SMESPD Circular Letter No. 05: Temporary Relaxation of CMSME Sector wise Loan/ Investment Disbursement and Scheduling of Recovery of Installments against Pre-Financing Scheme

Bangladesh Bank Chief Executive Motijheel, Dhaka-1000 Bangladesh.

SMESPD Circular Letter No. 05 Date: 14 Chaitra 1429 28 March 2023

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

Subject: Temporary relaxation of the distribution ratio of loan/investment in production, service and business sectors under the Pre-authorization Scheme of 25,000 (Twenty-five Thousand) Crore Taka authorized for CMSME sector and determination of the schedule for recovery of installments against Pre-authorization.

Reference is drawn to your attention to SMESPD Circular No. 04 dated 19 July 2022, SMESPD Circular Letter No. 07 dated 08 November 2022, SMESPD Circular Letter No. 01 dated 18 January 2023 and SMESPD Circular Letter No. 02 dated 31 January 2023.

2. During the post-COVID period, the demand for loan/investment in the business sector, along with other sectors, has been observed to be relatively high in the country's economic activities. In this context, by relaxing the existing distribution ratio for providing loan/investment in the production, service and business sectors as stated in SMESPD Circular Letter No. 07/2022, banks and financial institutions may provide loans to any sector according to customer demand. This relaxation will remain valid until 30 June 2024.

3. Furthermore, in accordance with the previous instructions issued by Bangladesh Bank under the Pre-authorization, 60 (Sixty) percent of the loan/investment must be distributed as term loan/investment and 40 (Forty) percent as working capital loan/investment. Additionally, the loan granted by Bangladesh Bank under the Pre-authorization shall be recovered following the methods specified below:

a) Loans granted as term loan/investment shall be recovered in quarterly installments with interest/profit over a period of 5 (Five) years including a 6 (Six) months grace period;

b) Loans granted as working capital loan/investment shall be recovered in a single lump sum with interest/profit every 12 (Twelve) months.

4. Furthermore, other instructions stated in the aforementioned circulars and circular letters shall remain unchanged.

5. These instructions are issued under the powers granted by Section 45 of the Bank Company Act, 1991 and Section 18 of the Financial Institutions Act, 1993.

6. These instructions shall take effect immediately.

Yours faithfully,

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