Bangladesh Bank to facilitate loans to CMSME sector

The Bangladesh Bank has directed banks and financial institutions to provide special loan facility to revive cottage, micro, small and medium enterprises (CMSMEs) that have been affected financially due to the Covid-19 outbreak.

The institutions have also been urged to disburse loans in the shortest possible time by adopting the simplest procedure possible in all steps from receiving application to loan disbursement, reads a press release issued on Monday.

The central bank has also directed to transfer all imposed/ imposable interest/ profit on all types of loans/investments facilitated between April 1, 2020 and May 31, 2020, to interest-free blocked accounts.

The interest/profit transferred as blocked cannot be acquired from the respective loan/investment recipient till further instruction and such interest/profit cannot be transferred to bank's income book.

The central bank took the initiative upon a proposal by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) regarding easy loan access by entrepreneurs in the CMSME sector. The FBCCI hopes the business community will particularly benefit from the facility.

Following the instruction, separate help desks will be set up in each branch of the banks or financial institutions to assist the entrepreneurs so that information about financial aid packages can be found easily.

The institutions will form monitoring teams at their respective head offices to properly supervise loan or investment disbursement activities and to inform the names, phone numbers, and e-mails of the entrepreneurs to the in-charges at the SME and Special Programmes Department, according to the press release.  

Besides, they were also instructed to receive assistance from FBCCI and its affiliates in selecting borrowers, disbursing loans, supervising lenders, and including personal, social, and group guarantees instead of collateral to avail the entrepreneurs while taking loan or investment benefits.

On April 5, Prime Minister Sheikh Hasina declared a financial assistance package of Tk20,000 crore to introduce low-interest on working capital loan facility through the banking system to retain the capacity of CMSME entrepreneurs affected by coronavirus and to keep the manpower working.

In light of the prime minister's announcement, FBCCI President Sheikh Fazle Fahim submitted a proposal to the Bangladesh Bank to make the loan disbursement process easier for the CMSME entrepreneurs as well, reads the press statement.

He also urged for an easy access to credit for all media outlets. Fahim assured that FBCCI would remain involved in the loan process and would always strive to revive the economy by providing all possible assistance in case of any problem.

He said, "Most of the CMSME entrepreneurs, entitled to have the current capital loan facility, have minimal infrastructures and relationship with bankers than those of the others."

"As a result, if these entrepreneurs were selected upon reviewing their basic standards, financial statements and ICRRS, many would fail to meet required qualifications to avail the loans and investment benefits," he added.

"Meanwhile, if the loan amount is not determined and the demand is not coordinated with it, we will not get desired results," said Fahim.

The premier has already allocated Tk70,000 crore as refinancing for the smooth implementation of loan and other facilities under various financial assistance packages, announced so far, to keep economic activities uninterrupted during the coronavirus pandemic, added the FBCCI president.

Meanwhile, a demand was also raised to facilitate media, newspapers, TVs, trucks, cargo, launches, and backward exports, with the loan facility on the basis of salary statements and as per the advice of the association concerned, the press release adds.