BB relaxes rule of presenting audited financial statement for CMS entrepreneurs

The Bangladesh Bank (BB) has relaxed its condition to present the annual audited financial report for the cottage, micro and small (CMS) entrepreneurs who faced financial shock during the Covid-19 pandemic, aiming to help their growth.

The finance sector regulator on Tuesday issued a circular in this connection and sent it to all the managing directors of the financial institutions which will remain effective until 31 December this year.

A Bangladesh Bank official, who preferred not to be named, told TBS that the small entrepreneurs were affected a lot during the Covid-19 pandemic. The loan disbursement process is much lengthy in their case as they could not show the annual audited report in time.      

That is why the central bank has relaxed the condition of presenting the report for them until December this year so that they can get the credit easily, he said, adding: the Bangladesh Bank rules will be strictly followed in other type of loan disbursement.

Referring to a circular issued on 17 August last year, the Bangladesh Bank said it has been noticed that the financial institutions disburse the loans after sanctioning to a third party account instead of the actual client. This is a clear violation of the rule which instruct of using the credit for the right purpose. It is mandatory to disburse the credit in the actual client's account, the circular said.

The circular also said the bank statement of the actual client should be attached with the documents before disbursement of the approved loan. But this rule will not be applicable for the CMS entrepreneurs as per the new rule.           

The financial institutions which are operated following the Islami Shariah rules can disburse the approved loan to the actual suppliers account. But the no objection letter of the actual client should be attached with the documents.   

Meanwhile, according to a data of CMSME sector loan disbursement, the government declared a Tk200 billion stimulus loan package to help the CMSMEs to overcome the financial shock due to the Covid-19 pandemic.

In the first phase, the loan disbursement rate was 77% of the target in eight months (July-February) in the last fiscal year.

In the second phase, the banks disbursed Tk71.17 billion loan among businesses in CMSME sector in the first eight months of the current financial year (July-February) which is 36.8% of the target.

The central bank held a meeting with the managing directors of the scheduled banks in February this year in a bid to increase the disbursement rate. The Bangladesh Bank governor chaired the meeting.

The governor instructed the managing directors to achieve the set target by June this year.