TK33,000CR STIMULUSBanks disburse Tk 4,725cr in 2nd round

Banks disbursed Tk 4,725 crore to pandemic-hit large industries and the services sector from the government-announced stimulus in the second phase, which is only 14.32 percent of the total fund. 

Private commercial banks disbursed Tk 4,586.44 crore and state-run banks Tk 138.60 crore between July and October 15 of the current fiscal from the Tk 33,000 crore stimulus fund, Bangladesh Bank data show.

Foreign banks are yet to disburse any fund from the stimulus.  

A senior BB official said the amount was still low as most banks were yet to start the disbursement process from the fund. 

New borrowers would be eligible to get low-cost loans from the fund, which may be the reason behind the slow disbursement as a good number of large borrowers availed support from the first phase of the package, the official explained. 

On April 5 last year, the government announced a Tk 30,000 crore stimulus package as working capital for Covid-19 affected industries to revive economic activities. The stimulus package size was increased by Tk 3,000 crore as wages for workers of export-oriented industries.

From April 2020 to June this year, banks disbursed Tk 32,388 crore among 2,000 companies of the large industries and service sector, BB data show. 

The banks disbursed 98 percent from the fund in the first phase and then the central bank allocated the same fund for FY21-22 to large industries and services sector.

The stimulus disbursement for the second phase started in July this year. This time, distribution is very slow as most of the clients cannot repay the previous loans, said Emranul Huq, Managing Director and CEO of Dhaka Bank.

“We disburse stimulus funds after various verification and assessing the actual needs of clients as the central bank directed to increase monitoring on how loans from the stimulus funds were being channelled into unproductive sectors,” said Huq.

The central bank on July 25 instructed banks to increase monitoring on how loans from the stimulus funds were being channelled into unproductive sectors as the regulator found some stimulus funds were being used in real estate and the stock market amid the Covid-19 pandemic. 

Echoing Huq, Eastern Bank Deputy Managing Director M Khurshed Alam said that the stimulus disbursement is still slow as the credit demand in the industries is yet to rise.

He added that the loans’ recovery from the borrowers is not satisfactory, which is one of the reasons behind the slow disbursement. 

As per BB policy on stimulus fund, a borrower would be able to get 30 percent loans of his working capital from the packages. The borrowers, who availed support from the first phase of the package, would not be eligible for the second phase. 

The stimulus package will be continued for three years from April 14 last year, while a borrower will be entitled to get an interest subsidy at 4.50 percent for a maximum of one year, as per BB policy. 

The borrowers will pay 4.5 percent interest out of the 9 percent under the fund, while the government will pay the remaining 4.5 percent as an interest subsidy.