CMSME loan disbursement rises 8.75%

The loan disbursement to cottage, micro, small and medium enterprises (CMSME) rose 8.75% year-on-year in the third quarter of the calendar year 2021, thanks to the growing economic activities amid the ease of the Covid-19 situation.

In the July-September period, lenders disbursed a total of Tk42,075 crore in CMSME loan, which was TK38,689 crore in the corresponding period of the last year, according to the latest data of the central bank. 

The third quarter's figure, however, is only 0.68% higher compared to the previous quarter (second) of this year. The central bank also reported higher credit flow to the industrial sector and increased export-imports in the July-September period.

CMSME sector insiders said although the government announced a stimulus package for them, many of the entrepreneurs had not taken risk of investment during the Covid-induced lockdown and restrictions, which resulted in low disbursement of the loans.

As the economic activities have now bounced back with the pandemic situation turning the corner, the small-scale entrepreneurs, along with others, have been returning to their full-swing operation. As a result, the credit flow increased.

"Almost 50% of the SME firms remained closed last year. Now they are in operation, resulting in a surge in loan disbursement," Abu Sayed, deputy general manager at the SME Foundation, told the Business Standard.

The lion's share of SME products is usually sold centring different social and religious festivals. As the government, last year, imposed restrictions on the celebrations to prevent the deadly virus outbreak, SME firms hardly went for credit.

According to the latest data, the banks and non-bank financial institutions provided loans to 233,276 people of the CMSME sector. The figure for July-September is higher by Tk286 crore from Tk41,788 crore in the second quarter (March-June) of this year.

Of the latest amount, some Tk5,846 crore went to 41,712 new SME enterprises, while Tk9,123 crore was disbursed among SMEs in rural areas, Tk6,296 crore in collateral-free loans.

Last year, the central bank, apart from the regular loans, announced a Tk20,000 crore stimulus package to help small-scale entrepreneurs survive during the pandemic. Some Tk15,000 crore was disbursed from the package as of June this year.

The Bangladesh Bank again allocated Tk20,000 crore for the ongoing fiscal, from which lenders could disburse Tk1,555 crore until the end of October this year, a 7.75% of the total target set for the year.

In October, the overall bank loan increased by 11% year-on-year to Tk1,06,596 crore, according to the central bank data.