BB introduces credit guarantee facility to speed up loan disbursement to the poor

Bangladesh Bank has introduced a new credit guarantee facility to speed up loan disbursement to landless farmers, low-income professionals, school bank account holders and small traders.

The BB’s SME and Special Programs Department on Sunday issued a circular titled “Financial Services Credit Guarantee System” mimicking the existing credit guarantee unit to ensure loan repayment under the department’s circular. financial inclusion.

Marginal people can take a loan of Tk 25,000 to Tk 5 lakh in one name, while Tk 20 lakh can be borrowed as a group of five members under the new credit guarantee scheme.

Previously, the central bank had set up a fund of Tk 500 crore from its own source to provide a credit guarantee scheme to expedite the disbursement of loans to the informal sector.

But the disbursement of loans in this sector is not satisfactory despite the application of the Bangladesh Bank. In order to boost the rural economy, the central bank introduced the “Financial Services Credit Guarantee Scheme” against lending to marginal people.

The BB said the adverse effects of the second wave of Covid-19 are hampering the recovery of the economy. In this context, the existing refinancing program for marginal/landless farmers, low-income professionals and small traders.

As part of the restructuring, no security deposit can be taken in case of lending to marginal/landless farmers, low yielding professional mothers, school bank account holders and small traders with bank accounts. of 10/50/100 Tk, indicates the circular.

On the other hand, lending banks can take a personal guarantee from no more than two people, including the borrower, to provide a loan.

The lending bank will benefit from the credit guarantee scheme on the payable/disbursed loan under the scheme. In this case, the BB will provide credit guarantee support to the banks.

Lending banks must sign a participatory agreement with the Bangladesh Bank to benefit from the credit guarantee facility.