The whole world is now badly infected by the COVID-19 pandemic. In addition to the COVID-19 related health and safety issues, there is a need to discuss possible measures for liquidity in the economy and financial sector. COVID-19 can certainly cause a global recession, and in the worst-case scenario, it could even take the form of a great depression. Like many other economies, Bangladesh’s economy is likely to be badly damaged. According to economists, Bangladesh’s GDP could shrink by 2-3 percent.
Due to the COVID-19 Bangladesh RMG sector, the top export earning sector of Bangladesh, facing a difficult time. To overcome the effects of coronavirus, all big and small industries of Bangladesh have applied for low-interest loans from the incentive package announced by the government. Applicants include organizations in both the manufacturing and service sectors. All the customers are applying for this loan.
The main reason for applying in this way is that even though the interest rate of this loan is 9 percent but they have to pay only 4 and a half percent. The government will bear the remaining 4 and a half percent. It costs more to borrow loan from abroad bank.
Meanwhile, the banks are saying that only the customers who will repay will get this loan. Because, even if the government pays half of the interest, all the responsibility of collecting this loan will remain with the bank.
The government announced an incentive package of Tk 30,000 crore to provide loans to companies in the industrial and service sectors affected by the COVID-19. Bangladesh Bank has set up a revolving refinancing fund to provide half of this loan that is Tk 15,000 crore. All the banks will give a total of Tk 28,865 crore and the non-bank financial institutions will distribute Tk 1,135 crore.
According to the central bank’s policy, the term of this loan will be three years. Industries that have already availed capital from the bank will be able to borrow up to a maximum of 30 percent from this fund. However, only the victims will get this loan. Debtors will not get any loan from this fund. Not only defaulters but also traders who have rescheduled loans more than three times won’t be able to get the loans.
The loans that have been given to be recovered from the COVID-19 pandemic, however, for such critical preconditions it is not working accordingly. Also, the ability of customers to repay the loan is much less than before. So, the bankers are being very careful in giving loans for this.
The loans will be distributed by several banks such as:
- The state-owned Agrani Bank will be able to lend Tk 914 crore from this fund. The bank has already sanctioned a loan of Tk 19 crore in the name of Wata Chemical, which is listed on the stock exchange. Hundreds of companies including Jamuna Group, Thermax, Acme, Diamond Cement, PHP Group, Apex Footwear, City, Nital Niloy Group have applied for loans from the bank.
Agrani Banks Managing Director (MD) Mohammad Shams-ul Islam said that it is low-interest loans, so it is normal for everyone to apply. He added that they will selectively lend to good export-oriented companies so that the money comes back.
- The City Bank will be able to give a loan of Tk 1,023 crore. BRB Cable, TVS Auto, Citigroup, mobile operator Robi, BSRM Steel, KSRM Steel, Shah Cement, Apex Footwear, Pran-RFL, ACI and much other industry have applied for loans from the bank. The bank has already sanctioned several loans and sent them to the central bank for final approval.
Masroor Arefin, MD of The City Bank said that most of the customers have applied for loans and they are checking and sorting, then approval is being done.
- Exim Bank will lend Tk 914 crore. The bank has about 350 garment factories among its customers. Most of them have applied for loans. It is known that the bank will start approving the loan by holding a board meeting next week.
- Prime Bank will be able to give a loan of Tk 912 crore. More than 50 companies including BSRM Steel, KSRM Steel, Square Toiletries, KDS Group, City Group and Meghna Group have applied to the bank for loans.
- State-owned Sonali Bank alone will lend Tk 1,622 crore. The bank has already approved a loan of Tk 1,000 crore for Biman Bangladesh Airlines, a state-owned aircraft operator. Several companies including Thermax and Gulshan Spinning have also applied for loans.
- Apart from this, another government bank Rupali is going to give a loan of Tk 4.5 crore to the private Universal Medical College and Hospital soon. The bank has sanctioned Rs 5 crore to Green Planet Resort. Several groups including Abanti Group, Noman Group, Thermex have also applied to this bank.
- Jamuna Group has applied for a loan from Janata Bank. Beximco Group will also apply, said the bank’s MD Abdus Salam Azad. He said in the first light, everyone is communicating. Most of them said they would apply.
- According to Bangladesh Bank sources, Islami Bank will lend a maximum of Tk 2,982 crore out of Tk 30,000 crore.
Among other major lenders, Sonali Bank will provide Tk 1,622 crore, National Bank Tk 1,613 crore, United Commercial Bank (UCB) Tk 1,163 crore and Dutch-Bangla Bank Tk 1,068 crore.
Other banks include The City 1,023 crore, Exim 994 crore, Eastern 985 crore, Agrani 914 crore, Prime 912 crore, Bank Asia 819 crore, Rupali 787 crore, Mercantile 774 crore, Southeast bank 766 crores and Dhaka Bank 758 crore Will lend.
Among the foreign banks, Bangladesh Bank has set a limit of Tk 724 crore for Standard Chartered and Tk 334 crore for Commercial Bank of Ceylon.
According to the data, all the textile industries are applying for low-interest loans to sustain in the RMG sector. The RMG industry provides jobs for over 4 million people and contributes over 83 percent of the country’s total export receipts. So it is time for the government and all the banks to come forward to help all the textile and apparel entrepreneurs to sustain during this pandemic. In this regard, loan giving policy should not be tough, rather it should be friendly both for the big and small entrepreneurs.