CMSME to get Tk200 crore at 4% interest to offset Covid-19 losses

The Small and Medium Enterprise (SME) Foundation will provide another Tk200 crore in loans to Cottage, Micro, Small and Medium Entrepreneurs (CMSMEs) as part of the government's second round of stimulus packages to accelerate the country's economic recovery and improve the living standards of people in rural areas subject to marginal subsistence.

An agreement will be signed with banks and financial institutions soon after the revised loan disbursement policy is approved at the next meeting of the board of directors of the SME Foundation on 2 September 2021.

To ensure credit to genuine small and medium entrepreneurs, half of all borrowers are to get less than Tk20 lakh each, women entrepreneurs at least 30%, and SME cluster entrepreneurs should get 10% of the total loan package of Tk200 crore, said SME Foundation Managing Director Md Mofizur Rahman in a views-exchange meeting with representatives of banks and financial institutions on Monday.

Apart from that, manufacturing entrepreneurs will be given the highest loan amounts while trading entrepreneurs should get 30% he said, in elaborating about the distribution of loans, adding that the maximum limit of a loan package could be reduced from Tk75 lakh to Tk50 lakh.

He also said priority should be given to entrepreneurs who have not received stimulus loans before.

Mofizur Rahman expressed optimism about starting the distribution of loans in mid-September. The SME Foundation is hopeful about disbursing Tk200 crore by 31 December having overcome the challenges of disbursing Tk100 crore in the last fiscal year.

He added that the SME Foundation has already started the process of signing agreements with several new, public-private banks and financial institutions, including Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, to bring entrepreneurs in remote areas within the fold of SME loans.

A notable aspect of the foundation's loan disbursement policies and guidelines is that certain categories of entrepreneurs among micro, small and medium enterprises, affected by the Covid-19 epidemic in rural and marginal subsistence regions, will be given priority.

Namely, priority will be given to entrepreneurs who have not received any loans under the first stimulus loan package, those who are prioritised SME sub-sector and cluster entrepreneurs, female entrepreneurs, new entrepreneurs who have not yet received any bank loans, and physically challenged and third gender entrepreneurs from backward and ethnic regions will be prioritised.

The entrepreneurs under the stimulus package will get loans at a 4% interest rate, to be repaid in a maximum of 24 monthly instalments. The bank concerned will take initiative to disburse the loan in favour of the customer by approving the loan within the shortest time of a loan application being submitted with required bank documents.

In general, loans will be disbursed in favour of single and joint ventures. However, group-based loans can be disbursed in favour of a maximum of five entrepreneurs based on banker-customer relationship and consensus to bring marginal small, especially women-entrepreneurs, within the loan program.

In light of the experience of the last financial year, the SME Foundation, in consultation with partner banks and financial institutions, will appoint focal officers in one or more branches that are convenient for entrepreneurs. Entrepreneurs will contact the focal officer. The focal officer will coordinate with the SME Foundation, the bank's head office, and branches and entrepreneurs.