Circular No. 04: CMSME Working Capital Refinance Fund

Bangladesh Bank Department of Supervision Dhaka-1000 Bangladesh. website: www.bb.org.bd Circular Circular No. 08, 08 August 2026 Circular No. 04 (General Management Branch) dated: 25 Ashar 1433 Head of Department/Deputy Governor

The Comprehensive MSME (CMSME) Department of Bangladesh Bank has issued this circular regarding the CMSME Working Capital Refinance Fund. This circular aims to ensure proper utilization of funds for working capital/refinance by eligible MSMEs and to facilitate timely disbursement. Accordingly, the circular outlines the procedures and guidelines for the CMSME Working Capital Refinance Fund.

To ensure proper management of MSME credit and CMSME lending, and to provide clear guidelines for the fund's administration, Bangladesh Bank has established a Revolving Working Capital Refinance Fund of 5,000 (Five Thousand) Crore Taka. Accordingly, the following important instructions are issued for all scheduled banks regarding this fund: 2.1 Name of Fund: CMSME Working Capital Refinance Fund. 2.2 Objective: To establish a dedicated fund under the supervision of Bangladesh Bank to ensure proper management of MSME credit. 2.3 Purpose: To ensure timely disbursement of working capital/refinance to eligible borrowers under the CMSME framework at full capacity, and to facilitate overall development of MSMEs through proper utilization of funds for productive and income-generating activities. 2.4 Fund Size: 5,000 (Five Thousand) Crore Taka, which will be managed on a revolving basis. 2.5 Fund Duration: Three (3) years from the date of issuance of this circular. 2.6 Interest Rate and Terms: Working capital/refinance for CMSME borrowers under the framework of Circular No. 01 dated 17 April 2025 issued by the Deputy Governor (General Management Branch) of Bangladesh Bank. Refinancing will be provided according to the terms and conditions of the respective working capital/refinance schemes. 2.7 Interest Rate and Incentives under Refinancing Terms: Banks will be paid an interest rate of 4% (four percent) per annum for refinancing under this fund, applicable to schemes under the Priority Sector Lending framework (April, August, October, and December circulars). In case of default under the Priority Sector Lending framework, if the bank pays the penalty to Bangladesh Bank, the bank will be granted an additional 1% interest rate under the Priority Sector Lending framework after verification by the Central Office of Bangladesh Bank. 2.8 Interest Rate, Other Charges and Penalty for Banks: 2.8.1 The applicable interest rate for banks under this fund will be a maximum of 9% (nine percent). Banks operating under the Priority Sector Lending framework and other banks under the Comprehensive Credit Scheme will be eligible for refinancing under this fund according to the respective scheme guidelines, without being restricted by the circular's conditions. 2.8.2 A penalty of 3% or 6% will be imposed on banks under this fund. In case of default under the Priority Sector Lending framework, the penalty will be waived after verification. 2.8.3 No other charges or penalties will be imposed on banks for refinancing under this fund, as per the directive of the Deputy Governor of Bangladesh Bank. 2.9 Eligibility for Banks to Refinance: 2.9.1 Although generally the CMSME framework requires full capacity disbursement for priority sector borrowers, banks may apply for working capital/refinance under this fund under the General Management Branch circular. 2.9.2 If a bank has any other refinancing/counter-guarantee or scheme/fund from Bangladesh Bank, it cannot apply for working capital/refinance under this fund. However, if the bank's refinancing requirement is not met by other funds, it may apply for refinancing under this fund. 2.9.3 Banks with outstanding loans in the Credit Information Bureau (CIB) will not be eligible for refinancing under this fund. 2.10 Refinancing Application Guidelines: 2.10.1 Bangladesh Bank will issue guidelines for refinancing applications under this fund. Accordingly, banks can apply for refinancing if the borrower's loan under the bank is at least 70% of the total loan. In this regard, no prior approval from the ADR/IDR of Bangladesh Bank is required. 2.10.2 Under this fund, a Participation Agreement will be signed between Bangladesh Bank (Deputy Governor - General Management Branch), General Management Branch, Bangladesh Bank, Department of Supervision, Dhaka, and the respective bank. The Participating Bank's Authorized Official will be responsible for the Participation Fund Instrument (PFI).

3. General: 3.1.1 Refinancing for priority sector loans under banks will be adjusted in the respective bank's priority sector loan portfolio. Bangladesh Bank will not separately monitor refinancing for banks. 3.1.2 Banks may use refinancing for priority sector borrowers under the framework of working capital/refinance schemes to meet their priority sector lending targets. 3.1.3 Periodic or quarterly reviews of this circular will be conducted by the Deputy Governor (General Management Branch) of Bangladesh Bank regarding refinancing under this fund, and necessary amendments will be made based on findings and recommendations. 3.1.4 Under this fund, bank supervision and working capital/refinance scheme guidelines will be governed by Circular No. 01 dated 17 April 2025 issued by the Deputy Governor (General Management Branch) of Bangladesh Bank, along with other relevant Bangladesh Bank directives.

4. This circular has been issued under Section 45 of the Bangladesh Bank Order, 1991. This circular is binding on all banks. Contact: Md. Bilkis Ara Begum, Deputy Governor (General Management Branch), Ext: 9530502, nawshad.mustafa@bb.org.bd