The government yesterday raised the hopes of aspiring entrepreneurs as it announced a Credit Guarantee Fund (CGF) to act as guarantors for them when they apply for loans to banks or financial institutions to kick-start their venture.
The development comes after the cabinet approved the four-year-long SME Policy 2019.
The CGF will be created for arranging collateral-free loan for small and medium entrepreneurs, especially start-ups.
Entrepreneurs will not need to submit any document as mortgage to banks or financial institutes as the government will be the guarantor under the CGF, said Cabinet Secretary Mohammad Shafiul Alam.
He spoke while briefing journalists about the outcome of the weekly cabinet meeting chaired by Prime Minister Sheikh Hasina.
In the absence of such a policy in Bangladesh, the government formed the SME policy under the guideline of the industries ministry, Alam added.
The CGF has not been formed yet though, said a senior official from the industries ministry.
“It is still at the conception stage,” he said, adding that the industries ministry will start work to form the CGF soon.
Firstly, some companies will be formed under the CGF that will act as loan guarantors on behalf of the SME entrepreneurs.
In exchange for acting as guarantors, the companies will receive commission.
“Such companies can be found in India, Thailand and many other countries.”
A start-up cell will also be formed under the SME policy, he said.
Start-ups will have to apply to the cell first and officials will scrutinise the applications.
The start-up cell will help fresh entrepreneurs to get loans, licences and other necessary documents and find market-related information.
Currently, the number of SME units across the country is 78 lakh and together they contribute to 25 percent of the country’s gross domestic product, according to Alam.
The government will also provide six different kinds of services to the SME units like financing, new technologies, facilitating market access, training and business support. Female entrepreneurs will also get similar kinds of facilities for running their SME units, he said, adding that two high-powered committees will be formed for implementing the newly-adopted SME policy.
The industries minister himself will lead a 37-member committee that will include secretaries from different ministries and higher-ups of government divisions.
The industries ministry’s secretary will lead another 29-member committee in which officials from the National Board of Revenue, the Bangladesh Investment Development Authority and other related bodies will be incorporated as members.
AIIB to provide $1 billion
The Asian Infrastructure Investment Bank (AIIB) has offered to provide $1 billion to Bangladesh for various projects, Alam said.
The offer came during the meeting between Finance Minister AHM Mustafa Kamal and AIIB President Jin Liqun on the sidelines of the fourth annual meeting of the board of governors of the Beijing-based lender held in Luxembourg earlier in July.
Following the meeting, it was reported that the
AIIB will extend all-out financing support to Bangladesh in the coming days and has even agreed to let the country select its own projects as per its development demands.