1,000 crore Tk fund to create new entrepreneurs, no collateral required for loans

Bangladesh Bank has taken an initiative to form a special fund of 1,000 crore taka to develop the youth of the country as entrepreneurs. From this fund, plans are underway to provide low-interest loans to young entrepreneurs, along with grants based on timely loan repayment and good business performance. Initially, the target is to create at least 5,000 new entrepreneurs through 500 crore taka in loans and 500 crore taka in grants.

Regarding the implementation of this new initiative, Bangladesh Bank Governor Mostakur Rahman held a meeting with the leaders of the Association of Bankers, Bangladesh (ABB), the organization of chief executives of banks on Tuesday afternoon. The meeting included detailed discussions on a special refinancing and grant package to nurture youth entrepreneurship.

Following the meeting, ABB Chairman and Managing Director of City Bank, Mashrur Arefin, stated that the plan is to bring youths who are eager to start a business but lack necessary capital under the purview of this initiative. Under the central bank's refinancing scheme, an entrepreneur can receive a loan of up to 1 million (10 lakh) taka. The interest rate on this loan is being considered to be kept between 4 to 6 percent.

Compared to currently prevalent bank loan interest rates of 11 to 15 percent or NGO loans, the cost of funds for this loan will be much lower. Not only is there an arrangement for low-interest loans for entrepreneurs, but provisions for grants are also being included to help sustain businesses. According to the plan, based on timely repayment of loan installments and business performance, banks can provide entrepreneurs with an equivalent amount of money as a grant from their corporate social responsibility (CSR) funds.

This means that if an entrepreneur takes a loan of 1 million taka, fulfills the specified conditions, and repays the loan successfully, they will have the opportunity to receive a further grant of up to 1 million taka based on eligibility. This is expected to boost young entrepreneurs' interest in not only repaying loans but also running successful businesses.

The most important feature of this loan is that entrepreneurs will not need to provide any collateral. As a result, capable youths who lack the ability to mortgage land or other assets will have the opportunity to get loans to start a business.

There are plans to give special emphasis to the upazila level in selecting entrepreneurs. Genuine entrepreneurs will be selected locally through bank branch managers or designated committees. This is expected to reduce the chances of unqualified individuals getting loans through lobbying or influence, according to relevant parties.

The ABB chairman stated that banks will divide responsibilities among themselves across more than 500 upazilas in the country to identify and verify prospective entrepreneurs. Business potential, individual skills, and genuine initiative will be prioritized during entrepreneur selection.

Loans from this fund will not be restricted to specific sectors; both manufacturing and commercial ventures can come under its scope. These may include fish farming, livestock, food production, handicrafts, sataranji manufacturing, and other small and medium business initiatives.