Bangladesh Bank Proposes Tk 1,000 Crore Collateral-Free Fund for Young Entrepreneurs

Bangladesh Bank is finalising a landmark Tk 1,000 crore special refinancing and grant package designed to transform young individuals into successful business leaders. Under this proposed initiative, eligible young entrepreneurs will be able to secure collateral-free bank loans of up to Tk 10 lakh at concessional interest rates ranging between 4 and 6 per cent.

The central bank is also incorporating a unique incentive mechanism into the scheme: entrepreneurs who demonstrate exemplary business performance and maintain timely loan repayments may qualify for an matching grant of up to Tk 10 lakh. Initial projections aim to select and support at least 5,000 promising new entrepreneurs across more than 500 upazilas nationwide.

Discussions regarding the operational framework took place on Tuesday, 11 August, during a high-level meeting between Bangladesh Bank Governor Mustakur Rahman and leaders of the Association of Bankers, Bangladesh (ABB), the forum representing chief executives of commercial banks.

Low-Cost Financing and CSR Grant Incentives

Briefing journalists following the meeting, ABB Chairman and City Bank Managing Director Mashrur Arefin outlined the core objectives of the upcoming programme. He explained that the initiative specifically targets ambitious young citizens who possess viable business ideas but lack the seed capital necessary to launch commercial operations.

By capping interest rates between 4 and 6 per cent under the central bank’s refinancing facility, the scheme significantly reduces borrowing costs compared to conventional commercial bank loans, which typically range from 11 to 15 per cent, or microfinance loans issued by non-governmental organisations.

“Under the central bank’s refinancing scheme, an entrepreneur can receive up to Tk 10 lakh in loans at an interest rate between 4 and 6 per cent. If they pay their instalments on time and display satisfactory business performance, banks may provide an equivalent grant from their Corporate Social Responsibility funds.”

— Mashrur Arefin, Chairman, Association of Bankers, Bangladesh

The integration of Corporate Social Responsibility (CSR) funds marks a key feature of the proposal. Successful borrowers who meet strict performance metrics could receive an additional grant matching their original loan amount of up to Tk 10 lakh, effectively doubling their financial backing without increasing their debt burden.

Grassroots Selection and Target Sectors

To ensure equitable distribution and eliminate illicit influence or lobbying, candidate selection will focus heavily on sub-district levels. Local branch managers or designated regional committees will evaluate potential applicants directly within their communities.

Under the proposed arrangement, commercial banks will divide responsibilities across more than 500 upazilas to identify, vet, and mentor prospective business owners based on technical skill, feasibility, and genuine entrepreneurial drive. The absence of collateral requirements means capable youth without land or property deeds to mortgage will no longer be excluded from formal financial channels.

The fund will cover a diverse array of commercial and manufacturing ventures rather than limiting scope to a single industry. Priority sectors identified for potential funding include:

• Aquaculture and commercial fish farming

• Livestock rearing and dairy production

• Food processing and agricultural manufacturing

• Traditional handicrafts and cottage industries

• Shatranji weaving and artisan textile production

• Small and medium-scale trading enterprises

Central bank officials and commercial bankers remain confident that expanding access to credit at the grass-roots level will generate widespread employment, boost local production, and stimulate economic activity across rural Bangladesh.