Key contributors to the economy such as small and medium enterprises, farmers and lower-income professionals had gone through their worst-ever crisis because of the first wave of the coronavirus pandemic.
The second wave has not spared them either.
But the stimulus packages that were unveiled last year with a promise to help SMEs, farmers, and lower-income professionals make a turnaround have not seen their desired results.
One year passed since the announcement of the packages in April last year, but banks are still reluctant to give out much-needed loans to them under the taxpayer-backed funds.
Banks, however, have shown generosity in extending loans to the large borrowers under the stimulus package of large industrial and service sectors amounting to Tk 40,000 crore.
Experts say banks should take necessary measures in the quickest possible time to cater the credit support to small businesses and farmers as the severity of the second wave will be deeper than the first one.
Since Covid-19 hit Bangladesh on March 8, the government has announced 23 stimulus packages involving Tk 124,053 crore, which is more than 4 per cent of the country's gross domestic product.
Banks have been given the responsibility to distribute more than Tk 80,000 crore of the packages in the form of soft loans.
As of March 18, banks disbursed about Tk 13,011 crore among 89,892 borrowers under the stimulus package worth Tk 20,000 crore dedicated to the SME sector, data from the central bank showed.
Half of the package would be provided from the BB in the form of the refinance scheme.
The loan will be given at a 9 per cent interest rate. Of the interest rate, 4 per cent will be borne by the borrowers and 5 per cent by the government.
Despite extending the deadline twice by the central bank, many banks showed unwillingness to disburse loans to the SME sector, which is considered the bedrock of the economy. The last deadline to disburse the fund was March and the central bank may extend the deadline once again.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said that many banks did not have adequate structure to disburse SME loans.
"They will have to strengthen their capacity within a month or two such that the economy can tackle the business slowdown deriving from the second wave of the deadly flu."
In addition, the central bank will have to expand the package volume to reach out more SME clients given the severity of the second wave, he said. Banks have disbursed 72 per cent of the stimulus package for the farm sector, which received Tk 5,000 crore.
Like the SME stimulus package, the central bank was also forced to extend the deadline of the scheme due to the lukewarm response from banks.
The central bank asked banks to disburse the targeted fund under the package by June this year.
Salehuddin Ahmed, a former governor of the central bank, said loans should be provided to the farmers and the SME sector at any cost in the interest of the country, or else the economy will face dire straits in the days to come.
The small-scale businesses and farmers usually face more problems than the large businesses in the time of crisis, he said.
The implementation rate is also the same when it comes to the Tk 3,000 crore scheme for low-income professionals, small businesses, and marginal farmers.
Banks disbursed 52 per cent of the fund through microfinance institutions as of March.
But the disbursement situation is quite different for the stimulus fund dedicated to the large borrowers: banks lent 95 per cent of the fund, amounting to Tk 33,000 crore.
The Bangladesh Bank also increased the fund to Tk 40,000 crore to provide loans to the large businesses located at economic and export processing zones.
"Banks show interest in giving out loans to the large borrowers all the time. They have given the emphasis on them this time as well," Ahmed said.
For the export sector, the central bank has allocated Tk 12,750 crore, or $1.5 billion, by enlarging the export development fund.
Banks have implemented 98 per cent of the fund, meaning that large borrowers bagged adequate support from the package.
The export sector is highly important for the economy. But the importance of the SME and farm sectors are not less as well, according to a number of analysts.
Mansur said that the SME clients would not be able to pay back the loans taken from the stimulus package due to the second wave.
The repayment tenure of the loans is one year. "SME borrowers should be allowed to repay the loans from three to five years," he said.
SMEs have to be brought under the loan restructuring facility so that they can tackle the crisis. In addition, the government should take fiscal measures so that small businesses get direct cash support from the budget, Mansur said.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said that banks might be edgy in disbursing adequate loans to the SME sector, fearing that they might not be able to recover the previous credits because of the current spread of the virus.
"Many banks do not have adequate capacity to give out loans to small clients," he said, adding that the government should give importance to its fiscal measures.
Mirza Elias Uddin Ahmed, managing director of Jamuna Bank, said banks were trying to speed up the loan disbursement under the stimulus packages, but the demand from clients was weak.
Banks are still sitting on excess liquidity of Tk 200,000 crore, which is not good at all, he said.
"Jamuna Bank has almost fulfilled its stimulus fund disbursement targets. But we faced difficulties in providing the loans," he said.
In some cases, the interest rate on working capital, the short-term loan whose maximum repayment tenure is one year, has nosedived to 3-4 per cent, he said.
"So, why will clients take loans from the stimulus packages as they have to count an interest rate of 4 to 5 per cent?"
"Time has come to revisit the interest rate on the stimulus packages to make the funds attractive for clients," Elias said.