Written by The Banking Post
Bangladesh Bank (BB) has doubled its refinance fund for marginalised communities, small businesses and students to Tk1,500 crore to expand access to affordable credit and improve living standards.
Under the scheme, banks can provide individual loans of up to Tk10 lakh at an annual interest rate of no more than 7%, according to a central bank circular issued yesterday. Banks will receive funds from Bangladesh Bank at an interest rate of 1%.
The scheme covers landless and marginal farmers, low-income professionals, small entrepreneurs, student banking account holders and families receiving remittances. Banks can also provide group loans of up to Tk40 lakh to groups of two to five people.
“Our main goal is to improve the living conditions of marginalised people and enable them to benefit from economic development. So, we have increased the size of the fund,” said BB Executive Director Rup Ratan Pine.
To ease access to financing, borrowers seeking loans of up to Tk5 lakh will not need to provide collateral and can instead secure the loans through personal guarantees.
The scheme also requires banks to allocate at least 25% of total loan disbursements to women entrepreneurs and borrowers.
Priority will be given to small businesses affected by natural disasters, marginalised communities in coastal and haor areas, persons with disabilities and returning migrant workers.
Student banking account holders aged up to 25 will also be eligible for loans to cover vocational training, income-generating activities and higher education expenses, provided their guardians stand as guarantors.
