Industrial sector reviving from Covid crisis

Since the first case of Covid-19 reported in the country at the beginning of March last year, the government announced restrictions in phases for over a year, bringing the economy to a standstill. 

The government stood by businesses amid the coronavirus pandemic and announced stimulus packages worth a thousand billion taka. The stimulus helped big businesses revive from the losses caused by coronavirus pandemic.

ACI Limited made a net profit of Tk 370 million (37 crore) in January-March last year. The company took Tk 3.27 billion (327 crore) in loans from the stimulus package at a low interest rate. ACI made a profit of Tk 490 million (49 crore) in January-March this year. The company business is in consumer products, medicines, essential commodities, agriculture and commercial transport, motorcycles and more. This leading business group has started recovering losses caused by Covid.

The factory of the country’s largest conglomerate in steel sector, BRSM, was closed at the beginning of the pandemic last year. BSRM made a profit of Tk 540 million (54 crore) in January-March 2020. The company took Tk 6.41 billion (641 crore) loan from the stimulus fund to boost up its operations. BSRM has recovered the loss and started making a profit. The company made a profit of Tk 1.38 billion (138 crore) in January-March this year.

Deputy managing director of BSRM Group TapanSenguptasaid, “We took loan from the stimulus packages and used it in business. Our factory reopened after remaining closed for long. Production has returned to normal. But we are under a little pressure due to rise in the prices of raw material in international markets.”

Though many big companies are back in business, thanks to the loan from stimulus packages, some businesses allegedly spent the fund from the low interest loan on other purposes. Many firms are delaying repayments. Besides, there has been concern over the loan recovery from several companies since these firms received the money without proper verification because of quick disbursement of the loan. 

The stimulus package of Tk 330 billion (33,000 crore) was announced for the industry and service sectors. Loan disbursement began in April 2020. So far, 2,000 companies have received Tk 323.88 billion (32,388 crore) in loan at 9 per cent interest. The government pays half of the interest from tax money while companies bear the remaining half. 

Companies hit by the Covid crisis are eligible for this loan only and they must use the fund as current asset. Since many big companies have recovered from the loss caused by the Covid-19, now it is their time to repay.

Former director general of Bangladesh Institute of Bank Management (BIBM) Toufic Ahmad Choudhury said the stimulus is undoubtedly a good initiative of the government. Affected businesspeople are recuperating. But the question remains about who got the loans and where the money was used. That is why monitoring will have to be strengthened during the second phase of loan disbursement, he added.

State-owned Biman Bangladesh Airlines took the highest amount of loan. Sonali Bank disbursed Tk 20 billion (2,000 crore) in loan to the national flag carrier. AbulKhair Group received Tk 11.71 billion (1,171 crore) in loan, S Alam Group Tk 10.86 billion (1,086 crore), City Group Tk 8.27 billion (827 crore), Bashundhara Group Tk 6.78 billion (628 crore), BSRM Tk 6.41 billion (641 billion) Noman Group Tk 5.99 billion (599 crore) and Pran Group Tk 5.59 billion (559 crore) in loan. Many of these companies never defaulted on loans, while many having defaulted loans too.

PRAN-RFL Group director (marketing) Kamaruzzamn Kamal said, “Farmers faced a big problem at the beginning of the pandemic. Our sales dropped. About 100,000 farmers are involved with us in vegetables, rice and milk production. Collection of raw materials from them had not stopped for a day. We collected milk and powdered it. We also stocked seasonal fruits including mango and guava. We had the opportunity to stand beside farmers because of loans from the stimulus package. And now business is bouncing back.”

Meghna Group received Tk 3.71 billion (371 crore) in loan from the stimulus package, ACI Tk 3.27 billon (327 crore) GPH Tk 2.90 billion (290 crore), NavanaTk 2.68 billion (268 crore), BeximcoTk 2.60 billion (260 crore), Thermax Group Tk 2.38 billion (238 crore), Jamuna Group Tk 2.19 billion (219 crore), Nassa Group Tk 1.85 billion (185 crore) and Unitex Group got Tk 1.83 billion (183 crore) loan from the stimulus. Other than these companies, Bengal, Saad Musa Group, JajBhuiyan Group and Gazi Group are among the top 100 companies receiving loan from stimulus.

Sources said firms that received the loan in the first phase have also started taking loans in the second phase. Though there is uncertainty over loan recovery, bankers said they are optimistic. 

Managing director of Agrani Bank Mohammad Shams-Ul Islam said borrowers started payment of instalment on the loan from stimulus. Hopefully, a big portion of the loan would be paid on time, he added.

According to sources, many businesspersons applied for loan rescheduling as the one-year tenure of their loans nears an end. Managing Director of Premier Bank M Reazul Karim said, “Several clients applied for the extension of loan tenure. We don’t know when these loans are going to be recovered.”

Since allegations of misuse of the loans from the stimulus surfaced, Bangladesh Bank has started an inspection from this month. Executive director of Bangladesh Bank Serajul Islam said, “We are looking into the allegations on misuse of loans under the stimulus package.”

Former managing director of Agrani Bank and Southeast Bank Syed Abu NaserBukhtear Ahmed said several firms that had defaulted previously also received the loan from the stimulus. This wasn't right at all. Big firms received the large portion of the stimulus. Small companies did not get the loans despite suffering the worst. These loans from stimulus have accumulated among big firms and if these are not recovered, another big scandal would unfold, he added.