Bangladesh launches a fresh scheme worth nearly Tk 4.0 billion in aid to coronavirus-hit cottage, micro, small and medium enterprises (CMSMEs), as part of drives for economic recovery.
The recovery package is aided by the Islamic Development Bank (IsDB), and the funds from it will be disbursed in a Shariah-compliant method, officials say.
The amount of Tk 3.98 billion will be lent to eligible scheduled banks and non-banking financial institutions (NBFIs) for supporting the CMSME sector, according to a notification issued Sunday by the Bangladesh Bank (BB).
Earlier on June 24 last calendar year, the government signed a framework agreement with the IsDB for support to its CMSMEs under a project titled 'Line of Finance to Support SMEs Project under the IsDB SPRP for Covid-19, Restore Track (LFSSP)'.
"The project contributes to the economic stimulus packages launched by the government for combating the Coviod-19 crisis," the notification notes.
The central bank is designated as 'Executing Agency (EA)' for implementing this project in accordance with the agency agreement signed between IsDB and the Government of Bangladesh.
Islamic Shariah-compliant commercial banks and NBFIs and also conventional banks/NBFIs having Islamic
branches/windows are allowed to act as participating financial institutions (PFIs) under the project after fulfilling the central bank-set conditions.
Currently, 10 full-fledged Islamic banks have been operating with 1671 branches out of total 10937 branches of the whole banking sector in Bangladesh.
Besides, 41 Islamic banking branches of nine conventional commercial banks and 368 Islamic banking windows of 13 conventional commercial banks are also providing Islamic financial services across the country.
Under the notification, the PFI will receive mark-up at a maximum of 4.0 per cent on the financed amount to maintain a maximum sale price, which refers to financed (disbursed) amount to each enterprise plus a rate of maximum 7.18 per cent on it from their end-client.
"It's a pre-financing scheme, not refinancing one," a senior BB official told the FE while replying to a query.
Tenure of the scheme has been fixed two years from the date of first disbursement from the IsDB, according to the central banker.
