Banks reluctant to disburse stimulus package
Introducing credit guarantee scheme won't be wise: Experts
Al Amin :
Banks are showing reluctance to disburse loans from stimulus package, although the smooth distribution of the loans is the key to revive the economic activities in the country.
Economists, however, said proper implementation of stimulus package is now a key way to boost up the economy as the country is facing a critical period and there is not much space for exercising fiscal prudence at this crucial point.
Faced with the looming economic crisis resulting from Covid-19, Prime Minister Sheikh Hasina announced a stimulus package of Tk one lakh crore to support export oriented industries and other sectors on March 25.
Businesses alleged the banks are delaying to disburse loans as they are strict on collateral against loans.
Disbursing loan on the basis of bank-client relationship and trust are the common hinders to implement the package. So the Bangladesh Bank Should find the way to remove the barriers, they said.
Dr Ahsan H Mansur, Executive Director of Policy Research Institute, told The New Nation, "The loan process is being delayed as the banks are strict on procedures. Most of the clients could not come up with them."
He said the banks are preferring to select their trusted clients for issuing loans under the stimulus package, because the recovery of the loans is the responsibility of the banks.
If the banks fail to recover, they will have to pay the government from their own accounts, he added.
"Conditions for implementing the stimulus package need to be more relaxed to release money," the economist said
"Introducing a credit guarantee scheme will not be wise in Bangladesh perspective. But the Bangladesh Bank should take at least 50 percent risk-sharing measures to encourage banks to implement the package," he added.
Shams Mahmud, President of the Dhaka Chamber of Commerce & Industry (DCCI), alleged that the banks are showing apathy to disburse package loans, although they are the beneficiary from the package.
"Defying health security measures, economic activities have been started. Now easier terms and conditions for the loans disbursement are essential for the businesses to start a turnaround," he added.
Different commercial banks (especially state-owned banks) have already got a huge response from borrowers and they are scrutinising the proposals, although they think the implementation of the stimulus package will be difficult for the private banks for not having risk-sharing arrangements.
"The loans will be given based on a bank-client relationship as per the Bangladesh Bank's guidelines over the implementation of the package. So, the banks will be very cautious about selecting clients," said Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank, in a recent online discussion with Bangladesh Institute of Bank Management.
He said though liquidity is not the problem right now, it will be very problematic in the long run as deposits have been declining. So, more relaxed policy measures are needed to support the banks, he opined.
As the economic recovery process can turn out be a long drawn-out process, the government must continue with the fiscal stimulus until recovery is assured.