Small entrepreneurs being deprived of govt incentives

COVID-19 Pandemic

Golam Mostafa Jibon:Big merchants are getting benefits of the incentive packages announced by the Prime Minister Sheikh Hasina to revive the country’s economy, while small entrepreneurs including owners of cottage, small, medium and small scale industries are being deprived of the facilities that putting the economy at high risk.
Sources said, only big businessmen are getting 100 percent loans. The country’s overall economy has been suffering from the corona pandemic for over the last two years as the government was forced to imposed direct and indirect lockdown several times to control outbreak of the deadly virus.
Consequently, all big and small entrepreneurs face economic trouble seriously. The misery of low-income people takes serious turn. Under the current circumstances, the government has announced two types of incentive packages from April last year to the present. Of them, one is economic recovery and another is social security. But many are able to borrow at low interest rates from the economic recovery package, but a large part is deprived of that opportunity.
In the outgoing year, the goal of loan disbursement among big entrepreneurs has been achieved cent percent by the banks, but around 45 commercial banks of the country failed to meet the target of loan disbursement among small and medium entrepreneurs.
In the meantime, 39 private commercial banks have been given a new loan disbursement target of Tk 16,120 crore. Nine other government and specialized banks was given a target of Tk 3,030 crore.
Concerned people said, big industries are trying to survive during the pandemic in anyhow, but small entrepreneurs cannot survive resulting many of the industries are being closed.
Concern prevails among the small entrepreneurs about repaying the loan before taking it. The worries of big merchants are much less than that. So far in Bangladesh, most of the big merchants have been getting the facility of loan restructuring and rescheduling with special discounts.
On the other hand, bankers as always expressed disinterest to lend to small clients. Bangladesh Bank has received one more complaints that many SME entrepreneurs did not get necessary assistances from banks in context of loans. Many bankers, however, said, they are unable to lend because the loan seekers were not right persons as per the directives.
According to the relevant sources of Bangladesh Bank, the banks have disbursed loans of Tk 15,360 crore against the target of Tk 20,000 crore in the outgoing financial year.
Of them, 15 banks and financial institutions, which are facing crisis, have borrowed around Tk 4,000 crore from the central bank under the refinancing fund.
Besides, the government will have to subsidize at around Tk 750 crore to the banks against these loans at the rate of 5 percent interest. Banks have adequate funds as they do not disburse any loans to new entrepreneurs outside the incentives. Due to this, most of the commercial banks did not have to take any loan from the central bank. Meanwhile, the banks have achieved 100 percent of the target of disbursing loans of around Tk 43,000 crore to big entrepreneurs.
Replying to query about the reluctance of disburse loans to small entrepreneurs, some bankers seeking anonymity told that, most of disbursed loans are recovered from the small entrepreneurs. But, why the banks express disinterest to pay the loans to small entrepreneurs, it’s surprising matter. The opposite scenario was seen in the case of big entrepreneurs.
In the new financial year, the target of disbursing loans of Tk 20,000 crore has been set again. Of them, 30 conventional private commercial banks will give Tk 10,195 crore and nine Islamic banks will give Tk 5,925 crore. Islami Bank Bangladesh Limited (IBBL) has been given the highest target of Tk 2,250 crore in the banking sector in the current financial year. It is followed by BRAC Bank at Tk 1,400 crore and United Commercial Bank Limited (UCBL) at Tk 1,100 crore.
According to Bangladesh Bank sources, the banks have already been instructed to disburse loans to small entrepreneurs from now on. If the government gives a loan of Tk 100, the entrepreneurs are being given subsidy at 5 percent interest rate. The remaining 4 percent interest has to be borne by the loan takers. Entrepreneurs will get subsidy on interest rate for one year, if they get loan for three years.
Seeking anonymity, Managing Director of a private bank said, all the entrepreneurs including big and small have been affected in Corona. In the way, how the big entrepreneurs are getting the opportunity to turn around, the small ones are not getting that opportunity. However, we are ahead of private banks in providing small and medium loans.”
He also questioned that, how do we give loans to those, whose business is closed? Many are not coming to the bank for this. Even then the banks have properly distributed the incentive loan money. The loan is still being distributed, he added.
The Executive Director and Spokesman of Bangladesh Bank Sirajul Islam said, “Big merchants are submitting papers in accordance with the rules, so they are getting more loans. We have given a lot of discounts on paperwork for small traders. Further concessions may be made in the context of negotiations as needed from time to time. However, at least some documents must be submitted.”
“We have instructed the banks so that the small traders can get more loans. We have not only completed the responsibility by giving instructions, we are also supervising the matter. Hopefully the amount of loan disbursement will increase further in the future,” he also added.