FID Circular No. 01: Tk. 500 Crore Refinance Scheme for 10/50/100 Tk. Account Holders

1 FID Circular No. 01 05 September 2021 Date:-------------------- To: Managing Director/Chief Executive Officer 21 Bhadra 1428 All Scheduled Banks operating in Bangladesh.

Dear Sir,

"Refinance Scheme for Poor/Landless Farmers, Low-Income Professionals, School Banking Account Holders, and Small Traders holding 10/50/100 Tk. Accounts."

Reference is drawn to the circulars and letters issued under the Financial Inclusion Program: GBGSR Circular No. 01/2014 dated 14 May 2014, GBGSR Circular Letter No. 03/2014 dated 22 December 2014, GBGSR Circular Letter No. 03/2015 dated 31 March 2015, FID Circular Letter No. 01/2016 dated 20 January 2016, FID Circular Letter No. 04/2016 dated 03 October 2016, and FID Circular Letter No. 01/2017 dated 28 February 2017, along with their attached policies.

2. Through the aforementioned circulars and letters, a revolving refinance fund of Tk. 200 Crore was established for small/poor/landless farmers, low-income professionals affected by natural disasters, and poor/small traders to bring them under institutional financial services, and the relevant policy was issued.

3. Due to the outbreak of COVID-19, the income-generating activities of the poor population in the country have been disrupted. Furthermore, the second wave of COVID-19 is adversely affecting the recovery programs of the financial sector. In this context, it is necessary to revitalize/continue the financial activities of poor/landless farmers, low-income professionals, and small traders holding 10 Tk. accounts under the financial inclusion program, and to enhance the timeliness of this scheme by increasing the scope of loans, loan limits, and fund amounts, and simplifying loan procedures. Therefore, the scheme is restructured as follows:

3.1) Naming: The fund will be named "Refinance Scheme for Poor/Landless Farmers, Low-Income Professionals, School Banking Account Holders, and Small Traders holding 10/50/100 Tk. Accounts."

3.2) Source and Amount of Fund: Own funds of Bangladesh Bank; Tk. 500 (Five Hundred) Crore, which is revolving within the specified period.

3.3) Scheme Duration: The duration of this scheme will be 5 (Five) years. However, the duration may be extended if necessary.

Financial Inclusion Department Bangladesh Bank Head Office, Dhaka.

3.4) Scope of Loans: (a) All customers availing loan facilities under this scheme shall be existing 10/50/100 Tk. account holders. To avail loan facilities under this scheme, new customers must compulsorily deposit 10/50/100 Tk. (where applicable) and open a bank account; (b) Para/Mohalla/Village-based small/micro (SMME) entrepreneurs and professionals (e.g., carpenter, goldsmith, barber, blacksmith, potter, fisherman, rickshaw puller/van puller, electric/electronic appliance repairer, electrician, carpenter, mason, painter, grill maker, plumber, pickle/pitha manufacturer, small weaver, veterinarian, etc.) and any person involved in any type of income-generating activity (e.g., shopkeeper of mud and monohori products, mobile cloth shopkeeper, flexiloader service provider/mobile financial services agent, information service provider/internet service provider, food stall owner, tea/coffee seller, book/newspaper/magazine seller, thonga/modok manufacturer, flower/fruit/vegetable seller, duck/chicken/pigeon/quail farmer, cow/goat/sheep/livestock farmer, shrimp/fish/crab/pangasius farmer, earthworm fertilizer and any organic fertilizer producer, vegetable farmer, entrepreneur-nursery/tree planting, needlework, basok-batik, small/household industry, handicraft, confectionery and other food preparation and any other promising innovative activity, and trained VDP members managing various income-generating activities) will be considered eligible for this loan facility; (c) Poor/landless farmers, small traders, low-income professionals, and low-income populations residing in chars and haor areas affected by any disaster (natural and man-made) (e.g., riverbank erosion, tidal surge, cyclone, flood, drought, famine, fire, earthquake, building collapse, pandemic like COVID-19, etc.) will be given priority for this loan facility; (d) Persons with special needs and female entrepreneurs will be given priority for this loan facility in any type of income-generating activity; (e) To increase financial inclusion through the school banking program, as well as to develop human resources and create organizations: (i) Banks may provide loan facilities under this scheme to benefited and non-performing school banking account holders (including dropouts) for vocational/technical/information technology and other training, based on parental payment guarantee; (ii) Banks may distribute loans under this scheme to school banking account holders who have crossed 18 years of age for income-generating activities and professions/businesses based on acquired skills; (iii) Banks may distribute loans under this scheme for the purchase of educational materials required for higher education for students who had school banking accounts, based on parental payment guarantee.

