Credit risk rating not required for small businesses to borrow from stimulus fund

The Bangladesh Bank on Tuesday allowed banks to issue loans to cottage, micro, small and medium enterprises (CMSMEs) under the government's Tk20,000crore stimulus package even if the borrowers fail to meet the minimum credit risk rating.

The relaxation for the CMSMEs came as large and medium businesses got the same relief, for the Tk30,000crore stimulus package, a few days ago. The central bank in its circular, however, mentioned that no loan defaulter will be eligible for the loans.

Additionally, entities or individuals, which got rescheduling facilities thrice against loan default, will be considered ineligible for the facility.

Earlier, the central bank's guidelines barred banks from issuing credit to any business if it failed to meet, at least, the "marginal" rating.

The guidelines rates companies on the basis of four categories: "excellent, good, marginal and unacceptable."

Banks can only give loans to "excellent" and "good" borrowers as per the guidelines. 

"Marginal" borrowers get loans under special consideration and "unacceptable" customers are ineligible for any loans.

The ratings for businesses are made based on their last year's business activities, following the guidelines of the internal credit risk rating system of banks.

The central bank's circular suggested that banks select borrowers based on banker-customer relationship and analyse credit risk following their own guidelines.