Dhaka: Bangladesh Bank (BB) has implemented a new initiative allowing Bangladeshi citizens aged 21 and above to apply for startup loans from commercial banks at an interest rate of just 4 percent.
According to Bangladesh Sangbad Sangstha, the central bank’s newly issued master circular reveals that operational startups not older than 12 years from their registration date are also eligible for these loans. The circular outlines that banks and financial institutions can obtain refinancing support from a Tk 500 crore ‘Startup Fund’ established by the central bank to facilitate the distribution of these loans.
The circular highlights a significant enhancement in the policy, increasing the maximum loan limit from Tk 1 crore to between Tk 2 crore and Tk 8 crore, depending on the startup’s development stage. Additionally, the policy introduces equity financing for the first time, allowing banks to make equity investments in startups alongside providing traditional loans.
To support this shift, Bangladesh Bank has announced the creation of a venture capital company to enable banks to invest their entire startup funds as equity. These investments will be recorded as equity in the banks’ financial statements.
The master circular specifies that the interest rate for borrowers will be capped at 4% and charged quarterly. Banks and financial institutions are required to use their own loanable funds to finance these startups. Under the new guidelines, they cannot issue new loans from previously established internal startup funds, although disbursements for loans already sanctioned under the old system may continue.
Bangladesh Bank aims to stimulate innovation, employment, and sustainable growth by facilitating easier access to financing for high-potential startups. The revised policies align with the Sustainable Development Goals (SDGs), aiming to foster entrepreneurial ecosystems and enhance global investment connectivity.
Further guidelines on the formation and operation of the upcoming venture capital company will be released in a separate circular, as indicated by the central bank.