SMESPD Circular Letter No. 11: Availing refinance facility against loan/investment disbursed to CMSME sector

Bangladesh Bank Head Office Motijheel, Dhaka-1000 Bangladesh.

SMES & Special Programs Department SMESPD Circular Letter No. 11 Date: October 05, 1427 October 21, 2020

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

Context regarding availing refinance facility against loan/investment disbursed to the CMSME sector.

Reference is drawn to your attention to SMESPD Circular Letter No. 02 dated September 05, 2019, and SMESPD Circular Letter No. 02 dated April 26, 2020, on the subject cited above.

2. In order to further encourage lending to the CMSME sector, detailed instructions were provided through Paragraph-11 of SMESPD Circular Letter No. 02 dated September 05, 2019, regarding the availing of refinance from four (04) refinance schemes operated under this department. Subsequently, through SMESPD Circular Letter No. 02 dated April 26, 2020, a refinance scheme of 10 (ten) thousand crore Taka was established and related instructions were provided to ensure the continuous supply of working capital loans to the CMSME sector affected by the outbreak of the Corona virus.

3. However, it is observed that in providing refinance facilities against loans/investments disbursed to the CMSME sector under the aforementioned circulars, some financial institutions are not properly complying with the instructions regarding 'unsecured loans' distributed in Section 14(ch) of the applicable Financial Institutions Act, 1993 (amended from time to time); consequently, their receipt of refinance is being hindered. Additionally, the use of the term 'single entrepreneur' in determining the maximum limit for providing refinance in the 'Refinance Scheme for Establishing Rural Industries for Agro-based Product Processing' under Paragraph-11.1(g) of SMESPD Circular Letter No. 02 dated September 05, 2019, has created ambiguity regarding the type of ownership.

4. Now, in order to further streamline the process of providing refinance facilities against loans/investments disbursed to the CMSME sector, the following decisions have been taken:

a. Financial institutions shall comply with the instructions regarding 'unsecured loans' distributed in Section 14(ch) of the applicable Financial Institutions Act, 1993 (amended from time to time) as well as all other relevant instructions of this Act; and

b. The term 'single entrepreneur' in Paragraph 11.1(g) of SMESPD Circular Letter No. 02/2019 regarding the 'Refinance Scheme for Establishing Rural Industries for Agro-based Product Processing' shall be replaced with 'single enterprise'.

5. Except for the above, other instructions distributed in the circulars shall remain unchanged.

6. These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

These instructions shall take immediate effect.

Yours faithfully,

(Husne Ara Shikha) Deputy General Manager Phone: 9530502