BB Circular

Bangladesh Bank expresses dissatisfaction over low loan release

The Bangladesh Bank on Tuesday expressed dissatisfaction over the poor disbursement progress of stimulus loans for low income groups, farmers and marginal or small businesses from the BB formed Tk 3,000-crore revolving refinance scheme to tackle the adverse impacts of the corona-virus outbreak.

The central bank expressed its displeasure at a meeting held at its headquarters in the capital on Tuesday. BB executive director Joarder Israil Hossain presided over the meeting, attended by it’s general manager Md Anwarul Islam and representatives of 42 banks, among others.

As per the Bangladesh Bank data, 19 out of 42 banks, which were assigned to disbursed loans from the package, were yet to disburse any money in loans for the low-income people. The 19 banks include seven state owned banks and 12 private commercial banks.

It also showed that 23 banks had sanctioned Tk 1,325.71 crore under the scheme while the remaining 19 banks were yet to sanction any money for the low-income group even though the adverse impacts of flooding along with the corona-virus outbreak had made life difficult for these people.

Of the sanctioned amount, the banks have so far disbursed Tk 591.86 crore to microcredit institutions, also known as non-governmental organisations, to give loans to the people at up to 9 per cent interest. At the meeting, the BB again asked the banks, which are yet to disburse any money, to take prompt measures and to accomplish their respective loans disbursement targets by this year.

The banks were also informed that monitoring over loan disbursement would be strengthened in the coming days due to poor progress. Besides, the banks were also instructed to take the assistance of well-performing NGOs in areas where the rate of loan disbursement was still poor.

The BB also asked the banks to take assistance from NGOs which had already shown strength in stimulus loan disbursement. Allocation of more funds under the BB’s revised guidelines for those NGOs was also discussed at the meeting to boost loan disbursement. For the enhanced target, the banks would get another three months on top of the existing deadline for the already fixed target.

As per the guidelines, customers are supposed to get loans from the package at the rate of 9 per cent interest from the NGOs while the BB would provide funds to the banks at 1 per cent interest and the banks would forward the funds to the NGOs at the rate 3.5 per cent interest. Along with the seven banks, a number of large banks, including Bank Asia, Eastern Bank and Southeast Bank, are yet to disburse any loans from the package.

Shamsuddin Akanda

I am, Mohammad Shamsuddin Akanda, working as an officer in Islami Bank Bangladesh Limited, the largest bank in the country. I have been developing Banker Blog for a long time. Undoubtedly, this is an excellent and wonderful platform for the bankers. I write on this blog whenever I get time. I'm eager to learn the unknown aspects of Economics and Banking, especially Fintech, and I share as much as I can with everyone. If you get time, you can take a peek at my Blog (Banker)-

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