The government is set to toughen agreed commitments from borrowers of the Equity and Entrepreneurship Fund (EEF) to help recovery of funds in case of project failure. The government move came in the backdrop of poor recovery of equity funds from a section of errant borrowers.
"Since the fund is not considered loan, we can't go to the Artha Rin Adalat to file case against defaulters. So, we are trying to strengthen the commitments of borrowers to have scope of making them accountable in case of default," general manager of the EEF unit of the Bangladesh Bank (BB) Bazlar Rahman Molla told the FE.
He said the fund-realisation issue is getting importance as the EEF policy is being recast now.
Presently, nearly a dozen criminal cases are underway against entrepreneurs who fled after obtaining equity from the EEF or have become defaulter.
"We will also give importance to proper investment of the EEF money so that projects do not fail," he noted.
A senior official at the MoF said some recommendations regarding the recasting of EEF policy, which came from a workshop held in June this year, are now under scrutiny for finalisation.
New expression of interest (EoI) from prospective entrepreneurs will be sought after the policy amendments, he said. But he could not confirm when it will be completed.
Inviting EoI has been stalled for months as some major weaknesses in the EEF policy got exposed.
He said one such major weakness in the project operation is in the field of entrepreneur selection. Many entrepreneurs have fled after taking equity from the fund. Many entrepreneurs have become defaulter in loan repayment and failed to buy back government shares as per terms and conditions.
The official said the rules in case of entrepreneur selection have to be changed thoroughly to avoid misuse of the fund.
The government created EEF in fiscal year 2000-2001 to extend support to two promising sectors -- agro-based food processing and software -- for which Tk 1.0 billion was allocated.
The central bank was the implementing agency of the project until May 2009.
Later, the operational function of the fund was transferred to the Investment Corporation of Bangladesh (ICB). The central bank, since then, has been involved with formulating fund-management policies and monitoring the investment activities of EEF.
According to officials, since its inception, the government has allocated Tk 20 billion in favour of the fund of which Tk 15.13 billion went to agriculture sector and Tk 5.12 billion to information and communication technology (ICT) sector as of last March.
They said some 198 agro-sector projects and 32 ICT-sector projects have got maturity with eight-year completion from the release of first instalment of equity amount. Some Tk 5.33 billion could be realised from the projects. The recovery rate is around 35 per cent of the government's equity in those projects.
While conducting a field survey in 2014, the Bangladesh Institute of Development Studies (BIDS) could not locate a large number of projects on the sites mentioned in the project documents.
[email protected]