3.5) Ineligibility for Loan: (a) Defaulter borrowers will not be eligible for loan facilities under this scheme, and (b) If a borrower has an unsettled loan under any other scheme of the Government of Bangladesh/Bangladesh Bank interest subsidy, that borrower will not be eligible for loan facilities.

3.6) Customer-wise Loan Limit: (a) Scheduled banks may provide loan facilities up to a maximum of Tk. 500,000 per single customer under this scheme, subject to verification of customer needs; (b) In the case of group loans, banks may provide loans up to a maximum of Tk. 2,000,000 per group, with a maximum of Tk. 400,000 per member, formed by 2-5 members; (c) In the case of group loan repayment, all members of the group will be personally and jointly liable to the bank.

3.7) Refinance Interest/Profit Rate: The annual refinance interest/profit rate of Bangladesh Bank in favor of the refinancing bank will be 1%.

3.8) Customer-wise Interest/Profit Rate: (a) The interest/profit rate on loans/investments provided by the bank to customers will be a maximum of 7% per annum; (b) Interest/profit must be charged on the declining balance of the customer's loan/investment.

3.9) Collateral: (a) No security collateral will be taken for providing loans under this scheme. However, personal guarantees of the borrower and up to two other persons may be taken against each loan; (b) For loan facilities of Tk. 300,000 and above, banks may avail themselves of the Credit Guarantee Scheme facility at their own discretion against the full loan amount. In this case, the bank will pay the guarantee fee from its own source.

3.10) Loan Duration, Grace Period, and Repayment Schedule: (a) The grace period for both the bank and the customer will be a maximum of 6 months. Excluding the grace period, the loan duration will be a maximum of 3 years; (b) Bangladesh Bank will collect interest/profit/service charges from banks in quarterly installments excluding the grace period; (c) Banks will collect principal along with interest/profit from customers in monthly/quarterly/half-yearly (where applicable) installments excluding the grace period.

3.11) CIB Report: To ensure that loans are not provided to defaulter borrowers, CIB reports must be obtained. However, for loans/investments up to Tk. 300,000 under this scheme, no charge/fee will be applicable for obtaining the CIB report.

3.12) Loan Distribution Mechanism: For loan distribution under the aforementioned scheme, banks may use their own branches/sub-branches/agent banking/mobile financial services (MFS) arrangements. In this case, the bank's agent/MFS will be entitled to service charges approved by the respective bank's management for loan distribution and collection. However, in no case will any charge/fee be collected from the customer in excess of the instructions mentioned in clause 3(x)(1) of BPRD Circular No. 11 dated 10 June 2021 regarding processing fees for loans/investments.

3.13) Shariah-based Banking: Shariah-based banks will provide investments to customers under this scheme based on their own approved investment methods, without changing the applicable percentage. However, the distributed profit may not exceed 7% per annum.

3.14) Monitoring: Banks will ensure proper distribution, collection, and utilization of loans/investments distributed directly by the bank through regular monitoring, and submit reports to the Manager, Financial Inclusion Department, Bangladesh Bank, Head Office, Dhaka, by the 15th of the following month, quarterly, according to Annexure-K. Additionally, Bangladesh Bank may conduct inspection programs at any time on a random basis.

