Letter To the Editor
Fair distribution of stimulus package must be ensured
The central bank asked bank authorities to strengthen internal monitoring to ensure that stimulus loans are used in the targeted sectors. The BB in a primary observation found that, after stimulus loans had been given as working capital, the money was withdrawn at once in some cases, not gradually, indicating diversion of the funds.
According to the guidelines on Credit Risk Management, borrowers will have to use the money taken out in loans for which they have been provided. The central bank has alerted banks to possible fund diversions. In some cases, stimulus loans have been used for adjusting existing loans, not the purpose mentioned to get the low-cost fund under Covid-19 recovery packages. The banks need to form special cells to oversee the handling of stimulus loans. Economic recovery mostly depended on proper implementation of financial incentive packages announced by the government and the central bank. Unfortunately, some banks have been delaying the disbursement of stimulus loans. The interest rate of stimulus loans is 9%. Half of the interest is borne by borrowers while the other half by the government.
We expect that the authority responsible will ensure the fair distribution of announced stimulus package so that the productive sectors of the country continue production.