Big players have a ball, but small ones trail

The big businesses are at the forefront of borrowing from the government-announced virus stimulus packages as they have received almost the entire amount meant for them.

The banks did not have to take the trouble in this regard. Banks provided almost whatever amount the big players demanded without too many excuses. But, numerous issues rose while banks moved for lending to the minnows – letting them fall behind in the virus recovery rally. 

The central bank's updates on stimulus disbursement draw the grim picture marred by uneven treatments.  

According to the updates, 3,046 big enterprises borrowed Tk25,411 crore as working capital from the Tk33,000 crore package announced for them.

On top of this, the export-oriented garments got Tk2,263 crore loan in June and Tk2,534 crore in July last year as staff salaries. As the amount fell short, Tk3,000 crore was added up with the amount in July for the readymade garment industry.

Responding to the pandemic-led situation, the $3.5 billion Export Development Fund (EFD) for the export oriented sector was raised to $5 billion. At the end of January, almost the entire amount of the fund, which offers loans with only 2% interest, has been disbursed.

Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said the banks have more interest in and better relationship with the big players.

He said, "The big enterprises include labour intensive industries such as readymade garments. Therefore, they needed the stimulus support. But the medium and small enterprises are not getting the support when they need it due to the loan disbursement delay."

The CPD distinguished fellow thinks the uneven treatment is resulting in an uneven recovery. 

Stimulus implementation for the small and medium-sized enterprises (SME) sector – the major player in the country's employment – lags behind the most. Despite the central bank's repeated instructions to banks, stimulus disbursement to the SMEs failed to get the momentum.

After several extensions, the central bank lastly set March as the deadline for stimulus disbursement to the SMEs. As of 21 January, about 78,000 small entrepreneurs have availed loans from the virus stimulus package.

Bankers say most of the small ventures do not have the documents mandatory for bank loans. Besides, bankers have been claiming both the loan cost and risk are higher for SMEs.

On the topic, Professor Mustafizur Rahman said CPD has been demanding another stimulus only for the SMEs keeping the issues in mind.

He said stimulus disbursement to the small ventures by the micro-credit institutions and NGOs would yield the success.

Compared to the SMEs, the agriculture sector is at a much better position in stimulus disbursement.

Despite the pandemic-led situation and flooding, farmers managed to counteract the fallouts since they got a fair price for paddy. 

Professor Mustafizur Rahman said public banks mainly disburse the farm loan and they are quite efficient for the job compared to the private banks. Besides, he thinks the farmers were also positive to agri-loan.   

Meanwhile, financial institutions have not been successful in lending to various sectors while their disbursement target was Tk1,135 crore. The Bangladesh Bank had approved the only Tk214 disbursement against the package.

The Department of Financial Institutions and Markets returned the remaining Tk921 crore to the central bank's Banking Regulation and Policy Department to be disbursed by the banks.