• Wednesday, Jan 20, 2021
  • Last Update : 12:42 am

BB raises loan ceiling for trade-based small enterprises

  • Published at 12:27 am November 27th, 2020
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Syed Zakir Hossain/ Dhaka Tribune

Deadline to disburse stimulus fund extended to Dec 31

Now banks and financial institutions can lend more to the trade-based cottage, micro, small and medium enterprises (CMSMEs) as the central bank on Thursday raised the ceiling for loans to the sector by 5 percentage points.

The regulator enhanced the limit for the trade-based small enterprises considering the high demand for loans in the sector, according to a notice from the Bangladesh Bank.

While unveiling the Tk 20,000 crore stimulus funds for the CMSME sector in April, the central bank allowed banks and financial institutions to disburse 20 per cent of their total annual loans to trade-based CMSMEs. 

Then in October, the loan limit was raised to 30 per cent for the trading sector to boost stimulus fund disbursement. 

The BB yesterday further enhanced the ceiling to 35 per cent. 

If the loan amount crosses 35 per cent, the share of the funds for the manufacturing and service sub-sectors would go down proportionately, said the BB notice.

It would not be below 65 per cent combined for the two sub-sectors, it added.

The central bank also extended the deadline for banks and non-bank financial institutions to execute the stimulus package for the CMSMEs by another month.

The new extended deadline for the execution of the stimulus package is December 31. 

The BB further enhanced the limit for the trading sector to boost loan disbursement to CMSMEs sector, said a high official of the central bank upon the condition of anonymity as he is not authorised to speak with the media.

“The disbursement so far is not satisfactory,” he added.

As of October, banks have disbursed just 42 per cent of the sum among the CMSMEs despite a repeated push from the central bank to complete disbursement at the earliest.

“This is a good initiative,” said Syed Abdul Monem, head of SME of Brac Bank, whose main focus is the CMSME segment.

The stimulus fund disbursement will now increase owing to this move as there is a high demand for loans in the trading sector.

The loan limit for the trading sector will have to rise further as most of the trade-based enterprises are badly affected by the pandemic, he added. 

On April 13, the BB, in line with the government’s announcement, issued guidelines on providing working capital facilities amounting to Tk 20,000 crore to the CMSME sector affected by the coronavirus outbreak, setting the interest rate ceiling at 9 per cent.

Of the 9 per cent interest, the government will bear 5 per cent as subsidy and the remaining 4 per cent will be borne by borrowers.

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