Little businesses to get right up to Tk50 lakh in collateral-free loans

11 Aug 2020 1:20 PM
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For the first year, the charge will be 1% of the loans that would be guaranteed by the central bank

Bangladesh Bank on Monday launched a good credit assurance scheme for cottage, micro and little enterprises, allowing banks to concern up to Tk50 lakh in collateral-no cost loans from the stimulus package to the businesses.

A Bangladesh Lender circular issued on your day said guarantees against loans to small businesses which range from Tk2 lakh to Tk50 lakh will be covered beneath the scheme.

The formal announcement in the scheme came after the board of the central bank approved the Tk2,000 crore credit guarantee scheme about July 23.

As noted in the circular, banks can issue guarantees only against the loans which is sanctioned beneath the Tk 20,000 crore stimulus package that the government announced earlier for cottage, micro, small and channel entrepreneurs. 

As well as the applicable interest, the Bangladesh Lender scheme as well allows the banks to fee CMS enterprises the promise service fees that the central bank would receive from the banks.

For the first year, the charge will be 1% of the loans that would be guaranteed by the central bank.

Banking institutions with up to 5% of non-performing loans might be charged for a price of 0.5% of outstanding loans after the first year, as the rate will be 0.75% for banks which have NPLs between 5% and 10%.

Banks with more than 10% NPLs will not access the credit promise scheme.

State-possessed banks are exempted from the NPL-related conditions.

The credit guarantee scheme will be satisfactory to issue guarantees to cottage, micro and small enterprises against working capital loans amounting to Tk8,320 crore, Bangladesh Lender officials have said.

The central bank in the circular asked banks to sign agreements with the central bank’s CGS (Credit guarantee scheme) unit under the SME section to get access to the guarantee facility.

Banks will come to be exempted from keeping any provision against the loans that would be guaranteed.