Banks start disbursing stimulus funds today

Private banks are all set to start disbursing loans from the stimulus packages today, as an effort to recover the country's economy from the fallout of the Covid-19 pandemic.

Prime Bank, one of the top private banks of the country, has already received around 100 applications for loans under the stimulus package of Tk30,000 crore, and a larger number of applications for small loans under the stimulus package of Tk20,000 crore.

"Banks will start operations in full swing from Sunday, so we have to make preparations to operate all types of business. We have received many loan appreciations under the stimulus packages," the managing director of the bank, Rahel Ahmed, said.

"We expect we can disburse loans from Sunday. We have scrutinised some of the applications, while some others are under process," he added.

To curb the spread of the Covid-19 pandemic, the government had declared general holidays from March 26 that ended on Saturday.

During this two-month period, businesses faced big trouble because of restrictions on people's movement and the shutting down of almost all trade and services except for some emergency ones.

There was no public transportation, and markets and shopping malls have missed big business during the country's largest religious festival of Eid-ul-Fitr for which traders wait for a year.

Facing such disruptions, Navana Group, a big business conglomerate, recently applied for a Tk1,200 crore loan under the stimulus package of Tk30,000 crore.

The government has declared around Tk1 lakh crore stimulus packages to provide low cost funds for the revival of all types of businesses and to help them overcome their losses.

In April, the central bank issued guidelines for banks to form a Tk30,000 crore fund for large industries, and another Tk20,000 crore fund for small and medium industries. The interest of the loans will be maximum 9 percent of which 4.5 percentage point will be provided by the government and the rest of the interest by the customers.

The Bangladesh Bank also formed two different refinance schemes for supporting banks with half of those packages.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said, "In the last one and half months, we have received a lot of applications from businesses. But we are not allowing any loan defaulters to avail this low cost fund as guided by the central bank."

Another top executive of a private bank said, "Disbursing loans is an ongoing process. For the last few months, the bank has only received loan applications under the stimulus packages."

Recently, 14 banks and non-bank financial institutions signed a deal with the central bank to disburse loans under the refinance schemes.

The central bank also instructed banks to form a fund to disburse Tk5,000 crore agri-loans at 4 percent interest and Tk3,000 crore for microcredit without any collateral.

The Bangladesh Bank also formed a Tk5,000 crore fund for pre-shipment loans for the export sector.