The Bangladesh Bank has reduced fees payable against credit guarantee facility for entrepreneurs in cottage, micro, small and medium enterprises (CMSMEs) and financial inclusion sectors.

The central bank issued a circular to this end on Monday.

Banks or financial institutions partaking in the scheme are required to pay a guarantee fee at the rate of 0.50 percent for the first year of the loan.

However, after the end of the first year and subject to the validity of the guarantee, the fee payable for the following years has been reduced to 0.25 percent from the previous 0.75 percent per year.

The central bank has taken this decision to address the need to make credit guarantee facilities more cost-effective and accessible to entrepreneurs, according to the circular.

On November 8 last year, the BB fixed the 0.75 percent fee from subsequent years after the first year.

The central bank highlighted the positive aspects of the CMSME sector such as contributing to economic growth, reducing rich-poor and regional disparities, and ensuring inclusive development including women's empowerment.