BB launches Tk 1,290cr refinancing for CMSEs

 The Bangladesh Bank has launched a Tk 1,290 crore refinance scheme funded by Asian Development Bank for returnee migrant workers, unemployed youths and rural entrepreneurs. 

The project titled “Supporting Post Covid-19 Small Scale Employment Creation Project (SPCSSECP)” will continue till June 2025. 

Cottage, Micro and Small Enterprises (CMSEs) will be financed under the project and such enterprises must be started or operated by targeted vulnerable groups such as returning migrant workers, unemployed youths and rural entrepreneurs. 

SME and Special Programmes Department of the central bank informed of the project in a circular published on Thursday on the BB website.    

Earlier in the last year, the government signed an agreement with ADB for a loan fund considering the adverse economic impact of Covid-19 on the returnee migrant workers, unemployed youths and rural entrepreneurs with a special focus on women entrepreneurs. 

 Loan limit and repayment tenure 

According to the central bank circular, the maximum loan limit of the fund for a single borrower is Tk 50 lakh and the repayment term is maximum 5 years. Banks and non-bank financial institutions will decide the collateral issues following the BB guidelines, the circular said. 

 Types of loans

Under this project, refinance facilities will be available for working capital or short term, medium-term and long term loan. 

Working Capital or Short Term Loan will be for one year, Medium Term Loan will be for a maximum 3 years and Long Term Loan will be for maximum of 5 years in tenure.

 Interest rate

The interest rate will be a maximum of 5.50 per cent for the interested borrowers. Refinance facility will be provided to the PFIs (Participating Financial Institutions) at the rate of 1.50 per cent.  

All qualified and interested banks/financial institutions shall apply to the Bangladesh Bank for the refinance scheme. Each PFI must have Cottage, Micro and Small (CMS) lending commitment, capacity and have a track record of performance on lending to the relevant sectors.

 Eligibility for the loan

CMSEs as defined by the Bangladesh Bank and subsequent changes thereon and operated by returnee migrant workers who returned since the beginning of 2020. Unemployed or underemployed youth (age between 18-45 years) who have received training from the government-approved institutions and rural entrepreneurs residing outside Dhaka and Chattogram metropolitan areas. 

At least 20 per cent of the qualified enterprises under the project shall be women-led enterprises. 

 Women-led enterprise

A qualified enterprise shall be considered as a Women-led Enterprise on the following grounds, if women are the owners or proprietors of a privately-run enterprise or own at least a 51 per cent share of the enterprise. If at least 60 per cent of its managerial staff are women or as defined by the Bangladesh Bank, provided that for the purposes of the project, such definition shall be agreed between the Bangladesh Bank and ADB.