Vetting by BB panel lawyers must for ESF loans

Staff Correspondent | Published: 00:05, Mar 30,2019 | Updated: 00:15, Mar 30,2019


Bangladesh Bank has made vetting of the deed of agreement by a BB panel lawyer mandatory for granting loans from the entrepreneurship support fund that offers credit at 2 per cent interest rate.
A BB circular issued on March 28 imposed a set of fresh conditions including the vetting by BB panel lawyers to be followed alongside existing guidelines on the Entrepreneurship Support Fund (ESF) for food processing, agriculture, and information and communication technology-related projects.
On August 5 last year, the central bank issued the guidelines after keeping the fund suspended for more than a year amid surfacing of irregularities in the use of the fund.
Under the March 28 circular, Investment Corporation of Bangladesh, disbursement authority of the fund, will have to sign agreement with the entrepreneurs based on the deed of agreement vetted by BB panel lawyers.
Previously, vetting of the deed of agreement by any lawyer was allowed.
To ensure recovery of the fund, the manager of the fund will have to sign separate agreement with the project implementing entity along with other documentation.
Separate financial institution code (FI Code) would be applicable to the projects which would be approved by the authorities concerned for granting loan facility from ESF.
Mentioning the ESF a positive intention of the government, the central bank also instructed all the parties concerned to give priority to the ESF projects.
It also asked the parties concerned to maintain project-based shadow files of ESF projects waiting for the government approval.
As per the BB’s circular issued in August last year, the provision of equity investment from the Equity and Entrepreneurship Fund was scrapped as the government’s target to support growth of innovative food processing, agriculture, and information and communication technology businesses remained unachieved since its launch in 2000-2001 with Tk 100 crore.
According to officials, since its inception, the government has allocated Tk 2,000 crore in favour of the Fund until March, 2017.
Of the money, Tk 1,513 crore was apportioned to agriculture and Tk 512 crore to information and communication technology.
A study carried out by Bangladesh Institute of Development Studies in 2014 said that at least 77 companies which borrowed capital amounting to Tk 289 crore from the Equity and Entrepreneurship Fund were traceless.

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