Refinance Schemes and Special Funds

Overview:

Sustainable Finance Department of Bangladesh Bank was established on July 23, 2015 upon extinguishing the previous Green Banking and CSR Department with a view to develop sustainable banking (i.e. Green Banking and CSR) framework and to integrate it into core business operation of banks and FIs through efficient and effective implementation of Green Banking and CSR.

Functions:

Following funcrions policies are monitoring by the department

1. Policy formulation and monitoring of different aspects of Green Banking (green finance, environmental risk management, in house environmental management, climate risk fund, green marketing, online banking, green branch, green product innovation, green strategic planning etc) activities of banks and Financial Institutions (FIs);
2. Policy formulation and management of BDT 2.00 billion Bangladesh Bank Refinance Scheme for renewable energy and green products;
3. Policy formulation and management of USD 50 million ADB supported Refinance Scheme for Brick Kiln Efficiency Improvement.

Necessary Links:

• Sustainable Finance Department of Bangladesh Bank

SME & Special Programmes Department (SME&SPD)

SME & Special Programmes Department (SME&SPD) is one of the significant outcomes of Bangladesh Bank (BB)’s policy paradigm shift to add financial inclusion to its traditional goals of prudential regulation & financial stability. This department started its journey in December, 2009 towards the development of CMSMEs in Bangladesh by improving the existing environment in the banking sector through regulatory & policy interventions. SME & Special Programmes Department is playing a pivotal role to ensure country’s inclusive & sustainable economic growth through CMSMEs development with a special focus on financially excluded, unbanked people & women entrepreneurs.

BB identified Cottage, Micro, Small & Medium Enterprises (CMSMEs) as a top priority sector for rapid industrialization, employment generation, poverty reduction, gender equality & overall economic growth of Bangladesh. To develop the sector, this department provides refinance facilities to Banks & Financial Institutions at a relatively cheap rate against their financing to CMSMEs. Currently, Bangladesh Bank is providing refinance facilities to banks and financial institutions from Bangladesh Bank Fund, Revolving Fund Account of JICA assisted FSPDSME Fund & Urban Building Safety Project, Small Enterprise Refinance Scheme, Agro-based Product Processing Industries Fund, New Entrepreneurs Fund and Islamic Shariah Fund. A target based lending to CMSMEs has been initiated since the inception of this department. This intervention for engendering SME finance has been declared as international best practice for SME financing by Alliance for Financial Inclusion (AFI) in 2014. All banks and financial institutions have been disbursing credit to CMSMEs following their indicative target set on a calendar year (Jan-Dec) basis. SMESPD has been taking multifaceted initiatives for developing the Cottage, Micro, Small and Medium Enterprises (CMSMEs) including women entrepreneurship development all over the country.

1. Refinance Scheme for Start-Up Fund
2. Small Enterprise Refinance Scheme.
3. Refinance Scheme for Setting up Agro Based Product Processing Industries in Rural Areas.
4. Refinance Scheme for New Entrepreneurs' in Cottage, Micro and Small Enterprise Sector.
5. Refinance Scheme for Shariah Based financing in 'Agro-Based Industry', Small Entrepreneurs' (Including Women Entrepreneur) and New Entrepreneurs' in Cottage, Micro & Small Enterprise Sector.
6. Refinance Scheme for BB Housing Fund

Necessary Links:

• CMSME Refinance Schemes Department of Bangladesh Bank

Entrepreneurship Support Fund (ESF):

EEF was a great initiative of the Government to promote specific sectors under specific conditions. Considering all the recommendations and findings of various surveys on the performance of EEF and workshops with the participation of Government, Bangladesh Bank and all the stakeholders, in 2017, the decision was taken to introduce a debt model with simple interest at a tolerable level instead of existing equity model in managing this generous scheme of the government. As a result, the name of EEF was changed to ESF (Entrepreneurship Support Fund) in 2017 and through EEF Circular No-35/2018 on 05 August 2018 ESF Policy, 2018 was issued.

