Bangladesh Bank declares Tk 60,000 crore incentive package

Bangladesh Bank has announced a Tk 60,000 crore refinance and support fund aimed at restarting closed industries, assisting small and medium entrepreneurs, and creating new employment opportunities. The central bank hopes that this initiative will generate employment for over 2.5 million people in the country.

Governor Mostaqur Rahman announced this at a press conference held at the Bangladesh Bank headquarters on Saturday.

He said the country's economic growth has been consistently declining over the past few years. While GDP growth once stood at 5.8 percent, it later fell to 4.2 percent. It is currently estimated that growth may settle at 3.7 percent.

During this period, sectors such as garments, textiles, steel, ceramics, information technology, and manufacturing have come under significant pressure.

The Governor pointed out that non-performing loans in the banking sector have increased, incidents of money laundering have occurred, and depositor confidence has been negatively affected. Due to high interest rates, small and medium entrepreneurs are also being discouraged from expanding their businesses. This special fund has been created to bring new momentum to the economy under these circumstances.

Out of the announced Tk 60,000 crore package, Tk 41,000 crore will be distributed under the refinance scheme. This includes Tk 20,000 crore for closed industries and services, Tk 5,000 crore for the CMSME sector, Tk 10,000 crore for agriculture and rural economic activities, Tk 3,000 crore for export diversification, and an additional Tk 3,000 crore allocated to develop North Bengal as an agricultural hub.

Additionally, various sectors will be financed from Bangladesh Bank's own Tk 19,000 crore support fund. This includes Tk 5,000 crore for pre-shipment credit refinance, Tk 5,000 crore for cottage, micro, and small entrepreneurs, Tk 2,000 crore for leather and leather goods, Tk 1,000 crore for employment of unemployed youth, Tk 1,000 crore for rural economic activities, Tk 2,000 crore for the frozen fish and fish export sector, Tk 1,000 crore for environmentally friendly investments, Tk 1,000 crore for employment abroad, Tk 500 crore for the startup sector, and Tk 500 crore for the creative economy sector.

The Governor informed that the Tk 500 crore allocated for the creative economy sector will be provided as grants from the Corporate Social Responsibility (CSR) fund. This money will not be disbursed as loans.

According to Bangladesh Bank's calculations, if the entire program is implemented, it could create employment for more than 2.5 million people. It is expected that this will particularly help restart closed industries, increase agricultural production, expand exports, and bring new momentum to the rural economy.

The central bank also believes that the Tk 1,000 crore allocated for employment abroad could create job opportunities for approximately one hundred thousand people.

Loans for unemployed youth will be disbursed through employment banks. On the other hand, funding for rural economic activities will be provided through the Ansar-VDP Bank. It has been stated that this will benefit a large number of Ansar and VDP members.

Regarding the interest rate, the Governor said that under the refinance scheme, Bangladesh Bank will provide funds at 4 percent interest. Banks can maintain a maximum spread of 3 percent. As a result, larger borrowers will have the opportunity to obtain loans at a maximum interest rate of 7 percent. However, due to the higher management costs of microcredit, the interest rate in that area may be somewhat higher. Particularly in the case of small loans disbursed through employment banks, a comparatively higher interest rate may apply.