BB seeks Tk 6.0b to finance farm projects under EEF

The Bangladesh Bank (BB) has sought an allocation of Tk 6.0 billion for its Equity and Entrepreneurship Fund (EEF) in the fiscal year of 2019 to finance agro-based projects, officials said.

Presently, the EEF has an amount of Tk 3.91 billion in its coffers from the last year's allocation, thus the central bank did not seek any fresh funds for the ICT sector, they said.

Officials said since the EEF policy was being revised, receiving new loan applications remained suspended from the last year.

General manager of EEF Unit of the central bank Parimal Chandra Chakraborty told the FE Wednesday the final revised copy of EEF policy would be sent to the ministry of finance next week.

Once the policy is approved by the ministry, new loan application would be received, he said.

Mr Chakraborty said that a Tk 6.0 billion has been sought for the next fiscal year to provide the second and the third instalments of loans to the existing projects.

"Money won't be a problem for new projects as the government is interested to assist such projects," he said.

Another central bank official told the FE that in the revised policy, the central bank has suggested providing loans instead of equity to help recovery of money in case of project failure.

Presently, the 'equity model' is followed in case of EEF enterprises where the government is a party with 49 per cent share and entrepreneurs own 51 per cent share.

In this case, the entrepreneurs do not feel the urge to make their enterprises profitable and return the money to the government.

The central bank suggested following 'loan model' and charging a 3.0 per cent simple interest on the money to be provided from the EEF to the enterprises.

Besides, the central bank also suggested mortgage of properties be made mandatory against loans so that the money can be recovered by selling those in case of closure or losses.

Presently, for the agriculture sector, having land property in favour of enterprises is mandatory but keeping those under mortgage was not mandatory.

Having a land property is not mandatory for the ICT sector enterprises, which want to get money from the EEF, but the BB has suggested that the entrepreneurs should provide personal guarantee or the third party or bank guaranty to secure the loans.

"If the mortgage is provided by entrepreneurs, the loan is safe," he said.

He said that if the money is given as loan against their mortgaged properties, no entrepreneur will show courage to misappropriate it.

The government created the EEF in fiscal year 2000-2001 to extend support to the two promising sectors -- agro-based food processing and software for which Tk 1.0 billion was allocated.

The central bank was the implementing agency of the project until May 2009.

Latter, the operational function of the fund was transferred to the Investment Corporation of Bangladesh (ICB).

Since then, the central bank has been formulating fund management policies and monitoring the investment activities of the EEF.

According to officials, since its inception, the government has allocated Tk 20 billion in favour of the fund, of which Tk 15.13 billion went to the agriculture sector and Tk 5.12 billion went to information and communication technology (ICT) sector until March last year.

[email protected]