Small-scale enterprises of Chattogram are facing a crisis of capital in operating their business while banks have disbursed only 3.6 per cent of the loans allotted under a government stimulus package for cottage, micro, small and medium enterprises.
Many enterprises have complained to trade bodies and the Bangladesh Small and Cottage Industries Corporation (BSCIC) that the real victims are not getting the assistance, even after applying multiple times in the last two years.
In April 2020, Bangladesh Bank announced a Tk 20,000 crore stimulus package of the government for the SME sector to deal with the economic fallouts caused by the coronavirus pandemic.
According to the Cottage, Micro, Small and Medium Enterprises (CMSME) and Loan Distribution Monitoring Committee in Chattogram district, which comprises stakeholders, 15 banks provided only Tk 29.99 crore in loans in the first quarter of the current financial year of 2022-23.
The disbursement target for this July-September period was Tk 834.66 crore. This means that only 3.6 per cent of the loan assistance has been provided.
The disbursement targets have not been fulfilled due to the slow disbursement process, according to the committee members.
This loan has been provided to 192 Covid-19 affected entrepreneurs in Chattogram district alone. All the banks, except for Sonali Bank, are of the private sector.
A majority of the loans were provided by City Bank (Tk 12.81 crore), United Commercial Bank (Tk 4.52 crore), Prime Bank (Tk 2.43 crore), Pubali Bank (Tk 2.2 crore), AB Bank (Tk 1.90 crore) and Sonali Bank (Tk 1.37 crore).
Data for the second quarter (October-December) of financial year 2022-23 have not yet been submitted to the committee, so it is not yet known how many people received loan assistance during this period.
However, people concerned say that the loan assistance decreased during this period.
In the four quarters of financial year 2021-22, 22 banks provided a total of Tk 647.15 crore in loans to 1,552 entrepreneurs.
The loan interest rate was 4 per cent in the initial years but in the recent quarter the loan interest rate has been increased to 9 per cent.
However, most entrepreneurs want to take the loan through an easy process and at an interest rate lower than others currently on offer in the market.
Arif Ullah Chowdhury, owner of SA Borka House in Chattogram’s Chawkbazar area, told that he had to face huge losses due to the long shutdowns during the Covid-19 pandemic.
“I applied at several banks after the announcement of Bangladesh Bank but they hesitated to give loans. As a result, my business dropped for a lack of new investment,” he added.
The same was stated by Md Rahim khan, proprietor of Khaja Gharib Newaz Department Store on Chattogram Commerce College Road.
The shop owner said the company faced huge losses during the pandemic period and in spite of applying with various banks for the past one year, he has received no loan from the incentive package so far.
On the other hand, many small and medium enterprises registered with the various BSCICs of Chattogram district said self-employed entrepreneurs and people who have good relations with banks were getting the low interest loans but the real victims were being harassed.
Nizam Uddin, member secretary of the district CMSME Loan Disbursement Monitoring Committee and deputy general manager of the BSCIC, said the ongoing loan disbursement process was progressing very slow compared to previous periods.
However, the trade bodies are supporting the entrepreneurs so that they can get the loans easily alongside through the monitoring activities of the banks, he said.
“We are already supporting the affected entrepreneurs through regular meetings apart from providing information through letters to the banks for increasing loan disbursements,” he added.
“Public and private banks should extend a helping hand to overcome the crisis,” Mahbubul Alam, president of the Chattogram Chamber of Commerce and Industry, told.
“A huge number of applications came from entrepreneurs due to the loan facility under the package having a low interest,” Mosroor Hossain, deputy manager of Basic Bank’s Dohazari branch in Chattogram, told.
“It is difficult to identify the real victims from these applications,” he said.
“Sometimes we found that some businesspeople applied but do not need loans for their business purposes. As a result, loan supply has decreased a little compared to before,” he added.
Two of other banks were contacted for comment on the disbursements falling short of the target. None agreed to comment.
However, several bank officials, requesting anonymity, said the loan disbursement was normal in the first two phases.
But now, some banks are apprehensive over securing the repayments on time and as a result, the loans are being provided after a lot of scrutiny, they said.
