Special Correspondent: Bangladesh Bank has further extended the scope of guaranteeing collateral-free loans at low interest rates to cottage, micro, small, medium and women entrepreneurs. Henceforth, the central bank will guarantee against loans of cottage, micro, small, medium and women entrepreneurs against four funds.
The central bank will provide guarantee against the loan from a minimum amount of Tk 4 lakh to a maximum of Tk 3 crore. This guarantee will be given from the own guarantee scheme of Tk 2000 crore formed by the central bank. That is, if a customer fails to repay the loan against that guarantee, the central bank will pay the guarantee part of the loan.
Bangladesh Bank on Wednesday issued a circular in this regard and sent it to the chief executives of commercial banks and financial institutions.
The central bank has taken this initiative to provide loan facilities to small, medium and women entrepreneurs.
Although the central bank has formed various funds to give them loans, the loan disbursement is not being increased. Because of this, the central bank has now increased the scope of the guarantee. Earlier guarantees were given on a small scale.
It is said that the loan will be given from Tk 25,000 crore pre-financing scheme for giving low interest loans to cottage, micro, micro, small, medium and women entrepreneurs, Tk 1,400 crore for processing of agricultural products, Tk 3,000 crore for women entrepreneurs and Tk 500 crore.
The central bank will guarantee against a portion of the loans given to entrepreneurs under the Inclusion Service Scheme. Bangladesh Bank will pay 30 to 80 percent of the total guarantee if the customer fails to repay the loan due to reasonable reasons.
The initiative has been taken make easier for entrepreneurs to get collateral-free loans as obligation of providing guarantee is considered as a major hindrance in taking loan from banks and financial institutions in the cottage, micro, small and medium enterprises (CMSME) sector.
Earlier, with the financial support of United Nations Capital Development fund (UNCDF) Bangladesh Bank successfully implemented a pilot credit guarantee scheme titled “Local Finance Initiatives (LFI) Support to SMEs in Bangladesh.”
The Bangladesh Bank has unveiled the new loan guarantee scheme to bolster women entrepreneurs, under which a maximum of Tk 50 lakh can be borrowed with the central bank’s backing.
Women entrepreneurs will get the support both in working capital and term loans. This guarantee will not charge any fees and banks will provide the facility if a customer applies for it.
Banks and financial institutions will be required to pay an annual fee of 1% for the guarantees they collect from the central bank against loans to women.
The central bank said the credit facility has been provided to increase the flow of loans to women entrepreneurs in economic activities and develop and diversify agricultural-based industries and export diversification.
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