Pvt sector banks should disburse 50pc: GEF
Abu Sazzad: Experts have underscored the need for reconsidering the government decision to disburse the lion share of stimulus loan package through public banks because such step may foil the economic losses overcome mechanism declared by the Prime Minister Sheikh Hasina concentrating the novel coronavirus outbreak.
A finance ministry official told on the condition of anonymity that the finance ministry recently took a plan to implement 80 percent of the stimulus packages through state-run banks to consider higher number of branches especially in the rural areas as well as financial capability.
In this connection, the finance ministry recently organized a virtual meeting with the managing directors of the public banks to explore ways to implement the said stimulus loan packages. Besides, the private banks and Non-Bank Financial Institutions (NBFIs) are allowed to disburse the remaining 20 percent loan amount among the affected stakeholders.
Banking sources said, country’s scheduled banks have 10,467 branches across the country. Of them, four public banks including Sonali, Janata, Agrani and Rupali are holding 34 percent of the branches and some 56 percent of such branches are located in the rural areas.
According to a recent report of Dhaka University, per day country’s industrial service and agriculture sector are incurring loss amounting at Tk 3,000 crore for lockdown situation. If the situation may prolong till the current month, the loss amount may exceed worth over Tk 2.18 lac crore which is almost 9 percent of country’s total Gross Domestic Product (GDP).
Beside, Export Promotion Bureau (EPB) sources said, country’s export income was only US$52 crore in the last month (April) which is the lowest in three decades. At the same time, the foreign expatriates sent $108 crore in the last month which was $143 crore during the corresponding period of the last fiscal.
However, Global Economist Forum (GEF) President Dr Enayet Karim demanded for the disbursement of at least 50 percent of the loans through private sector banking channel to avoid bureaucratic complexity in the public banks.
Maintaining the transparency in allocating the maximum loan money through the public banks may foil the initiative of the Prime Minister Sheikh Hasina to bounce back economy from recession because of the traditional influential and borrowers, he predicted.
Actually, stakeholders need immediate financial assistance to resume business and economic activities, but the delay in loan processing system of state run banks would push the affected stakeholders into complexity and uncertainty for availing the stimulus loan packages.
“It is true that many private banks are now facing acute liquidity crisis which is not applicable for all private banks. If the government distribute the lion share of stimulus loan through public banking channel, most of the stakeholders would face bureaucratic complexity to avail the financial assistance”, Enayet Karim added.
Commenting on the risk factors, Enayet Karim said, the disbursement through public banks may increase the number of defaulters which would push the banking sector into more crisis.
Considering the necessity in ensuring loan feasibility and transparency to tackle the worst ever economic loses, the authorities concerned will have to undertake prompt initiative to disburse half of the loan from public sector banking channel and the remaining 50 percent from private sector banks and financial institutions, he suggested.
“If public banks follow the traditional collateral-based loan processing system, many affected stakeholders will fail to meet the bank criteria in availing government declared stimulus loan package. If the big borrowers avail the lion share of stimulus loan packages that may lead the banking sector and economy into more vulnerability.
Dr Salehuddin Ahmed, former governor of Bangladesh Bank said, the disbursement of lion share through public banking channel is not rational to consider the loan disbursement policy of such financial institutions. He recommended for undertaking more comprehensive financial policy to assist all stakeholders as well as to minimise the economic losses from the coronavirus outbreak.
The implementation of the stimulus package would be challenging for the government unless it involves the NGOs and the social organisations to overcome the situation, he observed.