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Dhaka Tribune

Low-wage earners now eligible for bank loans

As per the scheme, a maximum interest rate of 7% will be imposed on loans from the fund

Update : 06 Sep 2021, 08:27 PM

Bangladesh Bank has restructured its refinancing scheme with Tk500 crore to provide unsecured loans for low-income group bracket holding bank accounts with as little as Tk10.

As per the scheme, a maximum interest rate of 7% will be imposed on loans from the fund.

Low-margin income-based individuals and small entrepreneurs such as blacksmiths, potters, fishermen, landless farmers, hawkers, shopkeepers, and rickshaw pullers will be able to take loans of up to Tk5 lakh without any deposit or collateral.

Group loans up to Tk20 lakh can also be availed under this scheme.

The Financial Inclusion Department of Bangladesh Bank on Sunday issued a scheme with restructured policy in this regard, announcing the fund for small and micro-entrepreneurs and professionals.

Also Read - BB launches Tk3,000cr refinancing scheme for small businesses

According to the central bank, the new scheme has been issued to increase funds and credit limits to continue the recovery of economic activities of low-income professionals and small traders affected by the pandemic.

The five-year scheme worth Tk500 crore has been set up from Bangladesh Bank's own funds. However, the term can be extended if necessary.

Individuals involved in food preparation, and any other potential innovative activities and VDP members trained in various income-generating activities, poultry, and agriculture-based entrepreneurs will be eligible for the loan facility.

Victims of any disaster either man-made or natural, marginal and landless farmers, small traders, low-Income professionals, and low-income people living in char and haor areas will also get this loan facility on a priority basis.

Additionally, individuals with special needs and women entrepreneurs will get this loan facility on a priority basis for any kind of income-generating activity.

However, defaulting borrowers or borrowers who have not honoured other loan facilities under the interest subsidy of the government or Bangladesh Bank, will not be eligible for loan facilities under this scheme.

Also Read - Women to get 25% of Tk3,000cr refinancing fund

In the case of group loans, a group consisting of 2-5 members can get a maximum loan of Tk20 lakh, or Tk4 lakh each, for which all the members of the group will be individually and collectively liable to the bank.

The annual interest and profit rate of refinancing of Bangladesh Bank in favor of the financing bank will be 1%.

The interest and profit rate will be a maximum of 7% per annum against the loans and investments made by the bank at the customer level.

However, interest and profit would be levied on the declining status of the customer's debt and investment.

In case of providing a loan facility of Tk3 lakh and above, the bank will be able to avail the benefit of a credit guarantee scheme against the entire loan at its own discretion.

In that case, the bank will have to pay the guarantee fee from its own source.

The grace period will be a maximum of 6 months at both bank and customer levels. The maximum loan period will be 3 years without a grace period.

The central bank will collect the principal from banks in quarterly installments excluding grace period with interest and the principal including interest and profit from the customer in monthly, quarterly, and half-yearly (if applicable) installments, excluding grace period.

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