ESF Process Flow:

he fund can be availed by an investor as per the following process flow subject to compliance of existing policy at each stage:

1. Submission of Expression of Interest (EOI):

   i) Food processing and Agro-based Industry: Fill up EOI form online ? Submit a nonrefundable pay order/bank draft of Tk 2000.00 directly/by post/by courier to the address of EEF Unit, Bangladesh Bank with a print copy of EOI.
   ii) ICT Based Industry: Collect EOI from ICB against a nonrefundable Pay order/Bank Draft of Tk.2000.00 ? Submit duly filled EOI directly/by post/by courier to ICB.

2. Accumulation of EOIs in ICB: Sending EOIs of food processing and agro-based industries filed with Bangladesh Bank to ICB
3. Presentation of applications to Project Appraisal Committee (PAC) by ICB.
4. Interviewing and short listing entrepreneurs.
5. Submission of Project Appraisal Report to ICB by the shortlisted entrepreneurs through any of the appraising Bank/FI.
6. Submission of Appraisal Reports to the concerned PAC to ascertain the technical and financial feasibility of the proposed project.
7. Instructions sent to appraising Bank/FI to submit final assessment report for feasible projects.
8. Registration of the feasible project under RJSC as Private Limited Company by the entrepreneurs of Food processing and Agro-based Industry. ICT based companies are eligible to apply for ESF loan having completed at least one year period since registration at RJSC as a private limited company.
9. Submission of final Assessment Report to ICB by appraising Bank/FI.
10. Presentation of final assessment reports before PAC to have recommendation for approval.
11. Submission of recommended project proposals to Sanction Board for final approval.
12. Issuance of sanction letter.
13. Documentation:

    i. Mortgaging required collateral by the entrepreneur in favor of ICB.
    ii. Charge creation at RJSC in favor of ICB
    iii. All other documentation requirements according to the sanction letter.

14. Verification of entrepreneur's investment (51% of the project cost) through joint inspection of ICB, appraising institution and BB.
15. Disbursement of ESF loan (49% of project cost) in 3-4 installments confirming entrepreneur's adequate investment.
16. Issuance of loan repayment schedule after full disbursement.

Necessary Links:

• Equity and Entrepreneurship Fund Unit of Bangladesh Bank
• Entrepreneurship Support Fund wing

Agricultural Credit in Bangladesh

The Agricultural Credit Department has been entrusted with the responsibilities of formulating agricultural credit policy for the country and its implementation. It formulates the policies relating to priority sectors of agriculture and rural credit. It monitors and ensures timely, adequate and transparent flow of credit to the rural people for agricultural activities and rural employment programs.

The department provides refinance facilities to BKB, RAKUB & BRAC against Government/ Bank guarantee and also provides demand loan to BKB & RAKUB as and when approached.

Works relating to formulation of policies and implementation of agricultural projects financed by Development Partners, Government of Bangladesh and Bangladesh Bank are also done by this department. It monitors the on-going projects, extending refinance facilities to the participating banks against their disbursement to target groups, coordinating disbursement and recovery activities of these banks and arrange repayment of project loan to Govt. and Development Partners. It also provides loan facilities to some specialized banks like Grameen Bank, Ansar VDP Unnayan Bank, karmasangsthan Bank etc. against Govt. guarantee for extension of microcredit services to the rural people.

The department monitors the Lead Bank Scheme which is aimed at forging a coordinated approach for providing agri credit to achieve overall development of rural areas in the country. It also collects information and maintains data in respect of agricultural credit which are supplied to the Ministries of the Govt., International bodies like IMF, World Bank, ADB, IFAD etc. as and when required.

Agricultural & Rural Credit Policy

• Agricultural & Rural Credit Policy and Program for the FY 2023-2024

Necessary Links:

• Agricultural Credit Department of Bangladesh Bank