Bangladesh Bank on Monday launched a credit guarantee scheme for the cottage, micro and small enterprises allowing banks to issue up to Tk 50 lakh in collateral-free loans from the stimulus package to the CMSs.
A BB circular issued on the day said that guarantees against CMS loans ranging from Tk 2 lakh to Tk 50 lakh would be issued under the scheme.
The formal announcement on the scheme formation came after the BB board on July 23 approved the Tk 2,000 crore credit guarantee scheme.
As per the circular, the banks are allowed to issue guarantee only against the loans which will be sanctioned under the Tk 20,000 crore stimulus package that the government announced for the cottage, micro, small and medium entrepreneurs.
In addition to the applicable interest, the BB scheme also allowed the banks to charge CMS enterprises the guarantee fees that the central bank would receive from the banks.
For the first year, the charge would be 1 per cent of the loans that would be guaranteed by the central bank.
The banks with up to 5 per cent non-performing loans will be charged at the rate of 0.5 per cent of outstanding loans after the first year while the rate would be 0.75 per cent for the banks which have NPLs between 5 per cent and 10 per cent.
The banks with more than 10 per cent NPLs would not get access to the credit guarantee scheme.
The state-owned banks, however, were exempted from the NPL-related condition to enjoy the guarantee facility.
The credit guarantee scheme would be adequate to issue guarantee to CMSs against working capital loans amounting to Tk 8,320 crore, BB officials said.
The BB in the circular asked the banks to sign agreements with the central bank’s CGS unit under the SME department to get the guarantee facility from the central bank.
The banks would be exempted from keeping any provision against the loans that would be guaranteed by the scheme even if those turn classified.
As of July 15, the banks have sanctioned Tk 2,065 crore in loans for the CMSME sector from the government’s stimulus package.
The dismal disbursement of loans by the banks to the sector prompted the central bank to issue the credit guarantee scheme for the CMS businesses.