BB forms Tk10,000cr refinancing scheme to boost SME industries

Bangladesh Bank (BB) has formed a Tk10,000 crore refinancing scheme to help implement the Tk20,000 crore stimulus package for the cottage, micro, small and medium enterprise (CMSME) sector.

According to a circular issued on April 27, banks and non-bank financial institutions (NBFI) will be eligible for the fund under the central bank's refinance scheme at 4 percent interest rate.

Earlier on April 13, the central bank issued guidelines in line with the government's announcement on providing working capital facility to the CMSME sector affected by the global coronavirus pandemic, setting the interest rate ceiling at 9 percent.

However, the government will bear 5 percent of the total interest as subsidy and the remaining 4 percent will be paid by the borrowers.

The circular asked banks and NBFIs to file an application to the central bank for the refinancing fund within 10 days of loan disbursement to the businesses as specified by the central bank.

After which the Bangladesh Bank will release 50 percent of the outstanding loans that were disbursed to the affected businesses by the banks or NBFIs.

The banks and NBFIs are entitled to get access to the refinance fund for three years upon complying with the BB's set limit for banks.

In case of lending to any other sectors which were made ineligible for the stimulus, the central bank would charge 2 percent on the banks or financial institutions in penalty.

Recently, Prime Minister Sheikh Hasina announced incentive package of Tk72,750 crore to offset the possible downturn due to the outbreak of the novel coronavirus. Under the packages, small and medium enterprises (SMEs) including cottage industry would get Tk20,000 crore as working capital.