SMESPD Circular Letter No. 02: Conversion of Refinance Scheme Amounting to Taka 25,000 Crore to Pre-Finance Scheme

Bangladesh Bank
Head Office
Motijheel, Dhaka-1000
Bangladesh.

SMESPD Circular Letter No. 02
Date:
17 Magh 1429
31 January 2023

To,
Managing Director/Chief Executive
All Scheduled Banks and Financial Institutions operating in Bangladesh

Context regarding the conversion of the 'Refinance Scheme of Taka 25,000 (Twenty-Five Thousand) Crore against Authorization in the CMSME Sector' into a Pre-Finance Scheme.

Reference is drawn to your attention to SMESPD Circular No. 04 issued on 19 July 2022, SMESPD Circular Letter No. 07 issued on 08 November 2022, and SMESPD Circular Letter No. 01 issued on 18 January 2023 on the subject cited above.

2. Under the scheme cited above, refinance facilities are being provided to banks and financial institutions participating against the term loans and working capital loans/investments provided to their customers.

3. The Bangladesh Bank has been informed that due to foreign currency sales, a large amount of local currency is being deposited with the central bank from the banking sector. Consequently, the internal flow of funds in banks has decreased, creating obstacles in lending to the CMSME sector.

4. Considering the aforementioned context, with the aim of increasing the flow of loans in the CMSME sector as a priority sector of the government, the Bangladesh Bank hereby declares the aforementioned Refinance Scheme as a Pre-Finance Scheme from now on.

5. The banks and financial institutions that have previously signed agreements as Participating Financial Institutions (PFIs) for the refinance mentioned above will be provided with the allocated funds as Pre-Finance. Considering the progress of loan disbursement, banks and financial institutions will now be provided with advance funds from the said fund on a quarterly basis. The Bangladesh Bank may take decisions on any matter including fund allocation after monitoring the efficiency of participating banks and financial institutions in using the said Pre-Finance fund.

6. However, for the loans/investments already distributed through banks and financial institutions under SMESPD Circular No. 04/2022, the refinance facility will remain operational. To this end, banks and financial institutions must submit applications to this department by 28 February 2023 to avail the refinance facility against the loans/investments already provided.

7. To receive funds from the Pre-Finance fund for implementing the loan/investment program of the next quarter at the end of each quarter, details/information of the loans/investments distributed in the previous quarter must be submitted to the Bangladesh Bank in accordance with the instructions mentioned in Paragraph 8.

8. For receiving funds on the matter mentioned in Paragraph 7, application forms in accordance with Appendix-'G' and Appendix-'Ch' must be submitted by the 10th of the month immediately following each quarter.

9. Furthermore, other instructions of the aforementioned circular and circular letters remain unchanged. The Bangladesh Bank reserves the right to make any changes, amendments, additions, or deletions to the aforementioned scheme from time to time for its smooth implementation.

10. These instructions have been issued under the powers conferred by Section 45 of the Companies Act, 1994 and Section 18 of the Financial Institutions Act, 1993.

11. These instructions will come into force immediately.

Yours faithfully,

Appendices: As per list.

(Mohammad Ashiqur Rahman)
Director (SMESPD)
Phone: 9530502

Appendix-'G'

Subject: ----------------- Date: -------------

Director (SMESPD)
SMESPD
Bangladesh Bank
Head Office
Dhaka.

Sir,

Context regarding loans/investments distributed through Pre-Finance availed under the 'Refinance Scheme of Taka 25,000 (Twenty-Five Thousand) Crore against Authorization in the CMSME Sector'.

Under the aforementioned scheme, on ------- date, the Bangladesh Bank provided a total of Taka ----------------- (in words ----------) as Pre-Finance in favor of our bank/financial institution, which, in strict compliance with the instructions of SMESPD Circular No. 04 issued on 19 July 2022, loans/investments totaling Taka -------------- were distributed in favor of a total of ----------- CMSME entrepreneurs from the date of ----------- to the date of -----------. The detailed information is attached herewith in accordance with Appendix-'Ch'. The sector-wise distribution of the authorization distributed so far under the said scheme is mentioned in the table below:

Nature of Enterprise	Amount Distributed	Rate of Distribution	Type of Loan/Investment	Amount Distributed	Rate of Distribution	Type of Enterprise	Amount Distributed	Rate of Distribution
Production			Term			Cottage
Micro			Working Capital			Small
Service			Medium

Yours faithfully,

(---------------------------)
Managing Director/Regional Head
---------------------- Bank/Financial Institution Phone: ---------------------- E-mail: --------------------------

Appendix-'Ch'

Information regarding loans/investments distributed through funds received as Pre-Finance under the 'Refinance Scheme of Taka 25,000 (Twenty-Five Thousand) Crore against Authorization in the CMSME Sector'

Yours faithfully,

(---------------------------)
Managing Director/Regional Head
---------------------- Bank/Financial Institution Phone: ---------------------- E-mail: --------------------------

Name of Bank/Financial Institution:
Amount of Pre-Finance Availed:
Period:

Sr. No.	Details of Loan/Investment Recipient/Enterprise	Information regarding Loan/Investment and Authorization
		Remarks (if any)	Name of Enterprise	Address of Enterprise	Nature of Ownership (Proprietorship/Joint Ownership/Company)	Type of Business/Program	Type of Enterprise (Cottage/Micro/Small/Medium)	Nature of Enterprise (Production/Service/Business)	Trade License No.	Name of Entrepreneur/Entrepreneurs	BIN No.	Loan/Investment Account No.	Date of Loan/Investment Distribution	Type of Loan/Investment (Term/Working Capital)	Purpose of Loan/Investment	Amount of Loan/Investment Distributed (Taka)	Customer Rate of Interest/Profit (%)	Grace Period (Months)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)	(17)	(18)
1
2
3
Total	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
																Grace Period including Grace Period
																Tenor of Loan/Investment (Months)
																(19)