Bangladesh Bank has launched three refinancing facilities totalling Tk 22,500 crore to expand low-cost credit for micro, small and medium enterprises, aiming to support industrial growth, boost investment and create jobs.

In three separate circulars issued on February 5, the central bank introduced a Tk 1,500 crore revolving refinancing fund titled the Financial Sector Fund for the Development of Micro, Small and Medium Enterprises (FSFDMSME), created a Tk 3,000 crore cluster-based refinancing scheme for cottage, micro, small and medium enterprises (CMSME), and converted an existing Tk 18,000 crore CMSME pre-financing programme into a full refinancing scheme.

All three facilities will be financed from Bangladesh Bank’s own funds.

Under the FSFDMSME scheme, banks and finance companies will receive refinancing against loans provided to viable MSME businesses for expansion and modernisation.

Entrepreneurs will need to invest at least 10 per cent of total project costs from their own resources, while banks may finance up to 90 per cent.

The refinancing ceiling has been set at Tk 1 crore for micro enterprises and Tk 5 crore for small and medium firms.

Both working capital loans with tenure of up to one year and term loans ranging from more than one year to a maximum of seven years will qualify for refinancing.

Banks must ensure that borrowers’ administrative, financial and business information is properly documented before loan approval.

Bangladesh Bank has capped the customer-level interest or profit rate at 7 per cent, including for Shariah-based financing.

The central bank will provide refinancing to participating banks and finance companies at a concessional rate of 2 per cent.

Repayments of refinancing instalments, including interest or profit, will be automatically deducted from the current accounts of participating banks maintained with Bangladesh Bank.

The circular allows BB to carry out on-site inspections before or after approving refinancing.

If it detects misuse of funds, the central bank will recover the refinanced amount in one instalment, along with penal interest set at two percentage points above the refinancing rate.

Separately, the central bank introduced a Tk 3,000 crore cluster financing scheme to support CMSME clusters through low-cost funding.

Under this scheme, Bangladesh Bank will refinance banks and finance companies at 1 per cent, while the customer-level interest or profit rate will remain capped at 7 per cent.

Banks have been instructed to disburse at least 10 per cent of their total loans under this scheme in March 2025.

In another circular, Bangladesh Bank confirmed that the CMSME scheme launched as a Tk 25,000 crore programme in July 2022 and later converted into a pre-financing facility will now operate as a refinancing scheme with a current size of Tk 18,000 crore.

From December 2026, the fund will be reduced by Tk 750 crore each year over four years and stabilise at Tk 15,000 crore from January 2030.

Loans under the CMSME refinancing scheme will follow similar conditions, with a maximum customer interest or profit rate of 7 per cent and a refinancing rate of 2 per cent.

Only non-default borrowers will qualify, and banks must verify loan status through Credit Information Bureau reports.

Bangladesh Bank said that the initiatives are designed to ease financing constraints caused by high borrowing costs, limited collateral and funding gaps in the MSME and CMSME sectors, while maintaining strict oversight and disciplined use of funds.