A total of 19 financial institutions have started disbursing money from an Asian Development Bank (ADB) fund meant for small firms, which can meet the financial needs of genuine entrepreneurs.
The ADB and the government have allocated US$240 million or equivalent to approximately Tk 1.92 billion for the small and medium enterprises (SMEs) and entrepreneurs living outside Dhaka and Chittagong metropolitan areas will also be eligible for the credit.
Under the refinancing scheme, the banks and the non-bank financial institutions will provide entrepreneurs with upto 90 per cent of their equities.
Abul Bashar, general manager at the Financial Inclusion Department of the Bangladesh Bank told the FE, "This will widen and deepen the financial inclusion."
Mr Bashar also said that the financial institutions will focus on green projects.
He said the Bangladesh Bank would lend out to the banks and non-bank at a rate of 4.0 per cent. The central bank usually maintains the bank rate of 5.0 per cent in refinancing schemes.
Mr. Basahr noted that the central bank has asked the institutions to keep lending rate at single-digit.
The second small and medium sized enterprises development project will extend Tk 10 million in loan to micro, cottage and small entrepreneurs, while medium enterprises will get upto Tk 30 million.
The repayment period is longer than the usual five years.
There is a mandatory provision for financing projects of entrepreneurs as they will have 15 per cent quota to avail this credit facility.
The entrepreneurs will get the loan facility from private commercial banks such as Bank Asia, BRAC Bank, Dhaka Bank, Eastern Bank, IFIC Bank, Mercantile Bank, NCC Bank, One Bank, Pubali Bank, City Bank, United Commercial Bank and Trust Bank,
CAPM Venture Capital and Finance, IIDFC, IDLC Finance, IPDC Finance, Lanka Bangla Finance, Union Capital and United Finance are among the non-bank financial institutions, which will provide such lending.
Md Rezaul Karim Sarker, a deputy general manager at the Financial Inclusion Department, told the FE that the banks and NBFIs have already signed "participatory agreement" with the central bank in early this month.
He also said this credit facility had been designed for the micro, cottage and small entrepreneurs as they set aside earmarked two-thirds of the scheme for such ventures equivalent to US$160 million.
Only $80 million has been reserved for the medium enterprises.
The funding facility under the refinancing system will come to end in June 2021.
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