DCCI urges for easy, faster loan disbursement to revive CMSMEs

Mentioning some of the bottlenecks that hinder faster disbursement of stimulus to the Cottage, Micro, Small and Medium Enterprises (CMSMEs), business leaders at a workshop have urged for easy and faster implementation of loan disbursement for the revival of the country's CMSME sector affected by the Covid-19 epidemic.

"To help the Covid-affected CMSMEs revive, a stimulus package of Tk40,000 crore was declared only for CMSMEs in two phases but due to complex definition of CMSME, lack of required documents, complicated disbursement process, not having a bank account, poor relation between banks and entrepreneurs, collateral issues and lack of database, CMSME entrepreneurs sometimes face difficulties in getting loans," said Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry (DCCI) at a workshop on "Procedures and preparedness of getting a loan from stimulus package from banks" organised by DCCI on Saturday.

In his welcome remarks, the DCCI president also said 80% of total employment in the industry sector comes from CMSMEs contributing about 45% value addition in the manufacturing sector, but due to lack of financial and policy support, the CMSME sector could not utilise their fullest capacity and potentials.

Jaker Hossain, general manager, Small and Medium Enterprises Sector Development Programme (SMESPD), Bangladesh Bank, who was present on the occasion as guest of honour, said the disbursement of the loan under stimulus is quite satisfactory in city area but in remote areas, it is not up to the mark.

He informed that from the first phase of a stimulus of Tk20,000 crore, Tk15,500 has already been disbursed and from the 2nd phase of Tk20,000 crore, Tk6,217 crore has been disbursed till 9 February, which is 31% of the allotment in the 2nd phase.

"At the field level, there might be some misconceptions among bankers and entrepreneurs that hinder slow disbursement process. I request loan seekers to maintain proper documents and cooperate with banks to get a loan in a faster manner as banks are not reluctant to give loans rather looking for CMSME clients at present," he added.

Regarding the definition of CMSMEs, the central bank official said, "It will be redefined in the next new industrial policy. We have to promote real SMEs and for that, we have to change our mindset to facilitate real SMEs."

He also requested bankers not to harass the loan seekers without any reason.
     
Md Rafiqul Islam, executive vice president, Islami Bank Bangladesh Ltd, in his keynote paper said that an SME database is very essential for distributing loans. CMSMEs represent 90% of businesses. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.

For getting loans under the stimulus, at first, an entrepreneur needs to be categorized under a segment he belongs to. Then it would be easy to give a loan. Bangladesh Bank policies are very flexible and adequate. As per the guidelines of Bangladesh Bank, 30% of loans of banks and financial institutions dedicated to MSMEs have an easy sanction process, he added.

Rafiqul also said a banker has to follow almost 86 rules and regulations in day to day banking activities. For a CMSME loan, a minimum set of documents are needed as banks have to comply with financial transparency therefore he requested loan seekers to maintain consistency and coherence of submitted documents. 

In this regard, he said the digitalization of all services will help the process a lot. Banks are ready and very willing to disburse loans but many proposals are not very remarkable.     

DCCI Senior Vice President Arman Haque moderated the question-answer session. 

More than 100 CMSME members of DCCI participated in the workshop held virtually for a better understanding of how to avail loans under stimulus easily.