FBCCI is out to bat for cottage and micro enterprises
The country's apex trade body yesterday needed relaxing the conditions and conditions for disbursing loans from the government-announced bailout package such that every sector, especially the cottage, micro and small businesses, can receive funds promptly.
The country has many cottage and small enterprises that are yet to come beneath the formal banking coverage but those have already been badly afflicted by the coronavirus pandemic, said the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
For instance, it said, there are a few 46 lakh units of grocery shops and cottage industries in various districts but their owners can barely fulfil the conditions of the banks to take funds from the stimulus package.
"The central bank and scheduled banks should get in touch with them with easy rules so that they too are benefitted by the bailout package," said FBCCI President Sheikh Fazle Fahim.
The terms and conditions ought to be relaxed for large businesses aswell, he said, while addressing businesspeople and bankers with a virtual conference on "roadmap to stimulus loan execution".
On April 5, Prime Minister Sheikh Hasina unveiled a Tk 20,000 crore package for the cottage, micro, small and medium enterprises (CMSMEs), and another Tk 30,000 crore for the industries and service sector companies.
The loan proposals ought to be executed on time because the enterprises are in trouble, Fahim said, while calling for quick assessment of documents.
"But at the same time, everybody ought to be careful in order that the banks don't fall in big trouble while saving the industries," he added.
As the FBCCI demanded quick access to loan from the bailout package by all sectors, bankers needed the forming of a credit guarantee scheme by which the banks can recover the loans that bear risks.
The proposed credit guarantee scheme will protect the banks in loan recovery through insurance. For example, if any small or large enterprise owners fail to repay the loans timely, the banks will recover the total amount from the credit guarantee scheme through insurers.
Banks would be able to manage the funds because they have enough liquidity now, said Ali Reza Iftekhar, chairman of Association of Bankers, Bangladesh.
"But banks come to mind about the risks connected with loan recovery," he said.
Md Abdus Salam Azad, managing director of Janata Bank, said his bank will grant loans to micro or small enterprises and especially to female entrepreneurs if they can offer proper documents.
If any media outlets develop proper documents his bank will disburse loans to them as well, he said.
The credit guarantee scheme is particularly necessary for the cottage and micro industries as the majority of those enterprises do not have satisfactory financial strength, said Selim RF Hussain, managing director of Brac Bank.
Of the bank's total clients, 47 % are CMSMEs, he added.
Cottage and micro enterprises should be treated on an urgent basis because they are going through a rough patch now as a result of pandemic, said Md Shafiqul Islam, managing director of the SME Foundation.
Of the total businesses registered with the SME Foundation, 80 % are cottage and micro and 1 per cent are small enterprises.
"We have to not put a lot of burden on banks in order that the ill-fated banking sector will not proceed through further crisis," said Mashrur Reaz, chairman of Policy Exchange, a think-tank.
Loans ought to be disbursed on important basis to the worst influenced sectors like the aviation and retail businesses, he added. Munir Hossain, a director of the FBCCI, suggested the banks open separate help desks within their branches such that the clients usually do not face hassles while taking loans from the bailout package.
"There is absolutely no liquidity crisis in the banking sector now," said Kazi Akramuddin Ahmed, a former FBCCI president.
Shafiul Islam Mohiuddin and Mir Nasir Hossain, two former FBCCI presidents, also spoke.
