CMSME Funding Policy draft finalized
CMSME damaged by Covid to get Tk 50 lakh loans
Published: 12:41 PM, 5 January 2021 Updated: 12:41 PM, 5 January 2021
The government is providing a maximum loan of Tk 50 lakh and a minimum loan of Tk 10 lakh to Cottage, Micro, Small and Medium Enterprise (CMSME) entrepreneurs affected by the Covid-19 outbreak. A policy on providing loans has already been finalized.
According to the relevant sources, loans will be given from the new fund, however, the beneficiary will not be able to adjust or repay any loan taken before with the money of this loan.
With these provisions in mind – the draft policy has been finalized to provide “Quick Loans to CMSME Entrepreneurs to Tackle the Novel Coronavirus Effect”. It will take effect soon after the approval of the Finance Minister.
According to sources, the CMSME (Cottage, Micro, Small and Medium Enterprise) sector will be funded by the Bangladesh Bank or the Ministry of Finance. Bangladesh Bank will first give loans to banks and financial institutions at 50 percent interest. Banks and financial institutions will again distribute it to Micro Financial Institutions (MFIs) and other lending institutions at an interest rate of 2.5 percent. These institutions will pay the money to the beneficiaries at 14 percent interest, however, the beneficiaries will pay 9 percent. The term of this fund will be 5 years.
About this, MK Mujeri, former chief economist of Bangladesh Bank, said that it is difficult to get loans in the CMSME sector. This has become more evident in the Covid situation. So they need help. Besides, CMSME sector is playing an important role in employment and economy. The government may think more about this.
It is learned that the Prime Minister has announced an incentive package of Tk 1.21 lakh crore to counter the effects of coronavirus. The SME sector is getting Tk 20,000 crore of this, however, loans worth Tk 10,000 crore were distributed in the SME sector till December.
The Ministry of Finance has recently organized a series of meetings with economists, industrialists, businessmen and other professionals to identify the problems in the implementation of these packages.
The meetings recommended giving more importance to the SME sector. In view of this, the Financial Institution Division of the Ministry of Finance has drafted a policy to include the CMSME sector to accelerate the incentive package for the SME sector.
It is mentioned that the working capital will be given in the form of a loan to accelerate the activities of the CMSME sector affected by Covid-19. Department of Youth Development Training, BSIC and the entrepreneurs trained from government, non-government, city or abroad are in the priority list for getting loans.
The draft policy further states that beneficiaries will get a maximum of Tk 50 lakh at the individual or group level, cottage entrepreneurs at a maximum of Tk 10 lakh, micro-entrepreneurs at a maximum of Tk 30 lakh and small entrepreneurs at Tk 50 lakh.
Meanwhile, the rationale for formulating the draft policy states that the role of incentive packages is important in creating small entrepreneurs, creating employment and increasing economic activities at the marginal level. Besides, the CMSME sector plays a key role in the overall economic development of the country, especially in job creation and rapid poverty alleviation.