BB changes Tk20,000cr lending rules to support closed industries

Bangladesh Bank has revised the lending rules for its Tk20,000 crore refinancing scheme aimed at supporting closed industries and service-sector enterprises, requiring banks to disburse loans from their own funds first before seeking reimbursement from the central bank.

Under the previous system, banks received funds from Bangladesh Bank before disbursing loans to eligible businesses.

The changes were introduced through a circular issued on Thursday, which also renamed the scheme from the “Pre-financing Scheme” to the “Closed Industry and Service Sector Support Refinancing Scheme.”

Under the revised guidelines, banks must obtain approval from their respective boards or executive committees authorised by the boards before disbursing loans under the scheme.

After disbursing the loans, banks must apply to Bangladesh Bank for refinancing within seven days. However, an additional 15 days may be granted in cases where valid reasons are provided.

The circular also stipulates that borrowers will receive priority consideration from the banks that originally financed their projects.

All transactions under the scheme must be conducted through escrow accounts or designated revenue accounts to ensure proper monitoring of fund utilisation.

In addition, banks must obtain declarations from loan applicants confirming that they have not been involved in money laundering, fraud, fund diversion or misuse of loans.

Bangladesh Bank launched the three-year revolving fund on 4 June to support industries and service-sector enterprises affected by working capital shortages.

Under the scheme, banks receive funds from the central bank at an interest rate of 4% and can lend to eligible customers at a maximum interest rate of 7%.

However, loan disbursement under the scheme has remained sluggish.

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According to Bangladesh Bank data, as of 15 October, banks had disbursed only Tk560.93 crore, while loan applications involving another Tk929.50 crore were under process.

Together, the disbursed and pending amounts stood at Tk1,490.43 crore, equivalent to around 7% of the total Tk 20,000 crore allocation.

The latest changes are aimed at strengthening the lending process, ensuring greater accountability among participating banks and improving monitoring of loan utilisation under the scheme.