$240M Refinance Fund

Bangladesh Bank sets 6pc interest cap on lending to CMSMEs

Staff Correspondent | Published: 23:36, Nov 23,2020


The Bangladesh Bank on Monday imposed a lending rate ceiling of 6 per cent at the customers’ end from the refinance package formed jointly by the government and the Asian Development Bank for the development of cottage, micro, small and medium enterprises.

Apart from fresh loans, the lending rate, to be effective from November 18 this year, would also be applicable for existing loans as well.

The central bank issued a circular on the day stating that the change in the interest rate was made to keep the strength of the CMSMEs intact amid the coronavirus outbreak and to ensure adequate term loan facility for employment generation.

As per the new rules, banks and financial intuitions would get funds from the second Small and Medium-Size Enterprise Development Project at the rate of 2 per cent for disbursement to customers at the highest rate of 6 per cent.

On November 15 in 2017, the government in association with the ADB formed the $240-million refinance fund for the development of CMSMIs.

As per the initial rules, the central bank disbursed funds among banks and financial institutions at the rate of 4 per cent, asking the entities to disburse the same among CMSMIs at the market rate.

However, the central bank barred the banks and financial institutions from charging women CMSMIs rates above 10 per cent.

The BB said that the other instruction would remain unchanged.

Want stories like this in your inbox?

Sign up to exclusive daily email