Bangladesh Bank is planning to create a refinancing fund of up to Tk1,000 crore to support young entrepreneurs across the country, with a proposal to offer collateral-free loans of up to Tk10 lakh each to people aged between 25 and 27.
The fund, tentatively named “Udyog”, is expected to start with Tk500 crore and aims to finance around 5,000 young entrepreneurs. Loans at interest rates ranging from 4 to 6 per cent are under consideration, along with grants equivalent to the loan amount for successful entrepreneurs from banks’ corporate social responsibility (CSR) funds.
However, the size of the fund, interest rates, eligibility criteria, age limits, loan amounts and grants have yet to be finalised.
Governor Md Mostaqur Rahman met leaders of the Association of Bankers Bangladesh (ABB) on Tuesday to discuss the proposed structure of the fund and the role of commercial banks in implementing it.
The meeting discussed the lending framework, selection of beneficiaries, participation of banks at the upazila level and possible mechanisms for disbursing the loans.
After the meeting, ABB Chairman and City Bank Managing Director Mashrur Arefin told reporters that banks could obtain refinancing from the central bank and lend to young entrepreneurs at low interest rates.
“Those aged 25, 26 or 27 could receive loans from banks at very low rates of 4, 5 or 6 per cent using refinancing from the central bank. They could get around Tk10 lakh each to start or run their businesses. A major fund is coming for young entrepreneurs across the country,” he said.
Under the proposal, the loans would be entirely collateral-free. Financing could be available for manufacturing, fisheries, agriculture and other small ventures, including home-based food businesses.
Selecting genuine entrepreneurs is seen as one of the biggest challenges. One option discussed at the meeting is to divide upazilas among participating banks, with designated banks responsible for identifying potential entrepreneurs in their assigned areas.
“Identifying young entrepreneurs at the upazila level would be the logical approach. Whether they must be entirely new entrepreneurs or have been running a business for a year are among the issues that will be decided,” Arefin said.
The proposal also envisages grants for borrowers who successfully operate their businesses and maintain a good repayment record.
One option under consideration is to provide the grants from banks’ CSR funds. This could potentially allow an entrepreneur receiving a Tk10 lakh loan to subsequently qualify for another Tk10 lakh as a grant.
Arefin said even if only a fraction of the targeted entrepreneurs succeeded, the programme could have a wider impact.
“If we finance 5,000 young people and even 100 of them establish themselves properly as entrepreneurs, it could create a new wave across the country,” he said.
He stressed that ensuring the money reaches deserving entrepreneurs without lobbying or influence would be critical. “It must go to the right people, without any lobbying.”
Bangladesh Bank, however, said the initiative remains at the conceptual stage and the framework will be developed after considering feedback from bankers.
“This loan package is being planned for small and medium entrepreneurs, but nothing has been finalised yet,” Bangladesh Bank spokesperson and Executive Director Arief Hossain Khan said.
