Bangladesh Bank has introduced new rules that make it easier for young entrepreneurs to get affordable startup loans. From now on, any Bangladeshi citizen aged 21 or older can apply for a startup loan from commercial banks at a maximum interest rate of 4%.
New Policy Announced by Central Bank
On Wednesday, July 9, Bangladesh Bank released a Master Circular that outlines the updated policy for startup loans. This circular brings several major changes to how startups can receive funding and support.
Who Can Apply?
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Anyone aged 21 or older
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Existing startup companies can also apply, but their registration must not be older than 12 years
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Loan Amount and Interest Rate
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Loans can range from Tk 2 crore to Tk 8 crore (previously, the highest was Tk 1 crore)
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The interest rate at the customer level will be 4% maximum
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Interest will be charged quarterly
Refinance Fund for Banks and Finance Companies
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Banks and financial institutions can access a refinance facility from a Tk 500 crore fund created by Bangladesh Bank called the “Startup Fund”
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They can use this fund to support entrepreneurs with loans or investments
Equity Investment Now Allowed
Earlier, the startup fund only allowed loans. But under the new rules, equity investment is also permitted. Banks must use their own startup funds to offer equity investment in startups.
To support this, Bangladesh Bank plans to set up a venture capital company. This company will manage equity investments from the banks. The central bank’s SME & Special Programs Department will handle the setup and administration.
No New Loans from Bank’s Own Startup Fund
From now on, banks cannot provide new loans from their own startup funds. However, they can still release already-approved funds. New loans must come from the refinance fund or banks’ investable funds.
Importance of Startups in Bangladesh’s Economy
Banks’ investable funds or the refinance fund must be the source of new loans:
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Economic growth
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Job creation
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Innovation
They also help in achieving the Sustainable Development Goals (SDGs) by creating new opportunities and improving the business environment.
The central bank believes this updated policy will speed up funding for promising startups and help create more jobs and innovation across the country.
Source: TBS
