80% CMSME loan disbursal target met in six months

Loan disbursement to the cottage, micro, small and medium enterprises (CMSME) sector has gained pace with improving pandemic situation as banks and non-bank financial institutions (NBFIs) have accumulated debts worth 80% of the yearly target from January to June this year.

As of the end of June, a net Tk2.30 lakh crore has been disbursed to the CMSME sector against the yearly disbursement target of Tk2.85 lakh crore.

Experts say that small businessmen have suffered the most during the pandemic. At that time, credit distribution among small entrepreneurs decreased. Now with the improving pandemic situation, the entrepreneurs are again taking loans from the banks to run their businesses. As a result, loan disbursement has increased compared to the same period last year.

According to the report of the central bank, most loans have been distributed to the productive and business sectors during this period. These two sectors accounted for 79% of the total disbursed loans. Apart from this, at the end of June, the default amount of loans disbursed to the total CMSME sector stood at 15.26%.

Meanwhile, the central bank report shows that in the second quarter (April-June) of this year, the loan disbursement to the CMSME sector was Tk56,484 crore, which is 35% more than the same period last year.

Besides, loan disbursement in April-June quarter has increased by 9% compared to January-March quarter.

Esrat Jahan Chowdhury, director at Bangladesh Jute Goods Exporters' Association and Owner and Founder at TULiKA, said, "The swift disbursement happened thanks to the initiatives of the Bangladesh Bank. The central bank pressured the commercial banks to disburse loans to the CMSME sectors, in particular to the women entrepreneurs."

She also said, "This is a positive sign that women entrepreneurs are getting loans more easily."

An official of Bangladesh Bank said, the banks are now giving more attention to the disbursement of small loans over the disbursement of large loans.

"As micro loans benefit small traders and common labourers, the Bangladesh Bank is more active in this regard. As a result, banks have increased their loan disbursements to the CMSME sector," he said.

According to the data, banks disbursed Tk9,710 crore in loans to new entrepreneurs in the SME sector during April-June 2022. A total of Tk11,955 crores of loans disbursed to SMEs in rural areas. Besides, Tk9,404 crores loans without collateral were disbursed during the period.

In addition to regular SME loans, Bangladesh Bank has issued guidelines for a stimulus package of Tk20,000 crore from April 2020 to provide low-interest loans to entrepreneurs of small industries affected by the outbreak of Covid-19.

In the second phase of the stimulus package distribution, lending target to CMSME was also set at Tk20,000 crore in the outgoing financial year 2021-22 and the disbursement was Tk13,505 crore, which is only 67.52% of the target.

Meanwhile, the banks have already started disbursing the third phase of stimulus loans.