The country's business leaders and top bankers have stressed the need for a collective effort to find a solution to a long-term lending for industries, especially for the small and medium enterprises (SMEs).
In a views exchange meeting held at a city hotel on Thursday, both sides agreed to the fact that the industries badly needed long-term credit supply to grow and contribute to the country's economy.
But chief executives of banks said banks could not provide long-term credit to the industries as the banks did not have long-term deposits.
Banks also cannot compromise basic documents required for getting a loan as banks do not own the money, said the top bankers, against the business leaders' demand for easing procedures of loans for the SMEs.
The bankers also reminded the business leaders that the banks were business entities too and that they had to make profits to survive and provide more loans to businesses.
On the other hand, business leaders recommended that the banks should reduce its operating costs and narrow spread to make loans cheaper.
They also demanded waiver of loan interests for certain periods so that businesses cope with the loss of Covid-19.
Speaking at the discussion, Federation of Bangladesh Chambers of Commerce and Industry (FBICCI) President Jashim Uddin said the term loan needed to be extended to 10-15 years and the grace period to two years for the development of the SME sector.
He recommended providing bank loans to entrepreneurs of the SME sector who do not have bank accounts as per recommendations of the concerned trade body.
"To do so, banks can enter into agreements with local trade bodies," he suggested.
He also called upon the banks to implement the Bangladesh Bank's Master Circular on CSME Financing.
If the rate of down payment is fixed at 1-2 per cent at the time of renewal or rescheduling of industrial loans, industrialisation will flourish in the country, he observed.
The FBCCI recommends that the corporate tax on banks, insurance and financial institutions should be reduced from 36.50 per cent to 35 per cent, in order to reduce the cost of business, said the president of the apex trade body.
Although banks have taken multifaceted steps in Bangladesh, including the introduction of a "dedicated desk" for the SME sector, the introduction of SME service centres, and special facilities for new and women entrepreneurs, some banks are reluctant to implement these initiatives, said Mr Jashim.
The FBCCI president called for an easy and unsecured loan facility for SMEs and simplification and activation of credit guarantee scheme by the Bangladesh Bank.
Calling upon the authorities concerned to take action against wilful debt defaulters, the FBCCI president said the apex trade body would not support the 'wilful debt defaulters.'
Admitting the fact that small businesses are adversely affected by the Covid-19, Association of Banker, Bangladesh Chairman Ali Reza Iftekhar said it was not easy to provide loans to small enterprises.
"There are some formalities and basic requirements and banks cannot compromise on those," he said.
Mr Iftekhar said that 80 per cent loans had been disbursed to SMEs to date under stimulus packages.
It would have been better, if the percentage had been increased further, he added.
He welcomed the FBCCI president's proposal of agreement between local chambers and banks to provide loans to the SMEs.
Mr Iftekhar said it was not banks' duty to provide 10-15-year-long term loans to industries.
Bond market and capital market can be the source of long-term credit, he said, adding, "We should work developing those markets."
Mr Iftekhar mentioned that banks were now more interested in providing loans to SMEs as it was becoming profitable.
Around 35 CEOs of banks and a similar number of business leaders attended the meeting.
FBCCI Vice President Mostafa Azad Chodhury Babu delivered the concluding speech.
