Bangladesh Bank (BB) will issue a master circular on 16 September detailing its planned ‘UDYOG’ programme, which proposes up to Tk10 lakh in collateral-free loans for young entrepreneurs and another Tk10 lakh as a one-off grant upon successful use and repayment of the credit.
The programme will initially be piloted in eight districts, one from each administrative division, with borrowers capped at 28 years of age.
The central bank initially aims to provide loans and other financial support to 5,000 young entrepreneurs, said BB spokesperson and Executive Director Arif Hossain Khan at a press conference at the central bank headquarters on Thursday.
In the first phase, 640 entrepreneurs will be selected from 64 upazilas across Manikganj, Feni, Naogaon, Jhenaidah, Bhola, Habiganj, Rangpur and Netrokona. Ten entrepreneurs will be selected from each upazila through a process involving banks, business chambers and representatives nominated by BB.
Under the proposed structure, an entrepreneur will initially receive up to Tk10 lakh entirely as a loan. The grant will not be provided upfront. A borrower who properly uses the financing and repays the principal may subsequently qualify for a one-off grant of up to another Tk10 lakh, Arif Hossain confirms.
The interest rate for borrowers has yet to be finalised, with a maximum rate of between 4 per cent and 7 per cent under discussion. The loans will be funded through BB’s existing refinancing schemes. The central bank is also considering whether the proposed grant could be financed from commercial banks’ corporate social responsibility funds.
UDYOG is intended to cover a wide range of businesses, including agriculture and food processing, handicrafts, fisheries, livestock, tourism, services, technology-based ventures and startups.
Besides financing, entrepreneurs may receive additional marketing and technological assistance under what the central bank describes as “credit plus-plus” support.
The BB official said safeguards would be put in place to keep borrower selection and loan distribution free from political influence. Its regional offices and participating banks will monitor implementation.
Arif Hossain, however, said “If a promising entrepreneur has a political identity, that identity will not become a barrier to receiving the loan. The key point is that whoever is selected on merit will receive the facility.”
Borrowers who divert the money to purposes other than those approved will face punitive measures, although the specific penalties have yet to be determined.
The programme follows an 11 August meeting between BB Governor Md Mostaqur Rahman and leaders of the Association of Bankers Bangladesh, where its proposed structure was discussed.
The initiative comes against the backdrop of an employment programme outlined in the BNP’s election manifesto. Governor Mostaqur Rahman was a member of the BNP’s election management committee for the 13th parliamentary election before taking charge of the central bank.
