Home ›› 28 Mar 2022 ›› Front
The Bangladesh Bank – with the help of Islamic Development Bank (IsDB) – has launched a Shariah fund of around $46.95 million or Tk 398 crore to support cottage, micro, small and medium enterprises affected by the Covid-19 pandemic.
From this fund, CMSME manufacturing and service industries, trading businesses, women-led enterprises and youth entrepreneurs will get a minimum of Tk 15 lakh and maximum of Tk 50 crore in support.
As the use of money for the purpose of making money is expressly forbidden under the Shariah law, this financing is strictly asset-based. The Participant Financial Institutions (PFIs) will be able make a maximum profit of 7.18 per cent from supported industries during product purchases.
The initiative will continue for two years from the date of first disbursement from IsDB and the financing mode is Murabaha financing, also known as installment sales, reads a circular by the SME and Special Programs Department of the central bank.
The government had signed a framework agreement with IsDB on July 24 last year to support CMSMEs under this project.
Benchmark for eligible industries
A cottage industry, in the manufacturing sector, having assets less than Tk10 lakh and manpower less than 15 including family members, can get a maximum Tk 15 lakh as support from the fund.
A micro industry, in the manufacturing sector, having assets between Tk 10 lakh to Tk 75 lakh and manpower between 16 and 30 can get a maximum Tk 1 crore as support.
The same industry, but in the service sector, having assets less than Tk 10 lakh and maximum manpower of 15 can get Tk 25 lakh in support, while a trading sector business can get Tk 50 lakh.
A small industry, in the manufacturing sector, having assets between Tk 75 lakh and Tk 15 crore and manpower between 31 and 120, will get Tk 20 crore in support.
The same industry, but in the service sector, having assets between Tk 10 lakh and Tk 2 crore and manpower between 16 and 50 people will get Tk 5 crore in support.
Small companies in the trading sector, having an annual turnover of Tk 2 crore to Tk 20 crore and manpower between 16 to 50 people, will get Tk 5 crore.
Under the medium industry, readymade garment (RMG) and labour-intensive industries with 1,000 workers and any manufacturing company holding Tk 15 crore to Tk 50 crore in assets with 121 to 300 workers will get Tk 75 crore in support. In the service sector, companies holding Tk 2 crore to Tk 30 crore in assets with 51 to 120 workers will get Tk 50 crore in support.
Purpose of financing
According to the Bangladesh Bank circular, an industry will receive support on fixed assets – limited to raw materials and other tangible assets such as equipment, machinery and working capital.
The financing will not however cover personal finance or the purchase of shares, and is not a reimbursement of, or to be used for, expenditures for goods and services supplied by parties in sanctioned countries declared as such by the United Nations and the Organization for Islamic Cooperation.
Interested banks and non-bank financial institutions (NBFIs) interested in participating in this financing facility should apply within the next three months or within a later date approved by central bank authority, the circular mentioned.