3.15) Eligibility for Refinance and Application Process: (a) Scheduled banks under the discussed scheme must enter into a Participation Agreement with the Manager, Financial Inclusion Department, Bangladesh Bank, Head Office, Dhaka. According to this agreement, banks must ensure repayment of principal along with interest/profit, for which they must separately execute a DP Note (Deed of Promise). However, there is no need for new agreements with banks that have already entered into participatory agreements; (b) Banks must submit applications for refinance for the previous month by the 15th of each month to Bangladesh Bank against loans/investments distributed under this scheme on a monthly basis, in the format specified in Annexure-K; (c) The installment payable for refinance along with interest/profit will be collected from the current account of the respective bank kept with Bangladesh Bank on the dates specified in the repayment schedule.

4. The previously issued GBGSR Circular No. 01/2014, GBGSR Circular Letter No. 03/2014, and 03/2015; FID Circular Letter No. 01/2016, 04/2016, and 01/2017, and their attached policies are hereby repealed. Notwithstanding the repeal, all programs taken under the repealed circulars and letters will be considered valid and proper.

5. These instructions will come into force immediately.

Yours faithfully,

(Md. Romjul Amin) Manager Phone: 9530343

Annexure-K Quarterly Progress Report of the "Refinance Scheme for Poor/Landless Farmers, Low-Income Professionals, School Banking Account Holders, and Small Traders holding 10/50/100 Tk. Accounts"

Name of the Bank: Period: March/June/September/December, 20..

1. Specified Annual Target: . . . . . . Lakh Tk.
2. Updated Information:

Serial No.	Borrower	Loan Distribution in Current Quarter	Capitalized Loans from Start of Current Year to March/June/September/December Quarter	Total Capitalized Loans Distributed under Scheme to Date	Loan Status under Scheme Reporting to Date (Customer-wise)
	Amount (Lakh Tk.)	No. of Customers	Amount (Lakh Tk.)	No. of Customers	Amount (Lakh Tk.)

1. Farmer | | | | | Male | Female | Male | Female | Male | Female

2. Low-income Professional | | | | | | | | | |

3. Small Entrepreneur (Income-generating activity) | | | | | | | | | |

4. School Banking Account Holder (Training) | | | | | | | | | |

5. School Banking Account Holder (Educational Materials) | | | | | | | | | |

6. School Banking Account Holder (Income-generating activity) | | | | | | | | | |

7. Others | | | | | | | | | | Total | | | | | | | | | |

8. Steps Taken for Target Achievement:

Signature of Reporting Officer: Name: Designation: Mobile: E-mail:

Signature of Financial Inclusion Focal Officer: Name: Designation: Mobile: E-mail:

Annexure-Kh Sample of Refinance Application by Refinancing Bank

Ref: ----------------- Date: ------------- To: The Manager Financial Inclusion Department Bangladesh Bank Head Office Dhaka.

Dear Sir,

Application for Refinance from the "Refinance Scheme for Poor/Landless Farmers, Low-Income Professionals, School Banking Account Holders, and Small Traders holding 10/50/100 Tk. Accounts."

In compliance with the instructions of FID Circular No. 01/2021 issued on 05/09/2021 regarding the subject mentioned above, our bank has refounded a total of ----------- Tk. against --/2021 (Name of Month) for a total of ---- loans/investments in favor of selected customers. All instructions mentioned in the circular have been properly followed for the approval of the aforementioned refinance and distribution of loans/investments. Detailed information regarding the application for refinance from the said scheme against the aforementioned refinance is submitted herewith. Please be kind enough to refound a total of ------------------- Tk. (in words ---------------------------) in favor of this bank.

Yours faithfully,

(---------------------------) Managing Director/Department Head Address:------------------------------- Phone/Mobile: ----------------------- E-mail:-----------------------------

Annexures:

1. Information details of loans/investments provided under the scheme.
2. DP Note.