Women entrepreneurs can get collateral-free loan up to Tk50 lakh

The Bangladesh Bank has unveiled a new loan guarantee scheme to bolster women entrepreneurs, under which a maximum of Tk50 lakh can be borrowed with the central bank's backing.

Women entrepreneurs will get the support both in working capital and term loans. This guarantee will not charge any fees and banks will provide the facility if a customer applies for it.

Under the scheme, banks and financial institutions have to submit their annual targets for loan distribution to the central bank. The Bangladesh Bank will provide loan guarantees to banks accordingly.

Banks and financial institutions will be required to pay an annual fee of 1% for the guarantees they collect from the central bank against loans to women.

The central bank yesterday launched two new guarantee scheme facilities. One is a guarantee for loans under a Tk3,000-crore scheme for women entrepreneurs, and the other is a guarantee under a Tk1,400-crore scheme for agricultural entrepreneurs.

The central bank said the credit facility has been provided to increase the flow of loans to women entrepreneurs in economic activities and develop and diversify agricultural-based industries and export diversification.

The central bank has two other schemes to guarantee loans at consumer level – a Tk25,000-crore pre-financing scheme for Cottage, Micro, Small & Medium Enterprises (CMSME)  sector and a Tk500-crore financial inclusion scheme for Tk10-50 account holders.

Tk3,000-crore scheme for women entrepreneurs

The central bank, in a directive issued in 2019, said that the share of total loans to women entrepreneurs in the SME sector will be increased to 15% by 2024.

In order to achieve this goal, the central bank launched a Tk1,500-crore refinancing scheme in 2021 to make it easier for women to access loans. The amount of the scheme was increased to Tk3,000 crore in June 2023.

Under the scheme, women entrepreneurs can take loans at a rate of only 5% interest, while banks can avail funds from the central bank at a rate of only 0.5% interest.

Previously, there was no guarantee facility for women for collateral. On Wednesday, the central bank issued a circular with new guarantee facilities to increase the flow of loans to women entrepreneurs and make it easier for women to access loans.

Under the guarantee facility, women entrepreneurs will be eligible for a guarantee of up to Tk50 lakh, while the minimum amount of loan will be Tk5 lakh.

According to the central bank data, a total of Tk2.2 lakh crore of loans were disbursed in the CMSME sector by the end of 2022. Of the figure, women entrepreneurs received only Tk10,000 crore, which is less than 5%.

An official of the central bank said, "Women are far behind in financial activities. They don't have assets in their name. Many women who want to become entrepreneurs cannot even put collateral because they do not have enough assets. So they are not getting loans from banks. Such facilities are provided to advance those women and increase their participation in economic activities."

Tk1,400-crore scheme for agricultural entrepreneurs

In October last year, the central bank launched a Tk1,400-crore scheme to process agricultural products produced in the country's SME sector, develop agriculture-based industries, and diversify exports.

Under the scheme, a customer can take a loan of up to Tk75 crore. The interest rate is 7% and banks and financial institutions can obtain funds from the central bank at an interest rate of 2%.

Under the new guarantee scheme, the central bank will provide a guarantee of up to Tk5 crore to customers in this sector. Customers will not have to pay any interest for this. However, the bank will provide this facility on the basis of an application to the bank.

The guarantee period will be the same as the loan period under the mentioned scheme. If any loan is fully repaid, the guarantee period will also expire.