SMESPD Circular Letter No. 03: Allowing Grace Period against Short, Medium & Long Term Loan in favor of Cottage, Micro & Small Entrepreneurs

Bangladesh Bank Head Office Motijheel, Dhaka-1000 Bangladesh. SMESPD SME & Special Programs Department (Women Entrepreneur Development Unit) SMESPD Circular Letter No. 03 Date: 30 October 2017 15 Kartik 1424

To: Managing Director / Chief Executive All Scheduled Banks and Non-Bank Financial Institutions of Bangladesh.

Regarding: Providing Grace Period for Cottage, Micro and Small Sector Entrepreneurs in respect of Working Capital Loan Approval and Repayment of Short, Medium and Long Term Loans.

Dear Sir,

The Cottage, Micro, Small and Medium (CMSME) sector is one of the driving forces of the country's economic development. This sector plays a major role in poverty alleviation, reducing wealth and regional disparities, establishing gender equality between men and women, and empowering women, as well as in achieving the highest economic growth. Entrepreneurs in the cottage, micro and small sectors, especially women entrepreneurs, often take short-term project loans, medium and long-term loans for business expansion, restructuring or starting new types of businesses, in addition to existing loans to meet the demand for working capital in the industry, service and business sectors. There is a provision for providing a grace period for a mutually agreed time based on the banker-customer relationship according to customer demand and business requirements, which is also considered in the case of providing restructuring facilities in accordance with paragraph 2.9 of SMESPD Circular No. 1 dated 07/01/2016. It has been observed that banks and non-bank financial institutions are reluctant to provide the stipulated grace period for repayment of loan installments according to their needs, without properly determining the business needs of entrepreneurs, especially women entrepreneurs, in the customer category of the cottage, micro and small sectors.

In order to accelerate the economic development of the country, it is necessary to compulsorily comply with the matter of encouraging entrepreneurs in the cottage, micro and small sectors, especially women entrepreneurs, in business, commerce and productive industries in accordance with the nature of the initiative, by continuing to approve working capital loans to meet the demand for working capital and by providing a grace period of 03 months for loans with a tenure of 01 year and 03/06 months for medium and long-term loans based on the banker-customer relationship. In this regard, the grace period will be considered as additional to the loan tenure.

Kindly acknowledge receipt.

Yours faithfully, ( Sheikh Md. Selim ) General Manager Phone: 9530502 Email: smespd@bb.org.bd