CMSMEs get credit guarantee facility for term loans

The Cottage, Micro, Small and Medium Enterprises (CMSMEs) will now enjoy the credit guarantee facility when borrowers from this sector take term loans from the Tk 25,000 crore refinancing scheme.

The Credit Guarantee Department (CGD) of Bangladesh Bank (BB) made the announcement in a circular on Wednesday.

It said that loans ranging from minimum Tk 25,000 to maximum Tk 1 crore by cottage and micro enterprises in the production and services sectors will get the credit guarantee facility.

Small enterprises in the industrial sector will get the facility for loans ranging from Tk 1 lakh to Tk 3 crore. Small enterprises in the services sector will also enjoy it for loans of a minimum of Tk 25,000 and a maximum of Tk 1 crore.

Also, medium enterprises from the industrial sector will get the facility for loans of a minimum of Tk 1 lakh and a maximum of Tk 5 crore. Medium enterprises in the services sector will get it as well for loans ranging from Tk 1 lakh to Tk 2 crore.

Under the credit guarantee facility, the interest rate on loans payable to all the customers will be 7 per cent.

The participating banks will have to disburse 10 per cent in favour of women entrepreneurs to ensure access to loans for all CMSMEs.

Regarding the purpose of granting the facility, the circular said that many marginal borrowers from the CMSME sector can afford the repayments but are unable to provide the collateral required to take loans from financial institutions.

Under the circumstances, the credit guarantee scheme has been provided to implement the refinance scheme facility and facilitate entrepreneurs’ access to loans.

The tenure of the guarantee will be the tenure of the loan granted under the refinancing scheme. If any loan is fully repaid within the stipulated period, the guarantee period will be completed. If any borrower wants to go for loan rescheduling, they will also get to enjoy the facility.

The central bank recently launched the Tk 25,000 crore refinancing scheme for the CMSME sector.

Besides, the government also launched a Tk 20,000 crore incentive package for this sector struggling to recover from the Covid-19 pandemic’s impacts. The credit guarantee facility will be available for both schemes, said the BB circular.