The government has constituted a Tk1,290 crore ($150 million) loan fund to support cottage, micro and small enterprises (CMSEs) taken up by returning migrant workers, unemployed youth and rural entrepreneurs hit hard by Covid-19 pandemic.
The Supporting Post Covid Small Scale Employment Creation Project (SPCSSECP), funded by Asian Development Bank (ADB), will have special focus on women entrepreneurs and will lend up to a maximum of Tk50 lakh to a single borrower for five years, according to Bangladesh Bank.
The central bank on Thursday informed all banks and financial institutions of the refinancing facility and advised the eligible institutions to enter participation agreements to implement the project which will run for three-and-half years to June 2025.
The project aims to restore employment, income and economic activities through providing financial support to CMSEs started or operated by targeted vulnerable groups such as returning migrant workers, unemployed youths and rural entrepreneurs with a special focus on women entrepreneurs, the central bank said in its letter to chief executives of banks and other financial institutions.
Participating financial institutions have been advised to decide the collateral issues following the Bangladesh Bank's "Prudential Guidelines and Circulars."
Meanwhile, the Bangladesh Bank instructed bankers to meet the loan disbursement target of the second phase of Covid stimulus fund for CMSME sector.
BB Governor Fazle Kabir gave the instruction at a meeting with managing directors of all banks held at the central bank on Thursday afternoon. Deputy governors and executive directors of the departments concerned also attended the meeting.
The government provided Tk20,000 crore incentive fund for the CMSME sector to help them make up for the losses inflicted by the ongoing pandemic.
The central bank's executive director and spokesperson Md Sirajul Islam told The Business Standard, "The disbursement of stimulus loans to the CMSME sector is very low. The central bank held the meeting to increase the disbursement of loans. At the meeting, the governor instructed the bankers to meet the target."
According to the data of the central bank, the banks disbursed micro loans of Tk7,117 crore in the first eight months of the current financial year, which is only 36.80% of the total target. However, in the first phase of the incentive disbursement last year, the banks disbursed 77% of the target in the first eight months (July-February).