The central bank of Bangladesh has launched a Tk 5,000 crore refinancing programme designed to support cottage, micro, small, and medium enterprises (CMSMEs). The initiative is engineered to alleviate working capital shortages across the sector, thereby fostering employment generation and accelerating national economic activity.
Under the operational guidelines released in a policy circular by Bangladesh Bank, the interest rate extended to commercial entrepreneurs has been strictly capped at a maximum of 9%. The revolving fund utilizes surplus liquidity sourced from domestic scheduled banks and will be fully administered by the central bank.
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Operational Mechanics and Framework
The liquidity facility has been commissioned for an initial duration of three years. Functioning as a revolving credit mechanism, the principal recovered from mature loans will be continuously reinvested into the fund to guarantee long-term availability for eligible businesses.
Structural Interest Rates and Timelines
| Operational Parameter | Policy Specification |
| Total Allocation Pool | Tk 5,000 crore |
| Refinancing Cost to Banks | 4% interest rate |
| Maximum Consumer Rate | 9% interest rate |
| Moratorium Window | 3 to 6 months grace period |
| Core Operational Term | 3 years (Revolving framework) |
Scheduled commercial banks will draw capital from the Bangladesh Bank pool at a concessionary refinancing rate of 4%, maintaining a maximum 5% margin when lending to end-user enterprises. Shariah-compliant financial institutions are similarly permitted to access the fund, provided they deploy the capital through approved Islamic financing instruments.
Regulatory Cap on Fees: The central bank has explicitly banned participating institutions from levying auxiliary fees, hidden commissions, or administrative charges outside the existing statutory framework.
Eligibility Criteria and Risk Management
The facility is primarily reserved for active CMSME entities that are currently operating below their optimum production or service capacity due to capital constraints.
Co-financing Provisions: Entities that currently maintain working capital arrangements through alternative credit facilities are not barred from applying, subject to regulatory compliance and individual credit thresholds.
Credit Constraints: Any enterprise or individual proprietor listed as a defaulter within the Credit Information Bureau (CIB) database will be automatically disqualified from receiving disbursements under this facility.
Allocation Priorities for Scheduled Banks
Every scheduled bank operating within Bangladesh is legally permitted to apply for the refinancing programme. However, the central bank will give deployment priority to financial institutions that maintain an Advance-Deposit Ratio (ADR) of more than 70%.
Before drawing from the fund, interested banks must enter into a formal Participation Agreement with the SME and Special Programmes Department of Bangladesh Bank. While participating commercial banks retain the right to secure additional collateral from applicants to hedge credit risk, the central bank has stipulated that the ultimate responsibility for loan recovery and credit risk management rests entirely with the participating financial institutions.