In FY21, the government allocated Tk1,500 crore in total for the improvement of living standards of the marginalized people in the CMSME sector and rural areas
The SME Foundation has received another Tk200 crore from the government’s incentive package for distribution among cottage, micro, small and medium enterprises (CMSME) across the country, said sources at the foundation and the Finance Department.
A total of Tk300 crore has been allocated to the foundation under the second phase of incentive packages aimed at expediting Bangladesh's economic recovery amid the Covid-19 pandemic.
The foundation disbursed Tk100 crore in the last fiscal year (2020-21) and it will start disbursing the newly allocated Tk200 crore soon.
In FY21, the government allocated Tk1,500 crore in total for the improvement of living standards of the marginalized people in the CMSME sector and rural areas.
Eight organizations were allocated funds for distribution in the sectors, of which Tk300 crore was given to the SME Foundation.
Dr Md Masudur Rahman, chairperson of the SME Foundation, said the Finance Ministry has a specific policy on incentive disbursement.
“We have always paid special attention to women entrepreneurs and we have disbursed more than 25% of our loans to them. This issue will also be given priority while disbursing this year's incentives,” he added.
Rahman also said that rural and marginal entrepreneurs who did not take out loans under the last package will be prioritized this year, along with new entrepreneurs and third gender entrepreneurs.
Earlier, the SME Foundation disbursed loans from the incentive package through agreements with 11 banks and non-bank financial institutions (NBFIs).
The SME Foundation chairperson confirmed that these 11 banks and NBFIs will also be in charge of loan disbursement this time.
SME Foundation signed agreements with Brac Bank, Premier Bank, Mutual Trust Bank, Bank Asia, Southeast Bank, Dhaka Bank, Dutch-Bangla Bank, Prime Bank, Basic Bank, IDLC Finance and LankaBangla Finance to disburse the loans in April of this year.
Earlier on March 21, the foundation’s chairperson approved the policy and guidelines for disbursement of this loan program during their 120th meeting of the board of directors.
Entrepreneurs will get loans at 4% interest under the incentive package.
At the consumer level, the loan amount will be from a minimum of Tk1 lakh to a maximum of Tk75 lakh.
The loans can be repaid in a maximum of 24 equated monthly installments based on banker-customer relationship.
After submitting the complete loan application, along with the required documents to the bank, the bank will take the initiative to disburse the loans.
The loans will generally be disbursed in favour of single and joint ventures.
However, group-based loans can be disbursed in favour of a maximum of five entrepreneurs on the basis of banker-customer relationship and consensus in order to bring marginal, small, and especially women-entrepreneurs, under the loan coverage.
The SME Foundation, in consultation with partner banks and financial institutions, will appoint focal officers in one or more branches.
Entrepreneurs will contact the focal officer, who will coordinate with the SME Foundation, the bank’s head office and branches.
Along with the SME Foundation, seven other organizations were given the responsibility to expand credit activities among entrepreneurs in rural areas.
Among these organizations, Tk100 crore was allocated to the Bangladesh Small and Cottage Industries Corporation (BSCIC), Tk50 crore to Joyeeta Foundation, Tk50 crore to NGO Foundation, Tk300 crore to Social Development Foundation, Tk300 crore to Palli Daridro Bimochon Foundation (PDBF), Tk100 crore to Small Farmer Development Foundation, Tk300 crore to Social Development Foundation, and Tk300 crore to the Bangladesh Rural Development Board.
Of these, the SME Foundation and BSCIC disbursed 100% of the allocated amounts last fiscal year.
According data by the foundation, most of the other institutions have not been able to disburse the incentive loans properly — so far, only 52% of the total funds allocated for the sector has been disbursed.