Dhaka, Bangladesh (BBN)– A new re-financing fund worth Tk 6.65 billion (US$95 million) has been formed aiming to facilitate financing in small and medium enterprise across the country, officials said.
The central bank of Bangladesh will provide the re-financing facility through eligible commercial banks and financial institutions at the existing bank rate, which is now 5.0 per cent.
“We’ve formed the fund aiming to develop the SME sectors across the country through providing re-financial facility,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka, adding that it’s a new investment fund which will be used for project financing.
The central bank will operate the fund under the ‘Small and Medium sized Enterprise Development Project (SMEDP)’ to accelerate the development of the SMEs, especially the in the rural and non-urban areas, by improving their access to medium and long-term credit facility.
The Asian Development Bank (ADB) has provided worth $76 million as soft loan in the fund and the remaining amount of $19 million has been contributed by the central bank on behalf of the government.
The central bank has issued a circular in this connection and asked the chief executives and managing directors of all scheduled banks and non-banking financial institutions (NFBFIs) to proceed for re-financing agreements.
The interested banks and NBFIs will have to sign partnership agreements with the central bank for disbursement of loans under the re-financing scheme, the BB officials added.
A project, having maximum fixed asset of BDT 200 million, excluding land and building, and number of employees highest 150 persons, will get the re-financing facility, according to the BB circular.
Under the new provisions, the banks and NBFIs will lend the funds to eligible SMEs outside Dhaka and Chittagong metropolitan areas for minimum two-year term at market-based interest rates.
A minimum of 15 per cent of the SMEDP credit facility will be earmarked for lending to women entrepreneurs with a view to promoting qualified female entrepreneurs by ensuring access to enterprise finance.
The banks and NBFIs will be allowed to finance maximum BDT 7.0 million and minimum BDT 50,000 in a single SME unit under the new provisions.
Any commercial bank or NBFI, which will disburse the loan under the scheme, will receive 75 per cent of the disbursed amount from the central bank as refinancing facility, and the remaining 25 per cent will have to be met by the bank or NBFI and entrepreneur 15 per cent and 10 per cent respectively.
BBN/SSR/SI/AD-04Aug10-5:00 pm (BST)