BB launches Tk5,000 crore CMSME refinancing scheme; lending rate capped at 9%

The Bangladesh Bank has launched a Tk5,000 crore refinancing scheme to support cottage, micro, small and medium enterprises (CMSMEs), aiming to improve access to working capital and stimulate economic activity across the sector.

Under the scheme, entrepreneurs will be able to avail loans at a maximum interest rate of 9%, according to a policy circular issued by the central bank.

The revolving fund has been established using surplus liquidity from scheduled banks and will be managed by Bangladesh Bank.

The facility will remain in operation for an initial period of three years. As a revolving fund, recovered loans can be re-lent, allowing the programme to continue supporting businesses over time.

The central bank said the initiative is designed to strengthen the CMSME sector, one of the country's key economic drivers, while also promoting employment generation.

Banks to receive refinancing at 4%

Scheduled banks will be able to access refinancing from Bangladesh Bank at an interest rate of 4%. However, the lending rate charged to end borrowers must not exceed 9%.

Islamic banks will also be eligible to participate in the scheme through Shariah-compliant financing mechanisms approved under their operational framework.

The policy further stipulates that banks cannot impose any charges, fees or commissions beyond those permitted under existing regulations.

Eligibility criteria

The facility will be available to operational CMSMEs that are unable to utilise their full production or service capacity due to a shortage of working capital.

Businesses that already have working capital loans under other financing schemes may also apply for support from this fund, subject to banking regulations and prescribed limits.

However, individuals or enterprises identified as loan defaulters in the Credit Information Bureau (CIB) database will not be eligible for financing under the scheme.

Borrowers will also be entitled to a grace period ranging from three to six months.

Priority for banks with higher ADR

All scheduled banks operating in Bangladesh will be eligible to participate in the refinancing programme.

However, banks with an Advance-Deposit Ratio (ADR) exceeding 70% will receive priority in accessing refinancing support from the central bank.

Interested banks will be required to sign a Participation Agreement with Bangladesh Bank's SME and Special Programmes Department before becoming eligible for the facility.

Banks may obtain additional collateral where necessary, while full responsibility for loan recovery will remain with the participating financial institutions.

According to the central bank, the scheme is intended to enhance the capacity of CMSME entrepreneurs and inject momentum into economic activities by addressing working capital constraints across the sector.