A government stimulus package worth Tk 600 billion for giving a shot in the sagging economy's arm remains unused even over three months after the central bank launched the massive financing scheme, sources say.
The Bangladesh Bank came up with the financing scheme on May 22 last in line with the new government's election manifesto promising to create 2.5 million jobs through reinvigorating Bangladesh's slowing private-sector-led economy with vibrant business activity.
But the progress in releasing the funds appears not satisfactory as the banking regulator verbally instructed the banks to disburse at least one-fourth of the package within this September, according to central and commercial bankers.
Getting frustrated by the lax progress, government high-ups indirectly instructed the banking regulator to further accelerate the process so that resumption of production in the closed or struggling industrial units can take place as quickly as possible, the sources said.
Seeking anonymity, a BB official has said no disbursement under the stimulus package has so far been made although all the formalities like agreements with 17 lending banks were completed.
He says the package has two components: a Tk 410-billion refinancing fund, sourced from banks with excess liquidity through long-term deposits of at least three years at policy rate (now 9.5 per cent), and a Tk 190-billion support fund drawn from the central bank's own resources, subject to government guarantee.
The broader objective of the scheme is to help resume production in the closed or struggling industrial units, boost agricultural output and exports and strengthen rural economic activities, he says.
"We've done all the preparations. We're ready now. We will be able to provide funds instantly once the demand comes," the BB official told The Financial Express.
About the cost of fund, the central banker says the regulator will source execs liquidity of the banks at the policy rate. Of the costing, the BB will give the remaining 4.0 per cent while the government will bear remaining costs as subsidy.
In terms of disbursement, according to the package, the commercial banks will get the funds at 4.0 per cent and will be allowed to lend at 7.0 per cent to the borrowers.
On condition of not being quoted by name, another BB official has said the banking regulator informally advised the banks very recently to speed up the process under the stimulus package.
"We're hopeful of starting to executive this package this month," the central banker hopes.
Commercial banks have started holding board meetings with issues relating to stimulus package on top of their agenda, according to the bankers.
Managing Director and Chief Executive Officer of City Bank PLC Mashrur Arefin says the bank is set to hold a board meeting in the coming week, where several of these proposals will be placed for approval.
Like City Bank, he says, many other banks also plan to hold board meetings within this week on the same.
"I think people will see good progress in disbursements under this refinance and pre-finance package over the next 7-10 days. Hopefully, a major portion of the special financing scheme will be executed within this month, and the process will be completed by next month," he told the FE writer.
Managing Director and Chief Executive Officer of Southeast Bank PLC Md. Khalid Mahmood Khan says they have started sitting with some interested parties under the package. "We have already approved two cases, and it is now under documentation stage to send to the BB's department concerned."
Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB) PLC Syed Mahbubur Rahman has termed the package a good one to revive the private-sector-led economy but the demand from the customer side not encouraging to date.
The seasoned banker says the current macroeconomic stress stemming from the energy crisis could be a reason but they have received few applications that are being assessed seriously.
"We're working on it actively."
Managing Director of NCC Bank PLC M. Shamsul Arefin has said they have approved few cases to bring vibrancy in the business activity and some others in the pipeline.
"We're hopeful of executing major share of our part in the package by coming December," he added.
