Govt releases Tk 570cr to support small firms

The government has released Tk 570 crore from the Tk 1,500 crore stimulus package for their disbursement among small traders, entrepreneurs and farmers to help them survive the ongoing pandemic.

Eight government and semi-government agencies will disburse the fund this fiscal year while the rest of the amount will the disbursed in the next fiscal year. The government approved the new packages on January 17 with an aim to improve the living standards of marginalized people living in rural areas.

The loans will be given as grants among cottage, micro and small enterprises (CMSE) in rural areas that previously had no access to formal banking channels. Borrowers can avail the loan at 4 percent interest while the lenders will charge this interest as transaction costs.

The Bangladesh Rural Development Board got the highest allocation of Tk 150 crore for disbursement within 2020-21 out of its total allocation of Tk 300 crore for two fiscals, including 2021-22.

Of the remaining amount, Tk 100 crore each has been allocated for the Palli Daridro Bimochon Foundation, Social Development Foundation and SME Foundation.

Tk 50 crore will go to both the Bangladesh Small and Cottage Industries Corporation (BSCIC) and Small Farmer Development Foundation while the NGO Foundation and Joyeeta Foundation have been given Tk 10 crore each.

Micro businesses and farmers that could not avail loans from banks due to a lack of necessary documentation will get funds under the package. The finance division has set some conditions for disbursing the loan.

Borrowers will have to repay the loan within two years in 18 monthly installments with a grace period of six months.

The disbursing agencies will have to formulate a separate policy to ensure convenience for potential borrowers from the package, which also aims to expedite Bangladesh's recovery from the Covid-19 fallout. The lenders will have to ensure receipt of the loan at the marginalized level clients. 

The grant is non-refundable while lenders will have to deposit the total collected money, including the principal amount and interest, by forming a separate revolving fund.

It is mandatory for the lending agencies to send soft copies of the detailed expenditure statements regarding disbursements against a particular firm to the finance division.  

The agencies will also have to properly follow all the rules and regulations while disbursing the fund.