Cenbank to launch Tk500cr financing scheme for young entrepreneurs in upazilas
The central bank’s board recently approved the programme, which is likely to be announced today.
The Bangladesh Bank is set to introduce a Tk500 crore financing programme, named UDYOG, for young entrepreneurs at the upazila level across the country.
The central bank's board recently approved the programme, which is likely to be announced today.
Under the proposed structure, funds may be collected from the corporate social responsibility (CSR) funds of scheduled banks to establish a separate, regulated grant account or special fund. The funds in this account will be used as performance-linked conditional grants for selected entrepreneurs.
Earlier, on 11 August, Bangladesh Bank Governor Md Mostaqur Rahman held a meeting with the chairman of the Association of Bankers, Bangladesh (ABB), managing directors and chief executive officers of 12 scheduled banks, and relevant officials of the central bank.
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The meeting discussed in detail the selection of entrepreneurs under the programme and the establishment of an integrated financing mechanism combining bank loans with grants from the CSR funds of scheduled banks.
Particular importance was given to using unutilised institutional CSR funds of scheduled banks to finance the grant component of the programme.
As the programme is directly aligned with the objectives of entrepreneurship development, employment generation, and financial inclusion, using a portion of the unutilised CSR funds for the initiative would ensure more effective, targeted and outcome-oriented use of CSR resources, according to the proposed plan.
Under the programme, applications will be invited from young entrepreneurs across different upazilas, followed by screening, shortlisting, assessment of business potential and selection through credit appraisal.
A lead bank in each upazila will coordinate the programme. Selected entrepreneurs will be provided with bank loans based on their actual business needs and credit appraisal, under the applicable sectors of existing refinancing facilities available through Bangladesh Bank's SME and Special Programmes Department, according to Bangladesh Bank sources.
An important feature of the programme is an integrated financing mechanism combining loans and conditional grants.
A portion of the grant will be provided conditionally at the initial stage to meet entrepreneurs' immediate business needs, while the remaining portion will be kept in a separate grant account.
The remaining grant will be activated at a later stage based on the entrepreneur's loan repayment performance and fulfilment of predetermined assessment criteria.
According to the proposed plan, this mechanism will not only provide initial support to entrepreneurs but also encourage them to build sustainable businesses and improve their loan repayment capacity.
How the programme will be implemented
For effective implementation of the programme at remote and upazila levels, money will be spent for identifying and selecting promising young entrepreneurs, publicity and promotional activities, receiving and screening applications, organising meetings, workshops and entrepreneur gatherings at upazila and regional levels, evaluating business ideas, capacity building, meetings with relevant stakeholders and other necessary activities.
For the smooth and effective implementation of the programme, it has been decided that expenses related to entrepreneur searches and identification, meetings, programmes, publicity and promotional activities, and other approved implementation costs will be met from Bangladesh Bank's CSR Fund, according to the proposed plan.
The nature and limits of expenditure, approval procedures, accounting and audit-related matters will be determined in accordance with Bangladesh Bank's existing financial rules and applicable guidelines.
The proposed plan document further noted that the role of young people was extremely important in Bangladesh's economic development, employment generation and promotion of innovative initiatives.
Many promising young men and women in remote areas and at the upazila level have viable business ideas but, due to a lack of initial capital, business advisory support, institutional networks and financing, are unable to turn those ideas into sustainable enterprises.
Against this backdrop, the Bangladesh Bank has taken the initiative to implement an upazila-based young entrepreneur identification and financing programme under its supervision, the document said.
