Bangladesh Bank has introduced an innovative scheme of Tk 200 crore, where loans will be extended to the poor and banks will enjoy incentives against recovered loans, in addition to interest.
For the first time, the central bank has introduced the 'revolving refinance fund' to give low interest loans to low-income professionals, small and marginal businessmen and farmers.
On Wednesday, the central bank sent a guideline in this regard to the chief executives of all the commercial banks.
Bangladesh Bank said low-income groups will get loans from the refinance scheme to make the rural economy more vibrant through financial inclusion.
Under the scheme, a maximum of Tk 50,000 can be given as loans to an individual with no collateral.
However, each loan applicant will have to provide a personal guarantee from an adult Bangladeshi citizen from the area.
Banks can give the loans directly or through micro-credit institutions approved by the micro-credit regulatory authority.
Banks will give loans to borrowers at a maximum interest rate of 12 percent and the micro credit institutions will take a maximum of 19 percent.
The banks will take a refinancing facility from the central bank at 5 percent. The micro-credit institutes will take funds from the banks at a rate of 7 percent.
The borrower will repay the loan plus interest by a maximum of one year. However, if any borrower fails to pay back the loan, the refinance facility will be cancelled and a market based interest rate will be applicable.
However, no borrower will have to pay twice the amount of the original loan amount.
After returning the refinancing facility, banks will get a subsidy at a rate of 3.5 percent.
In the guideline, BB said farmers who possess a maximum of 2.47 acres of land and businessmen who run very small businesses would come under the purview of this scheme by opening bank accounts by initially depositing Tk 10.
Around 50 types of small and micro entrepreneurs and professionals based in para, mahalla and village like grocers, stationery shop owners, barbers, tailors, mobile top-up service providers, floating food vendors, newspaper hawkers, tea vendors, rickshaw and van drivers will fall under the scheme.