Separating tourism sector for govt stimulus packages will be beneficial
The firms in the travel and tourism sector falls beneath the group of Cottage, Micro, Small and Medium Enterprise (CMSME). And already there are loan facilities available categorised by Bangladesh Bank for such enterprises. Along with it, the efforts of the tourism board and ministry of the united states to incorporate the sector in to the stimulus packages announced by the federal government separately will further ensure the companies receive the loans.
Syed Mahbubur Rahman, MD and CEO of Mutual Trust Bank Ltd said this recently during a session of the weeklong video conference titled PATA Talk During Lockdown organised by Pacific Asia Travel Association Bangladesh Chapter.
Among the stimulus packages, only the garments industry will receive its allocated amount of BDT 5 thousand crore directly. But the other packages, BDT 30 thousand crore for large corporations, BDT 20 thousand crore for CMSME etc, must be mobilised by the banks. Now, Rahman raised any doubt if the schedule 59 or 60 banks of the united states have enough liquidity to supply these loans the government has announced.
The banks may charge only 9 % interest, of which the federal government can pay 4.5 or 5 % and the customers can pay the others. However, the banks' cost of fund remain over 7 % since the banks aren't being able to lower the price of deposit, Rahman informed.
He expressed that even prior to the COVID-19 outbreak, when the united states was witnessing a rise of 8 % in GDP, the banking industry was in a very fragile state. And following the outbreak it has worsened.
The garment industry is expecting a loss of USD 6 billion currently. And the banking sector is largely reliant on garments. Remittance in addition has drastically decreased, another industry the banking sector depends on aswell, Rahman added.
On the other hand, he mentioned that one initiatives taken by the Bangladesh Bank have helped the private banks in this regard. For instance, Bangladesh Bank has relaxed some 1.5 % for Cash Reserve Requirement (CRR). Because of which the banking sector received almost BDT 18 thousand crore liquidity. Also the sector got a relaxation of 2 per cent beforehand deposit ratio. These have led the banks to place some money into loanable funds.
Also the current scenario imposes another challenge in offering loans, Rahman pointed out. To be able to provide customers with loans, the banks should be confirmed about the actual fact the clients are actually having the ability to use the money. Due to the lockdown, many are struggling to operate their businesses. In such circumstances the banks will see it very difficult to provide loans.
"These packages require a normal scenario where everything is operational. We are yet to make it happen. Everything is uncertain till now."
"Nonetheless, it's the banks' job to supply loans," Rahman urged.
Customers can apply now to any schedule bank in the country for the packages government has announced. However, Rahman suggested approaching the bank a company already has transactions with.
To supply loans, the banks can look into credit reports of customers. This consists of credit score or record, account relationship with the bank, future business potential etc because the banks have to make certain that the customers can pay the money back.
"We will have how your business was beforehand and what future potential it holds. If all checks well, then we will surely take extraordinary steps since extraordinary times require extraordinary measures," Rahman said.
Therefore, all might not exactly be able to take advantage of the packages, however, many surely will, Rahman concluded.
