The SME Foundation has announced that it will provide more than Tk440 crore in loans to micro, small and medium entrepreneurs.
Under its revolving fund credit wholesaling programme, around Tk295 crore will be disbursed, said a press release issued today (10 April). Entrepreneurs will be able to take out loans ranging from Tk1 lakh to Tk25 lakh. The interest rate will be 8% as per the new instructions from the Finance Division.
For this purpose, the SME Foundation has signed agreements with 15 banks and financial institutions, said the press release.
In addition, under a separate agreement with Bangladesh Infrastructure Finance Fund Limited (BIFFL), and with support from Japan International Cooperation Agency (Jica), Tk145 crore will be provided to cottage, micro, small and medium (CMSME) entrepreneurs in agriculture-based industries and food processing sectors through seven banks and financial institutions at 9% interest, said the press release. In this scheme, an entrepreneur can get up to Tk 1 crore.
The signing ceremony was held last night (9 April) at a hotel in the capital. Chief executives of 11 banks and four financial institutions signed agreements with the managing director of the SME Foundation.
The ceremony was chaired by SME Foundation Chairperson and Ministry of Industries Secretary Md Obaidur Rahman. Industries, Commerce and Textiles and Jute Minister Khandaker Abdul Muktadir attended as the chief guest. Special guests included SME Foundation board member Nasrin Fatema Auwal and Bangladesh Bank Deputy Governor Nurun Nahar. SME Foundation Managing Director Anwar Hossain Chowdhury delivered the welcome speech.
The minister said the government will improve the business environment and simplify approval processes from different government offices. He also said the SME Foundation will be strengthened as a central coordinating body for SME development.
He added that in the current global economic situation, it is necessary to make the industrial sector more competitive, resilient and innovation-driven.
He said easy and timely financing for MSMEs is essential, adding that this revolving fund-based financing system will help create new entrepreneurs, expand existing businesses and generate employment.
The SME Foundation said partner banks and financial institutions will be encouraged to disburse collateral-free loans. No collateral will be required for loans up to Tk 10 lakh.
The repayment period will be up to four years. Loans can be repaid in 48 monthly instalments with a six-month grace period, depending on the relationship between customers and banks.
At least 25% of total loans must be given to women entrepreneurs and 20% to SME cluster entrepreneurs. A minimum of 30% of the total funds must be distributed as loans of Tk 10 lakh or below.
At least 60% of the funds must go to the manufacturing sector, while the rest will go to the service and value chain sectors. However, loans in the value chain sector cannot exceed 20% of the total fund. Value chain refers to linked forward and backward businesses connected to a sector or cluster, including suppliers of raw materials, dye, screen printing, packaging, spare parts, and wholesale and retail sellers of finished goods.
Loan eligible sectors include prioritised SME sub-sectors, cluster entrepreneurs and value chain entrepreneurs; exportable and import-substitute product manufacturers; ICT and technology-based creative entrepreneurs, especially young or new entrepreneurs who have not yet received bank loans; women entrepreneurs across the country; entrepreneurs from backward and remote areas, indigenous communities, persons with disabilities and third gender communities; entrepreneurs from climate-vulnerable regions, green technology initiatives and special sectors; returning migrant entrepreneurs engaged in productive and service activities; and entrepreneurs recommended by trade bodies, SME associations, women entrepreneur organisations, NASIB, government and private SME development organisations, and district and upazila administrations.
The foundation will regularly monitor loan disbursement and recovery activities of banks and financial institutions, said the press release. After disbursement, the SME Foundation will conduct field inspections using its own methods and manpower to verify whether loans have been distributed according to the agreement and to the correct entrepreneurs.
However, loans under this programme will not be provided for unproductive sectors such as grocery shops, medicine sellers, hardware shops and businesses that cause environmental pollution.
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