BB advises single digit interest rate on SME loans

Bangladesh Bank has recommended the government to not take more than 9% interest on small and medium enterprises loans for women. The central bank in a circular issued on Monday thinks the single digit interest rate will encourage women into entrepreneurship. While the interest rate on SME loans has declined over the past years, it is still 14-20%. Abdul Matlub Ahmad, President of the Federation of Bangladesh Chambers of Commerce and Industry, recently said the bank deposit rate should be kept at 5-6% while the interest rate on SME loans needs to be reduced to single digit. Bangladesh Bank asked local banks and financial institutions to disburse Tk23,500 crore loans to create new entrepreneurs and promote sustainable development of the country. The figure is 20% higher than that of the previous year and most of the loans will be given to small and medium enterprises in rural areas. Bangladesh Bank has made it compulsory for banks and financial institutions to disburse SME and agricultural credit at low interest rates. New woman entrepreneurs are going to get Tk1,657 crore as SME loans this year.