Waiver of interest penalty for Entrepreneurship Support Fund
Central bank officials have said that such waiver has been given considering the impact of Covid-19
The central bank of Bangladesh has given a slight rebate on the interest penalty that would be levied if payment instalments on loans taken from the Entrepreneurship Support Fund, were not repaid on time.
Previously, there was a 2% interest penalty provision on the total loan if the loan instalment were not repaid on time. Going forward, now the 2% interest penalty will be levied only on the unpaid amount, read a Thursday central bank circular regarding the Equity and Entrepreneurship Fund Unit.
Central bank officials say this waiver has been given considering the impact of Covid-19.
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An Equity and Entrepreneurship Fund of Tk100 crore was set up in FY 2000-01 to assist entrepreneurs in potential food processing, agro, and ICT projects. It was later renamed the Entrepreneurship Support Fund.
As per a 2018 policy, the term for loans from the fund is eight years with 2% simple interest. It is not mandatory to repay the loan for four years once the first instalment of the loan is received. However, in the next four years, the entire loan would have to be repaid in eight instalments at six month intervals.
In case of failure to pay an instalment on time, there was a provision to pay a 2% penalty interest on the entire loan, but this time the central bank gave some concessions. In addition, any entrepreneur can repay the entire loan during the grace period.
In the case of food processing and agro-based projects, a minimum loan of Tk80 lakh to a maximum of Tk5 crore, and for equipment dependent projects, a maximum loan of Tk12 crore, is available.
The minimum loan limit for women entrepreneurs is Tk50 lakh and a maximum of Tk8 crore for a crocodile farm.
A minimum of Tk50 lakh and up to Tk5 crore can be availed for information and communication technology projects.
For availing loans, the equity to debt ratio is 51:49. In other words, if it costs Tk100 to start a project, the entrepreneur has to have Tk51. The remaining Tk49 can be availed as a loan from the support fund.
However, the policy states that it may be less than 49% in reality. In that case, the entrepreneur's equity would increase proportionately.
