Govt must do more for SMEs, domestic industries

Collected
There is absolutely no question that the export-oriented sectors, particularly garment, have already been dealt a cruel blow by the global coronavirus pandemic. Which is why, Prime Minister Sheikh Hasina on March 25 have rolled out a Tk 5,000 crore stimulus package for them.

But you will find a vast swathe of domestic industries and small- and medium-sized enterprises that is hit, arguably, just as hard. However they remain criminally neglected so far.

An assistance of sorts was wanted to them on March 19, when the Bangladesh Bank (BB) asked banks never to consider borrowers as defaulters if indeed they fail to repay instalments until June 30 this season.

But, their accounts will still continue accrue interest during the period, which means this begs the question: could this move from BB be of genuine help them?

When economic activities have already been close to standstill for an excellent a month now and with no signs of things getting back again to normal soon, could it be rational to assume that they would manage to service the loan accounts filled with the accrued interest in two months' time?

Banks cannot waive the interest payment for entrepreneurs because they now face a variety of financial problems of their own due to the ongoing crisis, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

"But, it really is undeniable that the SMEs will have to be protected from the financial fallout in the interest of the country's GDP growth."

One way the government can help them in this dark hour by offering to pay their interest amount, said Rahman, also an instantaneous past chairman of the Association of Bankers, Bangladesh a forum of managing directors of banks.

"It must only be the standard, upright borrowers who are given this relief -- the habitual defaulters should be left out of the facility, come what may," he added.

Salehuddin Ahmed, a former governor of the central bank, recommended outsourcing the duty of separating the nice borrowers and entrepreneurs from the bad ones to banks.

"The government should address the problem promptly, or else a huge number of local manufacturers will be forced to summary their businesses," he added.

Banks do not have any strength to waive the interest because they have to provide interest to depositors aswell, said Ahsan H Mansur, executive director of the Policy Research Institute.

The lenders are now burdened with the financial packages declared by the government.

For instance, lenders will never be permitted to realise any instalment from borrowers until June but which has put pressure on the funds.

Besides, the central bank asked mobile financial services never to impose any charge on deposits amounting to Tk 1,000 per day, as a result which the vendors are losing profits.

"The government should be providing funds to banks and MFS vendors. The other countries have also followed the model," said Mansur, also the chairman of Brac Bank.

The authority concern has yet to take any genuine rescue measures: the buck has been offered to the banks and the MFS players.

"And regrettably, the federal government hasn't taken any measure to shield the tiny entrepreneurs, when they will be the among the driving forces of the economy."

The SMEs generate employment and keeps the financial growth rolling in, said Mansur, also a former official of the International Monetary Fund.

Rahman, Mansur and Ahmed continued to urge the central bank to form a particular refinance schemes for the SME sector in a way that they are able to get loans at a discounted rate than the existing market rate for a soft landing to the drop in economic activities.

As of September last year, banks and non-bank finance institutions gave out Tk 205,491 crore to SMEs, which is about 20 per cent of their total outstanding loans, according to data from the central bank.
Source: https://www.thedailystar.net

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