The Bangladesh Bank served 14 banks and two non-bank financial institutions (NBFIs) with justification notices for failing to meet the Covid-19 stimulus loan disbursement target in the cottage, micro, small and medium-sized enterprises (CMSME).
They are Agrani SME Financing Company, GSP Finance Company (Bangladesh), Janata Bank, Habib Bank, Woori Bank, IFIC Bank, Meghna Bank, National Bank, NCC Bank, NRB Bank, Pubali Bank, Shimanto Bank, Al-Arafah Islami Bank, First Security Islami Bank, Global Islami Bank and Standard Bank.
The central bank said punitive action would be taken against them if they failed to meet the target by this fiscal year.
A Tk 20,000 crore stimulus package was announced for the CMSME sector last year, and the 16 institutions have met less than 50% of their disbursement targets until June 30 of this year, according to a statement from the central bank.
Of the 16, GSP Finance Company (Bangladesh) did not disburse any loans while Shimanto Bank only reached 4% of the target, the lowest among banks, according to central bank data.
Next Generation Meghna Bank CEO Sohail RK Hussain said they were unable to meet the target due to the Covid-19 lockdown.
He said 121 employees at his bank had been affected by the coronavirus, which had also caused disbursement delays.
The bank’s disbursement was 40.3% of its target, but it reached 100% of the target for large borrowers.
There is a similar picture in many banks as they are reluctant to lend to small businesses, although these businesses have been hit the hardest during the pandemic.
Sohail said they had verbally promised the central bank that they would meet the full disbursement target by this fiscal year.
At the same time, 13 banks and six non-bank financial institutions were able to fully meet the disbursement target.
They are United Commercial Bank, Brac Bank, Uttara Bank, Agrani Bank, Premier Bank, Bank Asia, Mutual Trust Bank, Eastern Bank, Prime Bank, Bangladesh Krishi Bank, Modhumoti Bank, Rajshahi Krishi Unnayan Bank, Commercial Bank of Ceylan , IDLC Finance, IPDC Finance, LankaBangla Finance, United Finance, Bay Leasing and Investment, and Prime Finance and Investment.
Overall, banks have reached around 77% of their disbursement targets.
Agrani Bank Managing Director and CEO Mohammad Shams-Ul Islam said they will also try to achieve the goal of this exercise.
He said they were also focusing on other stimulus packages.
Bangladesh Bank officials said it was very important to disburse global loans from CMSME in order to eliminate economic inequalities and create jobs.
They said that banks meeting 100% of disbursement targets deserve praise because they have set an example for other banks.
Last year, the government announced incentive programs of around Tk lakh 1.25 crore to help the economy recover from the fallout from Covid-19.
Prime Minister Sheikh Hasina announced the CMSME package on April 5 last year.
On April 13 of the same year, the Bangladesh Bank issued a policy on disbursing program loans.