Muhammad Tareq ; Dhaka: Bangladesh Bank has announced a Tk 20,000 crore pre-refinancing scheme aimed at fully restoring operations in closed and partially active large-scale industries and service sector enterprises.
Under this scheme, entrepreneurs can secure working capital loans at a 7% interest rate, providing a major boost to the country’s industrial sector.
Currently, bank interest rates in Bangladesh have surged past 14%. This initiative allows business owners to access funds at nearly half the market rate to revive idle production units.
The central bank issued a comprehensive policy guideline for the “Closed Industry and Service Sector-Assisted Pre-Refinancing Scheme” on Thursday night.
This follows a broader announcement made by Bangladesh Bank Governor Mostafizur Rahman on May 23, where he outlined a Tk 60,000 crore stimulus blueprint to jumpstart the economy. This Tk 20,000 crore fund is the first major execution step of that plan.
Under the new policy, an individual company or corporate group can borrow a maximum of Tk 200 crore in working capital.
To ensure transparency, lending banks are authorized to appoint representatives to the recipient companies.
Furthermore, companies and banks making significant contributions to the national economy through the proper utilization of this fund will receive state accolades.
The primary objective of this scheme is to inject momentum into a sluggish economy and generate mass employment.
Bangladesh Bank will supply liquidity to commercial banks at a 4% interest rate, which will then be disbursed to borrowers at 7%. All commercial banks operating in Bangladesh are eligible to tap into this fund.
Who is Eligible for the Loan?
The policy outlines that the fund primarily targets large-scale manufacturing and service sector enterprises that possess the necessary machinery but are failing to operate at full capacity solely due to a shortage of working capital. High priority will be given to export-oriented and deemed-export companies capable of resuming operations.
Additionally, efficient companies that acquire or lease closed factories to make them operational will receive priority access to the fund. Borrowers must clear credit checks: no loan defaulters under the Credit Information Bureau (CIB) guidelines are eligible, and companies with a history of money laundering or fund mismanagement will be strictly excluded.
Loan Utilization and Terms
A single entity or corporate group can borrow up to Tk 200 crore. The loan tenure for consumers will be a maximum of one year, renewable based on performance and utilization. Borrowers will enjoy a 6-month grace period, meaning interest installments will only commence after the first six months.
The funds can be used for specific operational expenses, including:
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Paying up to four months of salaries and allowances for workers and staff.
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Settling utility bills (electricity, gas, water, etc.).
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Procurement of raw materials required for production.
To prevent misappropriation, workers’ salaries must be credited directly to their bank or mobile financial service (MFS) accounts; cash transactions are strictly prohibited. Additionally, this loan cannot be used to adjust or repay any pre-existing debts.
Recovery and Monitoring Mechanisms
Bangladesh Bank will enforce strict oversight. If a commercial bank fails to repay the central bank on time, the amount will be automatically debited from that bank’s current account with an additional 2% penalty interest.
To ensure proper utilization, commercial banks must collect weekly sales or revenue reports from borrowers. Bank representatives are required to conduct physical factory inspections every three months and submit reports. Bangladesh Bank also reserves the right to conduct surprise on-site inspections at any time.
Borrowers must route all business income and expenditures through a designated bank account. Verifying workers’ National Identity Cards (NID) is mandatory before disbursing salaries.