Stimulus disbursement time extension bodes well for economy.

Bangladesh Bank (BB) recently extended the deadline for disbursing funds to the cottage, micro, small and medium enterprises (CMSMEs) from the Tk 20,000- crore stimulus package by three more months. Different media reported this on the basis of a central bank notice issued on December 31. The government announced in April different stimulus packages for different industrial and agricultural sectors to ward off the adverse impact of Covid-19 on the country's business and economy. A sum of Tk 20,000 crore was earmarked for CMSMEs. Later the amount was increased to Tk 52,000 crore in the face of growing demand from different quarters, including experts and business leaders. But, as of December 3, banks had disbursed about Tk 8,600 crore among 52,000 CMSMEs, according to the central bank's latest data. Another Tk 1,700 crore worth of loans have been authorised but are yet to be disbursed by banks. The failure to disburse the money came despite a repeated push from the central bank to complete disbursement at the earliest. It did so even amid the central bank's announcement in July of a credit-guarantee scheme (CGS) worth Tk 2,000 crore for the micro- and small enterprises for funds disbursed from the stimulus package. A CGS provides a third-party credit-risk mitigation to lenders through the absorption of a portion of the lender's losses on the loans made to SMEs in case of default, typically in return for a fee. Banks get 80-percent coverage of a credit given to an individual or a company. Experts and bankers suggested various options, including lowering the interest rates, for speedy delivery of the loans. In an apparent response to the demand, the government reduced the interest rate in November. At the outset, banks and financial institutions disbursed the loans at 9% interest rate. They now pay 2% interest to the central bank, which is a 2% cut compared to the previous 4%. Lending agencies blame a number of factors that hold them back from...