Cottage, micro, small, and medium enterprises (CMSMEs) will now be eligible to receive loans for their working capital as Bangladesh Bank has allowed banks to provide loans from the Tk25,000 crore refinance scheme.
Earlier, banks could not give loans for this, but now banks can provide up to 40% of their disbursed loans to CMSMEs as working capital.
In a circular issued by the Bangladesh Bank's SME and Special Programs Department on Tuesday, it said due to the current ongoing Russia-Ukraine war and rising global inflation, the entrepreneurs of the CMSME sector in Bangladesh are also facing huge losses.
There is an increasing demand for term loan/investment as well as current capital loan/investment by entrepreneurs, for which the sector was added.
Earlier, banks could only give loans for manufacturing, service and trading.
The circular also mentioned that the loan shall not be used for the purpose of stocking of goods in any way.
In addition, the circular also said 35% of the total disbursed CMSME sector loans can be given for trading by increasing the amount of lending to the business sector.
Also it can give 65% of the loan for manufacturing and service.
It is noted that this limit has been increased in the context of massive increase in credit/investment demand in the manufacturing as well as in the trading.
Earlier, it was directed that at least 70% of these loans can be disbursed to the manufacturing and services sector and a maximum of 30% to the business sector.
In July this year, the central bank set up a Tk25,000 crore refinance scheme under the title "Refinancing Scheme against Term Loans in CMSME Sector."
It was informed then that this money will be given from Bangladesh Bank's own funds.
Besides, it was also mentioned that the three-year period of this fund will be extended if necessary.
Under this scheme, banks and financial institutions can charge a maximum of 7% interest from customers.
They will get 2% interest refinance from the Bangladesh Bank.
