Bank-client relationship is not the only criteria for the stimulus package, rather the loan can be given based on books of accounts as per the circular, Bangladesh Bank Deputy Governor Abu Farah Md. Nasser said on Wednesday.

He was speaking at the 9th Financial Sector Development Working Committee (FSDWC) meeting organized virtually by Business Initiative Leading Development (BUILD).

Nasser and NKA Mobin, acting President of Dhaka Chamber of Commerce and Industry (DCCI) co-chaired the meeting.

Nasser also observed that currently banks like Brac Bank are improving the modalities of SME banking.

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He said Credit Guarantee Scheme (CGS) has been implemented for the collateral-free loan and in each division of the country, collateral-free loan lending has been prioritized. 

He said 10 percent collateral-free loan has been directed to provide to the women entrepreneurs.

Some eight percent of the total loan has to be gone to the women entrepreneurs at five percent interest and one percent incentive has been announced for both women entrepreneurs and banks for recognizing good borrowers, said Nasser.

He informed the meeting that the Ministry of Industries has already been requested to bring alternatives for trade licenses for the cottage, micro, and small enterprises so that the trade license issue in lending can be resolved.

The deputy governor said Bangladesh Bank has introduced a new scheme of Tk 500 crore collateral-free loan through agent banking, MFS, and bank sub-branch to provide finance to the rural and ultra-poor individuals and businesses.

He said the scheme would follow the model of Leno financing to process loan applications in the shortest possible time and funding at the grassroots level.

He said the central bank has implemented policies in such a way that will ensure liquidity support of banks and reduce the burden of cost of funds for the private sector, especially CMSMEs.

He also mentioned the initiative of the Central Bank and World Bank in setting up an independent entity for payment gateway for CMSMEs.

He emphasized the proactive initiatives of Bangladesh Bank and the country's scheduled banks that up to June 2020 Tk 2,43,000crore disbursement has been made to the SMEs by Banks.

BUILD CEO Ferdaus Ara Begum highlighted the implementation status of the last 8th FSDWC meeting and praised Bangladesh Bank (BB) for taking initiatives for supporting implementation of 15 out of the 20 recommendations proposed by BUILD in the earlier meeting.

These are fortnightly monitoring, increase in stimulus package volume, separate arrangements for cottage and micro traders, separate allocation for women, extension of the loan repayment period, collateral-free loan, credit guarantee scheme and expansion of agent banking, and considering alternatives for trade license for E-commerce.

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She raised the need for a comprehensive database for CMSMEs supported by the SME Foundation, A2I, and Bangladesh Bank and thanked Bangladesh Bank for increasing the limit of MFIs for disbursing loans for the low income group.

NKA Mobin said addressing the CMSME definition would help deal with the challenges of CMSME financing and all the organisations related to CMSME development can be brought under a single umbrella.

He referred to the DCCI survey conducted in 2021 on its members which revealed that 45% of the applicants were not allowed by the banks to get stimulus package loans and half of the approved loans have not been disbursed on time.

Md. Kamran Hasnain, Research Associate, BUILD delivered a presentation on Redesigning COVID Stimulus Linking to Employment, Consumption & Investment for Next Round Support.

He shared insights from the preliminary findings of the BUILD-UNIDO survey conducted in March-July, 2021.

According to the survey findings, only six percent of vulnerable SMEs have received stimulus packages while 36 per cent of Asian firms received them.

All SMEs & large firms faced loss of sales, while resilient Asian large firms witnessed positive sales growth.

It indicates a lack of consumer demand in Bangladesh during March to July 2021. 

The survey also found that layoff is higher in SMEs than large industries in both country and regional contexts.

The presentation also referred to another study of BUILD where country comparison of policies  specifically targeting  employment, demand investment related support have been shown.

Imtiaz Uddin of Premier Bank endorsed the proposal of BUILD for extending the moratorium so that banks do not have to face liquidity crisis.

Dr. Nadia Binte Amin, Director of FBCCI added that the women entrepreneurs (WEs) should be considered with utmost care while disbursing FSPs.

Ali Sabet, Team Leader, PRISM said that Bangladesh Bank may consider the individual entity for managing credit guarantee schemes.

He suggested utilization of the huge network of BSCIC for reaching up to the level of cottage industries.

Dr. M. Jahangir Alam Chowdhury, Executive Director, Center for Microfinance and Development, University of Dhaka said that a comparison of different stimulus packages among similar countries in terms of GDP can be conducted to have a better stimulus package comparison scenario.

The working committee meeting was participated by the representatives of the central bank, a number of scheduled banks, academicians, business chambers and associations, entrepreneurs from the private sector.