BB to set new Tk 200bn CMSE loan target

Most banks, NBFIs fail to achieve the target set to boost the pandemic-hit CMSEs

Anisul Islam Noor

29 March, 2021 12:00 AM printer

Bangladesh Bank (BB) is going to set a fresh annual loan disbursement target of Tk 200 billion from April 1 for the country’s CMSE sector.

Although, in April last year, the central bank put a similar target of Tk 200 billion, most banks and non-bank financial institutions (NBFIs) failed to implement the target.

According to the BB figures until March 14, the banks and NBFIs were able to achieve 64 percent of the target.

Now, the central bank is going to announce a new target of disbursing loans of Tk 200 billion to help cottage, micro and small enterprises (CMSEs) recover from the pandemic shocks.

The BB spokesperson Md. Serajul Islam told the daily sun on Saturday that the central bank had kept the CMSEs sector in priorities of loan disbursement so that the rural economy could revive from the pandemic and become vibrant again.

Replying to a query, he said the current amount had not been reached despite the central bank’s repeated directives towards the banks and NBFIs to increase the CMSE loan disbursements.

Md. Serajul Islam, however, hoped that the loan disbursements would increase this year as the entrepreneurs started coming out of the pandemic situation.

Another BB official who worked at the SME Department said the banks and NBFIs that “have failed to reach the target will be reprimanded.”

Under the policy, a bank has to usually disburse 10 percent of its total loans to CMSE sector.

Under the upcoming package, there will be no interest subsidy for the banks from the central bank.

In the earlier package, the entrepreneurs in CMSE sector received loans at 4.0 percent interest rate.

The BB provided 5.0 percent interest subsidy against CMSE loans just after the disbursement by the respective commercial bank.

Earlier, the government announced an incentive package to disburse loans on easy terms among the affected entrepreneurs during the pandemic.

The central bank is implementing the package through banks and NBFIs.

Last year the BB set a target of disbursing loans for 56 banks and 17 financial institutions.

The central bank has repeatedly extended the deadlines to achieve the target.

But most banks and financial institutions have not been able to reach the target.

According to the latest data until March 14, only 15 banks and financial institutions have achieved the target.

The remaining 58 percent of banks and financial institutions failed to meet the target.

Among them, the foreign banks were the worst performers in meeting the target. Most of the foreign banks in Bangladesh didn’t distribute any single loan to CMSEs.