150 crore stimulus fund for SMEs disbursed

 

The SME Foundation and Bangladesh Small and Cottage Industries Corporation (BSCIC)  successfully disbursed Tk150 crore  low interest loans to 2,460 small and medium enterprises  helping them overcome Covid-caused impacts.

The foundation disbursed 100 crore to 1,044 entrepreneurs from different clusters, mainly in rural areas. Of the loan r 25%-30% are women who received the loans among all.The BSCIC disbursed 50 crore among 1,416 entrepreneurs, and  Rajshahi, Khulna and Chittagong divisions got 72% of the total amount. On January 17, the government approved a special stimulus package to provide financial support to marginal entrepreneurs through the SME foundation, BSCIC and some selected non-governmental organizations, so that the sector must not submerged this unexpected crisis.The government earmarked 1,500 crore under the new package, for small and medium size traders, entrepreneurs and farmers loans disbursed under the initiative are repayable at a 4% interest rate in two years.

The finance ministry authorised the SME Foundation to disburse 300 crore under the package, while BSCIC to disburse 100 crore. But for fiscal year 2020-21, the foundation and BSCIC received Tk100 crore and Tk50 crore respectiuvely.

These institutions managed to fully disburse the amount allotted for FY21 by 30 June, insiders said, adding that the SME sector was one of the industries hit hardest by the pandemic.

Therefore, the demand for stimulus loans is very high.

The BSCIC disbursed the stimulus package through its 64 districts offices, while the SME Foundation utilised ten banks and two non-bank financial institutions to carry out the process as per the package implementation agreement. The rest of the fund will be handed over to the SME Foundation and BSCIC in FY 2021-22.

High demand for stimulus loans

The government had announced a 20,000 crore stimulus for SMEs last year after the Covid-19 pandemic wrapped over Bangladesh. But there were allegations that most small entrepreneurs did not get loans due to the complicated disbursement process, it is said.

For this reason, Government took this bold steps to involve the SME Foundation, BSCIC and selected NGOs in the quick disbursement process.

The government authorized the Social Development Foundation, Rural Poverty Alleviation Foundation, and 5 other NGOs in carrying out the stimulus package.

SME Foundation's General Manager Nazim Hasan Sattar said, "The demand for stimulus loans has gone up, as SMEs need more financial support to overcome this crisis.

"We are prioritizing hardest hit enterprises by the pandemic, and those failing to secure bank loans. We are prioritizing female as well, and 25%-30% of those received stimulus loans are women entrepreneurs. Lauding the government for the move, National Association of Small & Cottage Industries of Bangladesh (NASCIB) President Mirza Nurul Ghani Shovon said, "SME entrepreneurs received the loans under the stimulus package without any hassle, and", This has been very helpful amid the pandemic" he added .

Disbursement of SME Foundation

The SME Foundation disbursed 100 crore through 12 banks and non-bank financial institutions among them, Brac Bank disbursed the highest amount of 30 crore to 397 entrepreneurs, while the IDLC managed the second highest amount of TK27 crore to 212 entrepreneurs. Four of the 12 banks did not disburse any amount.

SME Foundation's officials recently told The Dmh reporter that loans requested by entrepreneurs were eight times higher than the money allocated under the scheme. As such, the loan facility should be further extended to help the SMEs to regain from Covid-19 shocks, the officials said. Entrepreneurs can apply for loans ranging from Tk1 lakh to Tk75 lakh at 4% interest with a maximum 24-month repayment period based on banker-customer relationship.

SME sub-sectors, potential SME clusters, women, physically-challenged, transgender and new entrepreneurs, and those in marginalized areas and ethnic communities across the country are being prioritized, official insisted.

 

BSCIC's disbursements

The BSCIC facilitated and supervised the disbursement of loans through its own channels throughout Bangladesh. Seventy-two percent of the recipients are from Rajshahi, Khulna and Chittagong divisions.

As there was a high demand, the BSCIC fully disbursed the money by 20 June, though the deadline was 30 June.

Among the recipients, 926 are men and 490 women. The highest number of recipients is from Rajshahi division where 403 entrepreneurs took Tk12.90 crore in loans.