SMESPD Circular Letter No. 08: Regarding Accomplishment of Participation Agreement with Banks and Financial Institutions for Credit Guarantee Scheme under Cottage, Micro and Small Enterprises (CMSE) Sector

SME & Special Programs Department CGS Unit Bangladesh Bank Head Office Dhaka. SMESPD Circular Letter No. 08 Dated: 28 Asharh, 1428 July 12, 2021 Managing Director / Chief Executive Officer All Scheduled Banks and Financial Institutions operating in Bangladesh

Dear Sir,

Regarding the accomplishment of Participation Agreement with Banks and Financial Institutions for Credit Guarantee Scheme under Cottage, Micro and Small Enterprises (CMSE) Sector.

Reference is invited to SMESPD Circular Letter No. 03/2020 and 04/2020 on the above subject.

2. In accordance with paragraphs 2.1 and 2.2 of SMESPD Circular Letter No. 03/2020, interested banks/financial institutions were instructed to sign a 'Participation Agreement' with the CGS Unit for 5 (five) years and determine a separate portfolio limit for each year. Subsequently, 'Guidelines for Application Form' were issued through paragraph 2 of SMESPD Circular Letter No. 04/2020; paragraph 6.1.2 of which provided instructions regarding the application process for participating institutions and the terms for signing participation agreements in Annex-9.

3. Now, to facilitate the program of the Credit Guarantee Scheme under the Cottage, Micro and Small Enterprises (CMSE) sector, paragraphs 2.1 and 2.2 of Circular Letter No. 03/2020 are hereby replaced as follows:

2.1. "In light of the instructions mentioned in paragraphs 1.2 and 1.4 of this policy, interested banks and financial institutions shall declare their portfolio of unsecured CMSE loans/investments based on the unsecured CMSE loans/investments as of December 31 of the immediately preceding year, in consultation with the CGS Unit, against the credit guarantee facility for unsecured working capital (ডড়ৎশরহম ঈধঢ়রঃধষ). If the bank/financial institution wishing to participate in the Credit Guarantee Scheme submits the prescribed form duly, a Participation Agreement (চধৎঃরপরঢ়ধঃরড়হ অমৎববসবহঃ) for 05 (five) years shall be signed initially, which may be extended later if necessary."

2.2. "The Participation Agreement shall mention only the Current Year Exposure (চএখ) amount for one year (only for the year in which the agreement is signed)."

4. (a) Simultaneously, the following lines are added at the end of paragraph 6.1.2 of 'Guidelines for Application Form':

'If the Current Year Exposure (CYE) of the applicant bank/financial institution is less than or equal to 50 (fifty) crore Taka, the total unsecured CMSE exposure and the five-year average Current Year Exposure (CYE) of the applicant bank/financial institution shall be mentioned in the Application Form. Otherwise, the Current Year Exposure (CYE) of the applicant bank/financial institution shall be mentioned in the Application Form.'

(ii) Besides this, paragraph 4.4 of Annex-9 of 'Guidelines for Application Form' is hereby replaced as follows:

'4.4. If the Current Year Exposure (CYE) of the applicant bank/financial institution is more than 50 (fifty) crore Taka, the total unsecured CMSE exposure of the applicant bank/financial institution and the five-year average Current Year Exposure (CYE) of the applicant bank/financial institution shall be mentioned in the Application Form. Otherwise, the Current Year Exposure (CYE) of the applicant bank/financial institution shall be mentioned in the Application Form.'

5. Other instructions of SMESPD Circular Letter No. 03/2020 and 'Guidelines for Application Form' shall remain unchanged.

6. 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.

Yours faithfully,

(S.M. Mohsin Hossain) General Manager Phone: 9530221 2