In a major move to inject vitality into a sluggish economy and generate employment, Bangladesh Bank (BB) on Thursday night announced a Tk 20,000-crore pre-refinancing scheme aimed at fully reviving closed and partially operational industries.
Under this new policy, titled the "Pre-Refinancing Scheme for Assisting Closed Large-Scale Industry and Service Sectors," eligible business entities and corporate groups can secure working capital loans up to Tk 200 crore at a highly concessional interest rate of 7 percent.
The initiative offers massive relief to manufacturers, given that the market interest rate across commercial banks currently exceeds 14 percent following recent monetary tightening.
The central bank issued a comprehensive circular detailing the implementation guidelines late Thursday. This policy stems from a broader economic recovery roadmap announced on May 23 by Bangladesh Bank Governor Mostafizur Rahman, who promised a Tk 60,000-crore master fund to stimulate economic growth.
According to the guidelines, commercial banks will pull funds from this central bank repository at a 4 percent interest rate and disburse it to qualified industrial and service enterprises at a maximum capped rate of 7 percent. All scheduled banks operating in Bangladesh are eligible to participate in the scheme.
The central bank noted that the fund primarily targets large-scale manufacturing and service establishments that possess the necessary machinery and infrastructure but are suffering from production stoppages solely due to an acute shortage of working capital.
Special emphasis will be placed on boosting export volumes and generating fresh employment opportunities. Partial or completely closed enterprises capable of resuming full operations will receive priority.
Furthermore, efficient, functional companies that acquire or lease underperforming or closed external factories to revitalize them will also receive priority access to the credit facility.
To maintain financial discipline, the central bank has imposed strict compliance checks. Borrowers must have a clean slate in the Credit Information Bureau (CIB) database, with no active loan defaults. Any business or entrepreneur with a record of money laundering or past credit misappropriation will be strictly barred from accessing the fund.
Loan Utilization Rules:
The tenure of the working capital loan will be a maximum of one year at the customer level, renewable based on actual performance and utilization. Borrowers will also enjoy a six-month grace period, meaning interest installment collections will only begin after the first six months.
The policy strictly regulates how the loan can be spent. Companies can use the funds to cover up to four months of wages and allowances for workers and staff. It can also be utilized to clear utility dues (electricity, gas) and procure raw materials necessary for immediate production.
To ensure transparency, all worker salaries must be routed directly into their respective bank accounts or verified Mobile Financial Services (MFS) accounts linked to their National Identity (NID) cards. Cash transactions are strictly prohibited. The central bank explicitly stated that these loans cannot be used to adjust, settle, or pay off any pre-existing bank liabilities or debts.
Strict Monitoring & State Recognition:
To prevent fund diversion, Bangladesh Bank has mandated a rigorous oversight framework. Lending banks must collect weekly sales and revenue reports from the borrowers. Bank representatives will be required to physically inspect the factory premises every three months to prepare compliance reports, while Bangladesh Bank reserves the right to conduct surprise spot inspections at any time.
Borrowers must channel all business-related income and expenditures through a single, designated bank account.
Failure to repay the funds on time will result in the central bank automatically deducting the outstanding amount directly from the respective commercial bank’s current account held with Bangladesh Bank, alongside a 2 percent punitive interest penalty.
In a unique motivational approach, the central bank announced that companies, entrepreneurs, and banks that demonstrate successful implementation and actively contribute to the national economy through this scheme will be honored with official state recognition.