BB asks banks to form mandatory ‘start-up fund'

Md Joynal Abedin Khan

The Bangladesh Bank (BB) on Monday asked all scheduled banks to allocate one per cent of their annual operating profit to form a mandatory ‘start-up fund to help new entrepreneurs start businesses.

The central bank on Monday issued a circular in this regard, signed by its General Manager of Small and Medium Enterprises Special Programs Department (SMESPD) Husne Ara Shikha.

The banks were instructed to provide the money for the next five years from net profits announced in their audited financial statements, according to the circular.

Earlier March 29, the Bangladesh Bank decided to form a Tk 500 crore fund in order to help new entrepreneurs, aged 21 years and above, to start businesses.

The fund will be constituted in the form of a refinance scheme, the previous circular had mentioned.

This means, banks will first disburse loans to clients and the central bank will later pay the amount to banks.

New entrepreneurs will be allowed to borrow from the refinance scheme at a maximum interest rate of four per cent while banks will get funds at 0.5 per cent interest from the central bank.