Several procedural bottlenecks are holding back prompt disbursement of stimulus money to the cottage, micro, small and medium enterprise (CMSME) borrowers, experts said in a workshop on Saturday.
They pointed out that shallow understanding of the CMSME sector, lack of necessary documents, absence of consistency and coherence in submitted documents, complicated disbursement process, poor relation between banks and entrepreneurs, collateral issues, and lax coordination among entrepreneurs and financial institutions restrain disbursement of stimulus loans aimed at CMSME borrowers.
The observation came at a workshop titled ‘Procedures and Preparedness of Getting Loan from Stimulus Package from Banks’, organised by the Dhaka Chamber of Commerce & Industry (DCCI) in the capital today, said a press release.
DCCI President Rizwan Rahman in his welcome speech said 80 per cent of the total employment in the industry comes from CMSMEs, contributing approximately 45 per cent value addition to the manufacturing sector.
“But lack of financial and policy support refrains the CMSME sector from utilising its full capacity,” he said.
“Complex definition of CMSME, lack of required documents, complicated disbursement process, not having a bank account, poor relation between banks and entrepreneurs, collateral issues, and lack of database cause CMSME entrepreneurs difficulties in getting loans,” Mr Rahman said.
He urged for quick and easy loan disbursement to revive the CMSME sector.
General Manager (SMESPD) of Bangladesh Bank Mr Jaker Hossain, who was present as the guest of honour at the programme, said, “The disbursement of loans under stimulus is quite satisfactory in the city area but it’s not up to the mark in remote areas.”
He informed that Tk155 billion had already been disbursed from the first phase of Tk 200 billion stimulus package, while Tk 62.17 billion had been disbursed as of Feb 9 from the second phase of Tk 200 billion stimulus money.
Saying misconceptions among bankers and entrepreneurs at the field level delay the disbursement process, Mr Hossain requested loan seekers to maintain proper documents and cooperate with banks to get loans faster.
He also urged the bankers to refrain from causing unreasonable harassment to loan seekers.
The definition of CMSME will be revisited in the next new Industrial Policy, Mr Hossain added.
Executive vice president of Islami Bank Bangladesh Ltd Md Rafiqul Islam emphasised creating an SME database for loan disbursement in his keynote paper.
“CMSMEs represent 90 per cent of businesses. Formal SMEs contribute up to 40 per cent of national income (GDP) in emerging economies. The first condition for streamlined loan disbursement process is to categorise entrepreneurs segment-wise.”
Mentioning policies of Bangladesh Bank are very flexible, he said as per BB guidelines 30 per cent loans of banks and financial institutions dedicated to MSMEs have an easy sanction process.
He requested loan seekers to maintain consistency and coherence of the submitted documents as banks require a minimum set of documents for transparency before sanctioning a CMSME loan.
DCCI Senior Vice President Arman Haque moderated the question-answer session at the workshop.
More than a hundred CMSME members of DCCI participated in the virtual workshop, the release added.