre-shipment credit disbursement stands small-scale farmers felt the ourselves is: ‘who is responsible
total of 2.5 million pandemic at an unsatisfactory level of Tk 1.1 crore absence of enough capital to pay for the newly created inequality?
affected SMEs in Bangladesh. out of Tk 5,000 crore announced, all of back loans in time. Is it us or is it the virus itself?’

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