BB relaxes rule of presentation of audited financial statements for contractors CMS

TBS report

March 29, 2022, 9:55 p.m.

Last modification: March 29, 2022, 10:00 p.m.

Bangladesh Bank file photo: Salahuddin Ahmed/TBS

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Bangladesh Bank file photo: Salahuddin Ahmed/TBS

Bangladesh Bank (BB) has eased its requirement to submit the annual audited financial report for artisanal, micro and small (CMS) entrepreneurs who faced financial shock during the Covid-19 pandemic, in a bid to foster their growth.

The financial sector regulator issued a circular in this regard on Tuesday and sent it to all managing directors of financial institutions which will remain in force until December 31 this year.

A Bangladesh Bank official, who preferred not to be named, told TBS that small entrepreneurs have been hit hard during the Covid-19 pandemic. The loan disbursement process is very long in their case as they could not show the audited annual report in time.

That is why the central bank has eased the condition of presenting the report to them till December this year so that they can get the credit easily, he said, adding that the Bangladesh Bank rules will be strictly followed for other types of loan disbursement.

Referring to a circular issued on August 17 last year, Bangladesh Bank said it had been noticed that financial institutions were disbursing the loans after sanctioning to a third party account instead of the actual customer. This is a flagrant violation of the rule that commands the use of credit for the proper purpose. It is mandatory to disburse the credit on the real account of the customer, specifies the circular.

The circular also states that the actual client’s bank statement must be attached to the documents before disbursement of the approved loan. But this rule will not be applicable for CMS contractors under the new rule.

Financial institutions that operate under Islamic Shariah rules can disburse the approved loan to the providers real account. But the actual client’s no objection letter must be attached to the documents.

Meanwhile, according to loan disbursement data from the CMSME sector, the government has declared a stimulus loan program of Tk 200 billion to help CMSMEs overcome the financial shock due to the Covid-19 pandemic.

In the first phase, the loan disbursement rate was 77% of the target in eight months (July-February) during the last fiscal year.

In the second phase, banks disbursed a loan of Tk 71.17 billion to enterprises in the SMEP sector in the first eight months of the current fiscal year (July-February), i.e. 36.8% of l ‘goal.

The central bank held a meeting with chief executives of banks scheduled for February this year with the aim of increasing the disbursement rate. The Governor of Bangladesh Bank chaired the meeting.

The governor has instructed the chief executives to achieve the set target by June this year.

Marianne R. Winn