Bangladesh Bank is going to launch a Tk 100 crore start-up financing scheme soon to encourage new entrepreneurs to get entry into trade and commerce with low-cost refinancing fund, a senior official of the central bank said. The fund will be channeled through 29 banks and financial institutions that have so far showed their excellence and established track records in promoting small and medium enterprises.
The highest interest rate the lenders could charge for start-up funds will be 10 per cent, against five per cent interest they will pay to BB.
‘The start-up financing is a new phenomena in the country to tap new entrepreneurs in commercial activities with low-cost funds and generous conditions,’ Masum Patwary, general manager, SME department, BB, told New Age on Tuesday.
‘We are going to sign deals with 29 banks and financial institutions on Sunday as the fund of Tk 100 crore will be lent for start-ups through the selected lenders.’
Besides, BB is planning to lunch a number of new financing tools at the end of this year to patronise the SME sector in view of the striking success it made in terms of contributions in business activities and employment generations, sources in the BB said.
The future schemes include credit guarantee scheme for SMEs, finance for new entrepreneurs, venture capital financing and introduction of ratings for SMEs.
The BB officials said new entrepreneurs having no proven business records are often not entertained by banks and statutory financial institutions. The start-ups with new idea of business, on counts of trade or services, would be given loans from the new scheme.
The lending institutions could fix ceiling of loans, depending on their assessments, while women start-ups will get priority in getting loans from the new refinancing scheme, they added.
Patwary said banks and financial institutions having non-performing loans ratio exceeding 10 per cent and banks grouped in the problem bank category of BB shall not qualify for the loans.
The latest data of BB showed the banks and non-banking financial institutions lent Tk 85,323 crore in 2013 in SME sector. Of the amount, Tk 56,703 crore was invested in trading, Tk 24,016 crore in manufacturing and the rest Tk 4,602 crore in services sector.
A total of 7,44,228 entrepreneurs were financed during the time, of which 33,466 were women entrepreneurs.
As most businesses require some sort of initial capital for things like inventory, marketing, physical facilities and incorporation expenses, the proposed start-up financing would address their financing needs, another BB official said.
He said banks and financial institutions could sanction loans up to Tk 25 lac to women entrepreneurs without collateral but against any personal guarantee under the refinancing facility.
BB started SME funding in 2010. As of March, this year Tk 3,575 crore was disbursed from the refinancing scheme of BB for SME sector, according to a BB report on SMEs.
The report said other than shortage of finance, problems in SME sector include lack of suitable technology, quality development of products, skilled labour, marketing services and inefficiency in management.
‘Besides, most of the SMEs are not attentive enough to increase productivity by using information technology strategies. In order to overcome these barriers, innovative initiatives are required to be adopted,’ the report suggested.
-With New Age input
