Banks shy away as Tk 20,000cr revival fund stalls

Commercial banks are dragging their feet on lending to struggling garment and other industrial entrepreneurs, putting the reopening of shuttered factories and the country’s export-led economic recovery at risk, business leaders warned on Tuesday.

Despite a Tk20,000-crore Bangladesh Bank incentive fund specifically designed to revive crisis-hit businesses and reopen closed factories, only Tk50 crore has so far been disbursed to three borrowers�"leaving the bulk of the fund virtually untouched.

Business leaders said entrepreneurs are keen to tap the facility but are being frustrated by banks’ reluctance to accept applications, excessive documentation and lengthy approval procedures.

They raised the concerns at a meeting with Bangladesh Bank, demanding immediate steps to remove procedural bottlenecks and speed up the processing and approval of loan applications.

Representatives of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA), Bangladesh Chamber of Associations (BCA), Bangladesh Employers’ Federation, Bangladesh Jute Association and Metropolitan Chamber of Commerce and Industry (MCCI) attended the meeting.

Bangladesh Bank Deputy Governors Dr Md Kabir Ahmed and Md Sarwar Hossain, along with senior officials from relevant departments, represented the central bank at the meeting, which reviewed shortcomings and ambiguities in the guidelines governing the incentive programmes.

According to meeting sources, business leaders said the biggest obstacle was not a lack of demand for the loans but the slow pace of decision-making by banks.

In many cases, banks are taking up to a month to decide on applications because loan proposals have to go through board meetings, they said. Such delays are particularly damaging for businesses already struggling to restart operations, as every passing week increases their financial burden and threatens the survival of factories.

The business leaders therefore urged banks to hold special board meetings every week, or whenever necessary, to dispose of applications quickly.

They also demanded that banks reduce excessive documentation and simplify procedures for accepting, processing and approving loans under the revival scheme.

BKMEA President Mohammad Hatem said entrepreneurs were eager to obtain financing from the Tk20,000-crore package, but many were struggling even to submit applications because of resistance from banks.

“Many banks are unwilling to accept applications. Some are also discouraging entrepreneurs on various pretexts,” he said.

Hatem said certain provisions of the Bangladesh Bank circular had also created complications for applicants.

“We have demanded that these complications be removed quickly and that the applications already submitted be disposed of without delay,” he said.

He said Bangladesh Bank was sincere about implementing the package and had assured business leaders that the problems would be addressed quickly.

The scale of the fund’s under utilisation has raised concern among industry leaders. Bangladesh Bank sources said 25 customers had so far applied for loans totalling Tk750 crore, but only Tk50 crore had been disbursed to three customers. In other words, barely a fraction of the Tk20,000-crore facility has reached the businesses it was designed to rescue.

Business leaders said the figures exposed a critical gap between announcing financial support and actually getting money into the hands of distressed entrepreneurs.

They stressed that reopening closed factories requires more than allocating funds. The financing must reach viable businesses quickly enough to restart production, restore employment, rebuild supply chains and protect export earnings.

With only Tk50 crore disbursed against a Tk20,000-crore fund, the immediate challenge, they said, is no longer simply finding money for distressed businesses�"but ensuring that the money actually moves.