Bangladesh Bank has initiated steps to form a special fund of Tk1,000 crore to develop the country's youth into entrepreneurs.
Under this fund, plans are underway to provide low-interest loans to new entrepreneurs, along with performance-based grants based on loan repayment discipline and business success.
Initially, the blueprint outlines utilizing Tk500 crore as loans and Tk500 crore as grants, aiming to create at least 5,000 new entrepreneurs.
Various operational aspects of implementing this initiative were discussed on Tuesday (August 11) during a meeting between Bangladesh Bank Governor Mostakur Rahman and representatives of the Association of Bankers, Bangladesh (ABB).
Speaking to journalists after the meeting, ABB chairman and City Bank managing director Mashrur Arefin said that work is underway on a special refinancing and grant package for young entrepreneurs.
The plan aims to bring youth under its scope who are eager to start businesses but lack the necessary capital.
He informed that under Bangladesh Bank's refinancing scheme, an entrepreneur can receive a loan of up to Tk10 lakh.
The interest rate on these loans is being considered between 4% and 6%, significantly lowering the cost of funds for young entrepreneurs compared to traditional commercial bank loans.
One of the defining features of this initiative is that no collateral will be required against the loans for young entrepreneurs.
Consequently, promising youth will have access to bank financing to launch their ventures even if they lack the capacity to mortgage land, property, or other assets.
However, during loan appraisal, priority will be placed on the entrepreneur's business potential, skills, drive, and project execution capacity.
Mashrur Arefin noted that the goal of this program goes beyond merely providing loans to create entrepreneurs. Grant provisions are also being incorporated to encourage them to sustain their businesses and grow into successful entrepreneurs.
Under the plan, if an entrepreneur pays loan installments regularly and manages their business effectively, they will become eligible for a grant based on performance. For instance, an entrepreneur taking a loan of Tk10 lakh could potentially receive an additional grant of up to Tk10 lakh based on merit.
Selecting entrepreneurs at Upazila level
To ensure fund benefits reach genuine entrepreneurs, significant emphasis is being placed on the upazila level.
Promising entrepreneurs will be identified and verified locally through bank branch managers or designated committees.
Stakeholders believe this mechanism will reduce the scope for ineligible individuals securing loans through lobbying, political clout, or local influence.
The ABB chairman stated that banks will divide responsibilities among themselves across more than 500 upazilas in the country to identify and verify prospective entrepreneurs.
Selection will focus heavily on business viability, candidate skillset, and genuine initiative.
The new fund will not be restricted to a single sector; both manufacturing and trading ventures are eligible.
Potential sectors include fish farming, livestock, food processing, handicrafts, Shatranji (traditional rug) manufacturing, and various small and medium enterprise (SME) activities.
Priority will be given to ventures capable of generating local employment and boosting regional economic activity.
