58 banks and 30 non-bank financial institutions (NBFIs) recovered at Tk1,49,774.61 crore from the CMSMEs
Loan recovery from the cottage, micro, small, and medium enterprises (CMSMEs) rose 12.51% last year amid the Covid-19 pandemic, owing to good repayment behaviour.
During January to December of last year, 58 banks and 30 non-bank financial institutions (NBFIs) recovered at Tk1,49,774.61 crore from the CMSME sector — up from Tk1,33,100.31 crore a year earlier.
The recovered amount is 87.51% of the Tk1,71,152 crore of recoverable loans, according to the latest data by the central bank.
Of the total recovered amount, the banks recovered Tk1,45,119.66 crore and the NBFIs recovered Tk4,654.96 crore from CMSME clients, data shows.
Bankers said that the repayment behaviour of small and medium borrowers is much better than the large borrowers, which was one of the reasons behind the surge of loan recovery.
Last year, most of the SME borrowers continued to pay loan instalments despite loan moratorium facilities offered by the Bangladesh Bank, they added.
The non-performing loans (NPLs) in the sector dropped by Tk438.34 crore to Tk30,849.82 crore in 2020.
The increasing trend of SME loan recovery amid the moratorium facility proves that small borrowers and farmers have good repayment behaviour, said Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank.
The central bank had offered a moratorium on instalments of loan repayments from January to December last year to give some breathing space to the borrowers amid the pandemic.
The small borrowers repaid their instalments voluntarily without pressure, which was a good sign, Ali added.
During the last year, the 58 banks and 30 NBFIs disbursed Tk1,53,496.15 crore among 785,858 CMSME borrowers.
However, loan disbursement to the CMSME sector fell by 8.62% in 2020; the country’s lenders had disbursed Tk167,970.67 crore in 2019.
Of the total disbursed amount last year, Tk5,390.47 crore was disbursed to women-run enterprises; Tk18,218.62 crore to new enterprises; Tk33,780.25 crore to rural enterprises; and Tk21,033.51 crore disbursed without collateral, Bangladesh Bank (BB) data shows.
Alongside the regular CMSME loan disbursement process, the country’s lenders were disbursing from the Tk20,000 crore stimulus fund for the sector announced by the government.
On April 13 last year, the BB — in line with the government’s announcement — issued guidelines on providing working capital facilities amounting to Tk20,000 crore to the CMSME sector affected by the coronavirus pandemic, setting the interest rate ceiling at 9%.
Of the 9% interest, the government will bear 5% as subsidy and the remaining 4% will be borne by borrowers.
But banks and NBFIs have been lending slowly to businesses belonging to CMSME sector.
As of March 18, banks disbursed about Tk13,011 crore among 89,892 borrowers under the stimulus package, BB data showed.