Bangladesh Bank (BB) on Thursday asked scheduled banks that they could lend stimulus loan to affected businesses in three years, instead of one year, to lessen liquidity pressure from local lenders.
The central bank extended the time for lending with a view to ensure that low-cost loan facilities could be lent to more affected businesses.
An official at the BB said the policy relaxation would allow banks to utilize the stimulus packages for the maximum number of borrowers.
For instance, if a borrower is entitled to get Tk300 under the stimulus package, he or she can avail the loan in three phases, Tk100 each time, in three years period.
If the entire Tk300 in credit facility is issued in the first year to a single borrower, it would be difficult for a bank to provide the facility to maximum number of borrowers, officials concerned at the BB have clarified.
BB also elaborated that the interest subsidy would only be given against the loans that would be within the specified limit.
The loans or investment must be within 30% of the existing working capital loans of borrowers as of December 31, 2019, the BB circular added.
Besides, banks are given authority to set loan limits for the new borrowers, and the disbursement mechanism for them will also be three years.
The government has announced stimulus packages totaling over Tk1,00,000 crore to overcome the economic impact from coronavirus, including Tk30,000 crore package for the industries and service sectors.
Talking to Dhaka Tribune, Pubali Bank managing director Md. Abdul Halim Chowdhury said the measure would help banks to cover more affected industries to finance under the stimulus packages.
“Now, Pubali Bank is receiving a huge number of applications from borrowers to get working capital loans from the stimulus packages.”