Traders’ access to SME loans broadens as rules eased

The Bangladesh Bank yesterday withdrew the ceiling on the loans going to the trading sector from its Tk 25,000 crore refinance scheme. 

The scheme for the small and medium enterprise sector was formed in July last year.

At that time, the central bank said that the manufacturing and services sectors would get a 70 per cent loan from the refinance scheme and the rest would go to the trading sector.

But yesterday the BB, in a notice, said banks and non-bank financial institutions (NBFIs) would not have to follow the ceiling of 30 per cent for the trading sector as credit demand among traders is high due to acceleration in economic activities.

The easing of rules will be in place until June 30.

Under the scheme, lenders can distribute at least 75 per cent of the loans among cottage, micro and small enterprises and a maximum of 25 per cent among medium-sized firms.

Banks and non-banks would not have to follow the ceiling of 30 per cent for the trading sector as credit demand among traders is high due to acceleration in economic activities

They have to give out at least 60 per cent of the refinance scheme as term loans, whose repayment tenure is more than one year. The rest can be disbursed as working capital, which has to be repaid in one year.

Borrowers who take up term loans are entitled to a maximum grace period of six months. The repayment period, including the grace period, will not be more than five years, said the BB notice.

The tenure of the refinance scheme, which is revolving in nature, is three years.

The high-priority sectors eligible for loans under the scheme include agriculture and food-processing industries, farm machinery manufacturers, readymade garments, knitwear, design and decorating companies, ICT, leather and leather goods industries, light engineering, and jute and jute goods industries.

The priority sectors are plastics and other synthetic industries, tourism, home textiles makers, renewable energy, automobile manufacturers and repairing industries, handicrafts, energy-efficient device makers, jewellers, toy industries, cosmetics and toiletries, furniture makers, and mobile, computer and television servicing industries.

Under the scheme, banks and NBFIs receive funds at 2 per cent from the central bank, while borrowers get loans at a maximum interest rate of 7 per cent.

But lenders with more than 10 per cent of default loans can't access funds under the scheme. Besides, they will have to have at least three years of business experience.

There are 78 lakh SME units across the country.