Author Topic: Bangladesh Bank frames policy on startup financing  (Read 2448 times)

Maliha Islam

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Bangladesh Bank frames policy on startup financing
« on: March 31, 2021, 12:48:10 PM »
Bangladesh Bank frames policy on startup financing

The Bangladesh Bank (BB) has formulated a policy relating to the disbursement of funds worth Tk 5.0 billion for startups.

The disbursement of funds to the startup clients will be made collateral-free.

The central bank's SME and Special Programmes Department issued a circular detailing the policy on Monday.

The BB would form the Tk 5.0-billion refinancing fund to help the country's startups. Banks will disburse money from the fund to the startups.

Besides, the commercial banks will constitute their own and separate funds for the startups.

Individual banks will form their own funds with money equivalent to 1.0 per cent of their respective operating profits for the year 2020.

The banks will formulate separate policies to this end, to be approved by their respective boards.

The highest ceiling for loan from the fund will be Tk 10 million having a maximum of five-year repayment period. The startups concerned will get a grace period of one year to repay loans, either in quarterly or semi-annual basis.

Educational certificates of the startups entrepreneurs will be treated as collateral for loans. Each bank will preserve 10 per cent quota for women entrepreneurs.

The rate of interest for the startup loans will not exceed 4.0 per cent. The banks will get funds at 0.5 per cent interest rate from the central bank refinancing scheme. If an entrepreneur shares an idea with any bank for getting loan, the bank cannot disclose whether it will fund him/her or not.

The banks will add a new head in their balance sheet under the name of startups.

According to the BB, startup means innovations for marketing new products, services and technologies, and such enterprises would create employment and assets in the country.

Meanwhile, the Startup Bangladesh Limited, a platform to support new business ideas, will provide 50 startups with Tk 1.0 billion venture capital within this year, marking the birth centenary of Bangabandhu Sheikh Mujibur Rahman.

The to-be-funded startups are expected to use the money to expand their businesses and generate new employments, thus contributing to the country's economy.

To this effect, Startup Bangladesh Limited is set to hold a virtual programme - 'ShotoBorshe Shoto Asha' (a hundred hopes in a centenary) - today (Wednesday), according to a statement.

Zunaid Ahmed Palak, State Minister to the Information and Communication Technology (ICT) Division, is scheduled to attend the programme.

Startup Bangladesh, a venture capital fund under the ICT Division, will also provide the startups with a wide range of supports, related with mentoring, networking, legal affairs and intellectual property rights.

The statement also said the launching event would be broadcasted on the official social media platforms of Startup Bangladesh. A startup is typically a technology-based, unique and scalable business model, which usually needs financing in venture capital form.