BB doubles refinancing funds for at-risk groups, small businesses

The Bangladesh Bank (BB) has doubled the size of a concessional loan scheme for underprivileged groups, small businesses and students to Tk1,500 crore, it said in a circular on Thursday.

Under the loan scheme, referred to as a refinancing scheme, landless and marginal farmers, low-income professionals, low-earning businesspeople, student banking account holders and remittance-recipients, among others, will be benefitted, the BB said in the circular.

The BB further said that at least 25% of the total funds disbursed under the scheme must go to women entrepreneurs and borrowers.

Priority will also be given to disaster-affected small businesses, marginalised groups in coastal and haor regions, differently abled individuals and returning migrant workers.

In a refinancing scheme, a central bank gives low-interest loans to commercial banks which then disburses the funds at affordable cost to different groups, which mostly include struggling and at-risk entities.

The loans usually replace exiting loans with better terms.

Under the Tk1,500 crore scheme, commercial banks can get loans from the central bank at 1% interest rate and disburse the loans to underprivileged and low-income individuals at maximum 7% interest rate.

Two to five people or entities can also form a group to avail maximum Tk40 lakh loan from a commercial bank.

Loans valued up to Tk5 lakh will be collateral-free and will be guaranteed only through personal recommendations and acknowledgements.

Student bank account holders aged up to 25 can obtain soft loans for vocational training, income-generating initiatives and higher education expenses under the guarantees of their guardians.