Regulatory Alerts2023-01-18
Added
SMESPD Circular Letter No. 01: Regarding disbursement of loan/investment in working capital sector under 25000 crore refinance scheme in CMSME sector
The circular mandates that working capital loans or investments under the CMSME refinance scheme must have a maximum tenure of 12 months, prohibiting longer tenures even with single or installment repayments. Participating banks and financial institutions are required to submit revised Annexures 'B' and 'C' with their applications and ensure that principal is repaid in a lump sum along with periodic interest/profit. These instructions apply to all scheduled banks and financial institutions operating in Bangladesh and take immediate effect.
50119
Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh.
04 Magh 1429 SMESPD Circular Letter No.-01 Date: -------------------------- 18 January 2023
Managing Director/Chief Executive All Scheduled Banks and Financial Institutions operating in Bangladesh
Regarding disbursement of loan/investment in working capital sector under 25,000 (Twenty-Five Thousand) Crore Taka refinance scheme in CMSME sector.
Reference is drawn to your attention to SMESPD Circular Letter No.-04 dated 19 July 2022 and SMESPD Circular Letter No.-07 dated 08 November 2022 on the subject cited above.
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In view of the increased demand for working capital loans/investments alongside term loans/investments by entrepreneurs, and the need for various banks and financial institutions to finance their customers to meet such demand, refinancing facilities are being provided for working capital loans/investments alongside term loans/investments under the aforementioned scheme. However, upon reviewing the refinancing applications submitted by various participating banks and financial institutions, it has been observed that some banks and financial institutions have provided working capital loans/investments for a tenure exceeding 12 months to their customers under conditions of single/variety of installment repayments, which is not consistent with the main characteristics of working capital loans/investments.
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In this context, the following instructions are to be followed for providing refinancing facilities against financing of working capital loans/investments under the discussed scheme: a) The tenure of working capital loans/investments shall be maximum 12 (twelve) months. However, loans/investments disbursed in the working capital sector can be renewed, and banks and financial institutions can reapply to Bangladesh Bank for refinancing against the renewed loans/investments. b) The refinanced funds against working capital loans/investments shall be repaid to Bangladesh Bank by the concerned banks and financial institutions in a lump sum along with periodic interest/profit.
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Furthermore, the revised Annexure-'B' and Annexure-'C' attached herewith must be used at the time of submitting the refinancing application.
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In addition, the other instructions of the circulars cited in the source shall remain unchanged.
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These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991 and Section 18 of the Financial Institutions Act, 1993.
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These instructions shall take effect immediately.
Annexure: As described.
Yours faithfully, (Signature) (Mohammad Ashiqur Rahman) Director (SMESPD) Phone: 9530502
Phone: 88-02-9550448, 9554896, IP: 88-02-9566501-6, Fax: 88-02-953049, www.bb.org.bd
Annexure-'B'
Source: -------------------------- Date: -------------------------- Director (SMESPD) SME & Special Programs Department Bangladesh Bank Head Office Dhaka.
Sir,
Regarding application for obtaining refinancing under the 'Refinancing Scheme for Term Loans/Investments in CMSME Sector'.
In accordance with the instructions of SMESPD Circular Letter No.-04 dated 19 July 2022 on the subject cited above, loans/investments amounting to -------------------------- Taka have been disbursed to -------------------------- CMSME entrepreneurs from -------------------------- Date to -------------------------- Date under the aforementioned refinancing scheme. The instructions mentioned in the circular have been duly followed in the disbursement of the aforementioned loans/investments. The sector-wise distribution of financing under the said scheme so far is mentioned in the table below:
| Nature of Entrepreneur | Disbursement Rate | Type of Loan/Investment | Disbursement Rate | Type of Entrepreneur | Disbursement Rate |
|---|---|---|---|---|---|
| Production | Term | Cottage, Micro & Small | |||
| Service | Working Capital | Medium | |||
| Trade |
Detailed information (Annexure-'C') regarding the application for obtaining refinancing from the aforementioned refinancing scheme against the described financing is submitted herewith. The information related to the aforementioned application has already been submitted online, the details of which are as follows:
| Online Application Date | Online Tracking Number |
|---|---|
In this regard, you are requested to provide a total of -------------------------- Taka (in words --------------------------) as refinancing in favor of this bank/financial institution as per the description attached.
Yours faithfully, (------------------------------------------) Managing Director/Branch Head -------------------------- Bank/Financial Institution Phone: -------------------------- E-mail: --------------------------
Annexure:
- Information regarding loan/investment (Annexure-'C').
Annexure-'C'
Information regarding loan/investment for obtaining refinancing under the "Refinancing Scheme for Term Loans/Investments in CMSME Sector"
| Name of Bank/Financial Institution: | |
|---|---|
| Financing Period: |
| Description of Loan/Investment Recipient/Enterprise | Loan/Investment and Refinancing Related Information | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Serial No. | Name of Enterprise | Address of Enterprise | Nature of Ownership (Proprietorship/Joint Ownership/Company) | Type/Description of Business/Activity | Type of Enterprise (Cottage/Micro/Small/Medium) | Nature of Enterprise (Production/Service/Trade) | Trade License No. | Name of Entrepreneur/Enterprise | NID No. | Loan/Investment Account No. | Date of Disbursement of Loan/Investment | Type of Loan/Investment (Term/Working Capital) | Purpose of Loan/Investment | Amount of Disbursed Loan/Investment (Taka) | Interest/Profit Rate (%) at Customer Level | Grace Period (Months) | Tenure of Loan/Investment including Grace Period (Months) | Amount of Claimed Refinancing (Taka) | Remarks (if any) |
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) | (14) | (15) | (16) | (17) | (18) | (19) | (20) |
| 1 | |||||||||||||||||||
| 2 | |||||||||||||||||||
| 3 | |||||||||||||||||||
| Total | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Yours faithfully, (------------------------------------------) Managing Director/Branch Head -------------------------- Bank/Financial Institution Phone: -------------------------- E-mail: --------------------------