SMESPD Circular Letter No. 12: Special loan/investment facility provided to CMSME sector affected by Novel Corona Virus(COVID-19) pandemic

Bangladesh Bank Head Office Motijheel, Dhaka-1000 Bangladesh. Ref. No. SMESPD/CL/12/2020 SMESPD Circular Letter No. 12 Date: 12 Kartik, 1427 28 October, 2020

To, Managing Director/Chief Executive Officer All Scheduled Banks and Financial Institutions operating in Bangladesh

Subject: Special loan/investment facility provided to CMSME sector affected by Novel Corona Virus(COVID-19) pandemic.

Reference is drawn to your attention to SMESPD Circular No. 01 dated April 13, 2020, and SMESPD Circular Letter No. 07 dated August 31, 2020, on the subject cited above.

2. In order to implement the government's announced financial stimulus package for the revival of the CMSME sector affected by the outbreak of the Corona virus, the production and service sub-sectors, which employ a large number of manpower, were given priority and the commerce sub-sector was included in the financial stimulus package through clause 1(b) of SMESPD Circular No. 01 dated April 13, 2020. At the same time, the annual loan/investment proportionate rate for banks and financial institutions in the production, service, and commerce sub-sectors was set at 50, 30, and 20 percent respectively. Subsequently, through clause 02(a) of SMESPD Circular Letter No. 07 dated August 31, 2020, the annual loan/investment proportionate rate for the production and service sectors under the said package was reallocated to a total of 80 percent for these two sub-sectors, replacing the previous 50 and 30 percent respectively.

3. Although a considerable amount of loan has been distributed in the industrial and service sub-sectors included in the CMSME sector affected by the outbreak of the Corona virus, the implementation of the said stimulus package has not been up to expectations. Furthermore, field observers engaged in the commerce sub-sector and various business organizations have requested an increase in the allocation for CMSME institutions affected in the said sub-sector under the said stimulus package.

4. Now, in order to maintain commercial institutions in the industrial and service sectors and to reduce the loss of genuine entrepreneurs engaged in business (trading), the following decisions have been taken regarding the provision of working capital loan/investment facilities to meet the loan demand in the said sub-sector:

a. The annual loan/investment proportionate rate for banks and financial institutions in the commerce (trading) sub-sector specified in clause 1(b) of SMESPD Circular No. 1/2020 is increased from 20 percent to a maximum of 30 percent; and

b. If the proportion of investment provided/required by banks and financial institutions in the commerce (trading) sub-sector under the said stimulus package exceeds 20 percent of the annual loan/investment (which cannot exceed 30 percent in any case), the proportion of loan/investment provided/required in the production and service sub-sectors will be reduced proportionally. However, the overall loan proportion provided/required in the said production and service sub-sectors must not be less than 70 percent.

5. In addition, other instructions of the said circular and circular letter will remain unchanged.

6. This instruction is issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

Yours faithfully, (Husne Ara Shikha) General Manager Phone: 9530502