Microfinance institutions to get more from refinancing scheme
Previously, microfinance institutions could avail loans up to 2% of the total refinancing fund
Microfinance institutions will get more from the Tk3,000 crore refinancing scheme meant for loans to virus-affected marginal businessmen and farmers.
The Financial Inclusion Department of the Bangladesh Bank on Sunday issued a circular in this regard.
"The maximum amount of financing by a bank to a microfinance institution will be 30% of the average investment/loan distributed by the microfinance institution in last three years, or 5% of the total funds [Tk3,000 crore] of the mentioned refinancing scheme, or the smaller amount above the two," said the circular.
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In the previous circular, microfinance institutions could avail loans up to 2% of the total refinancing fund.
The central bank formed a revolving refinancing scheme in April for the virus affected marginal businessmen and farmers to ensure their inclusive participation in economic activities.
Under the scheme, the Bangladesh Bank has been providing funds to banks at 1% interest, which they are lending to microfinance institutions at 3.5% interest. The MFIs are charging a maximum of 9% interest from borrowers.
The MFIs registered with the Microcredit Regulatory Authority will only qualify for the loans. The virus affected clients will be prioritised for the credit which will be the highest Tk75,000 for a single borrower.
In the case of the group-based financing with people involved in income generating activities, the maximum loan amount will be Tk3 lakh for a group having at least five members.
