New Tk 5,000 Crore CMSME Fund Launched by The Central Bank

The Bangladesh Bank has introduced a Tk 5,000 crore refinancing framework intended to support cottage, micro, small, and medium enterprises (CMSMEs). By addressing critical shortages in working capital, the central bank aims to enhance production capacities and stimulate employment opportunities across the sector.

A policy circular distributed by the central bank specifies that entrepreneurs can secure these loans at an interest rate capped at a maximum of 9%. The revolving fund itself has been established using surplus liquidity drawn from commercial scheduled banks and remains under the direct management of the Bangladesh Bank.

Core Framework and Interest Distribution

The credit facility will remain active for an initial operational period of three years. Because it is structured as a revolving fund, recovered loan capital will be re-lent to new applicants, ensuring continuous support for the business community over time.

Financial and Administrative Parameters

Scheduled banks can access the refinancing pool from the central bank at a concessionary interest rate of 4%. However, the final lending rate passed on to the end borrowers must not exceed the 9% threshold.

Islamic banks are fully integrated into the scheme and are permitted to participate using Shariah-compliant financing mechanisms that align with their approved operational guidelines. Furthermore, the central bank policy mandates that participating financial institutions cannot impose any extra charges, fees, or commissions beyond those already permitted under current banking regulations.

Applicant Selection and Credit Disqualifications

The refinancing facility is tailored for operational CMSMEs that are presently unable to utilize their full manufacturing or service capacities due to a lack of working capital.

• Existing Borrowers: Firms that currently hold working capital loans under alternative financing arrangements are eligible to apply, provided they adhere to prescribed banking limits and regulations.

• Credit Exclusions: In line with risk management guidelines, any individual or enterprise listed as a loan defaulter within the central bank’s Credit Information Bureau (CIB) database is strictly barred from accessing funds under this scheme.

Successful borrowers will be granted an integrated moratorium, with grace periods ranging from three to six months before repayment obligations begin.

Bank Participation and Prioritised Allocation

All scheduled banks operating across Bangladesh are eligible to join the refinancing initiative. However, the central bank will give priority access to financial institutions that maintain an Advance-Deposit Ratio (ADR) exceeding 70%.

To participate in the programme, interested banks must first sign a formal Participation Agreement with the SME and Special Programmes Department of the Bangladesh Bank. While these institutions are permitted to secure additional collateral from applicants where deemed necessary, the full responsibility for loan recovery and credit risk management remains entirely with the participating commercial banks.