The Financial Express

Old clients get most of stimulus loans: BIBM survey

| Updated: November 19, 2021 19:59:23

- Picture used for illustrative purpose - Picture used for illustrative purpose

The findings of a latest survey on the stimulus package show that the country's commercial banks preferred to provide loans to their existing customers from the package, announced in April 2020, instead of new customers.

The survey - "Assessment of stimulus packages on Covid-19" - was conducted by the Bangladesh Institute of Bank Management (BIBM) - based on interviews with bankers.

The survey shows that of the 1,788 sanctioned credits (among samples), only eight new borrowers got loans from the package, while 1,780 were existing customers.

For financing under the package, banks got 9.00 per cent interest/profit, where 4.50 per cent was paid by the borrowers and 4.50 per cent by the government as interest subsidy.

The survey findings were presented in a seminar by its author and BIBM Professor Md. Mohiuddin Siddique.

Its other authors were: Md. Shahid Ullah, associate professor of the BIBM; and Md. Nurul Alam, deputy general manager, Banking Regulation and Policy Department of the Bangladesh Bank (BB).

The BIBM organised a half-day online roundtable on Tuesday, where Ahmed Jamal, chairman of the BIBM executive committee and deputy governor of the BB, joined as the chief guest.

Dr. Md. Akhtaruzzaman, director general of the BIBM, chaired the programme.

The most-reported difficulties for extending credit were determination of loss and amount of loan required, according to the survey.

The respondents recommended some measures for making the stimulus packages more effective, which included: extending repayment period, timely release of interest subsidy, extending interest subsidy period, more publicity and campaigns, timely refinancing and quick approval from the central bank, disbursing agricultural and CMS loans under stimulus packages through MFIs, and simplifying reporting format, among others.

Dr. Barkat-e-Khuda, Dr. Muzaffer Ahmad chair professor of the BIBM and former professor of Dhaka University; Mosleh Uddin Ahmed, managing director and CEO of South Bangla Agriculture and Commerce Bank Limited; Md. Arfan Ali, president and managing director of Bank Asia Limited; and Mohammad Ahmed Ali, executive director of the BB, made comments on the occasion as designated discussants.

The BIBM director general said the output of the study along with its opinions and observations would help stakeholders to take future actions.

A large number of participants, including senior bank executives, academicians, media representatives, and faculty members of the BIBM, took part in the online roundtable.

Dr. Ashraf Al Mamun, associate professor and director (research development and consultancy) of the BIBM, delivered the welcome address.

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