BB launches Tk 5,000cr revolving refinance fund for CMSMEs

 
Bangladesh Bank (BB) launched a Tk 5,000 crore revolving refinance fund for the Cottage, Micro, Small and Medium Enterprise (CMSME) sector to ease working capital shortages, boost production and support employment generation.

The central bank introduced the fund through an SMESPD circular issued by its SME and Special Programmes Department on Monday, utilizing surplus liquidity of scheduled banks. The scheme will remain effective for three years from the date of issuance.

According to the circular, the fund aims to strengthen production activities, revive economic momentum and create direct and indirect employment opportunities by providing working capital support to active CMSMEs facing financial constraints.

Under the scheme, Bangladesh Bank will provide refinance to participating banks at an interest or profit rate of 4 percent, while banks may charge a maximum interest or profit rate of 9 percent to end borrowers, according to BSS report. 

The revolving nature of the fund will ensure continued liquidity as repayments are recycled into new financing. Interest will be calculated quarterly in March, June, September and December.

Borrowers will be eligible for a grace period of three to six months before repayment of installments begins.

The circular directs Shariah-based banks and Islamic banking windows of conventional banks to provide financing under approved Shariah-compliant models while maintaining the maximum profit rate of 9 percent and complying with all conditions of the scheme.