Bangladesh Bank (BB) has relaxed the participation criteria for state-owned commercial and specialized banks under its refinancing facilities, a move aimed at accelerating the flow of credit to the Cottage, Micro, Small, and Medium Enterprise (CMSME) sector.

The SME and Special Programmes Department of the central bank issued a circular to this effect today (Sunday).

According to the circular, the decision was taken to enhance the contribution of the CMSME sector to national economic growth and to expand employment opportunities at the grassroots level.

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Under the new directive, state-owned commercial and specialized banks can now enlist as participating financial institutions to access the central bank's CMSME refinancing funds.

To facilitate this, the central bank has exempted these state banks from two mandatory conditions that previously restricted their eligibility.

The relaxed conditions include the obligation to maintain the non-performing loan (NPL) or classified investment ratio within a maximum cap of 20 percent, mandatory adherence to Bangladesh Bank’s prescribed Capital Adequacy Ratio (CAR), Cash Reserve Ratio (CRR), and Statutory Liquidity Ratio (SLR).

By waiving these stringent capital and asset-quality thresholds, the central bank aims to utilize the vast rural and semi-urban network of state-run banks to channel low-cost funds directly to small and marginalized entrepreneurs across the country, BB officials said.