The distribution of startup funds by scheduled banks remains minimal, hindered by the absence of an effective policy from the Bangladesh Bank (BB).
A total of Tk 0.43 billion in loans had been disbursed to 153 customers as of August this year whereas it hovered at Tk 0.28 billion until June, the latest BB data showed. Out of 52 banks, 25 are yet to provide any loans to budding entrepreneurs.
As of August 2024, a cumulative total of Tk 10.05 billion had been raised for the startup financing and of this amount, Tk 5.05 billion was raised by different scheduled banks.
To create new entrepreneurs and encourage self-employment, the BB established a revolving refinance fund titled 'Start-up Fund', worth Tk 5.0 billion.
According to sources, no loans, however, have yet been disbursed from the fund created by the BB.
By December 2023, Tk 0.27 billion in loans was distributed to 133 customers whereas it hovered at Tk 0.16 billion until June 2023. On the other hand, only Tk 0.04 billion was disbursed to 18 customers until June 2022.
The BB has instructed all scheduled banks to establish the fund by allocating 1 per cent of their annual net profit each year, beginning in 2020 for the next five years.
The maximum interest rate for these loans is 4 per cent for the end user while banks can lend up to Tk 10 million for a period of five years. The startup ecosystem that began its journey in the early 2010s has experienced a remarkable transformation in recent years.
The fund aims to promote innovation and the development of new products, services, and technologies that will offer high returns on investment for successful ventures.
During a bankers' meeting on June 16, 2022, the BB instructed all banks to finance at least three customers annually under the startup fund facility.
A top-ranking BB official mentioned that a draft policy is being prepared, incorporating feedback from stakeholders.
Earlier, Managing Director & CEO of Mutual Trust Bank Syed Mahbubur Rahman said, "For top executives or managing directors, handling such funds is challenging as they are predominantly occupied with other issues including dealing with larger loans. Financing startups and giving commercial loans are not the same thing. It's also a mindset issue"
He suggested establishing a dedicated independent professional body to oversee a pooled fund from all banks, which could potentially improve utilisation of such fund.
"To make the fund more appealing, we could consider offering it as equity, which is a common global practice, rather than as a loan", Rahman added.
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