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The Bangladesh Bank (BB) has decided to form a startup refinancing fund worth Tk 5.0 billion, aiming to develop entrepreneurship in the country, officials said.
The decision was taken at a meeting of the central bank's board of directors, held at its headquarters in Dhaka on Thursday, with BB Governor Fazle Kabir in the chair.
As per the decision, concerned department of the BB will issue a notification mentioning different terms and conditions of the refinancing fund, they added.
"The board has given final approval to form the fund to help develop entrepreneurship in Bangladesh," BB's spokesperson and executive director Serajul Islam told the FE after the meeting.
A startup is a newly formed venture with particular momentum behind it based on perceived demand for its products or services. The intention of a startup is to grow rapidly as a result of offering something that addresses a particular market gap.
Another senior official at the BB said the central bank will announce a policy on formation of another Tk 5.0 billion startup fund to be mobilised by all the scheduled banks from their own resources on the same ground.
"The scheduled banks will have to keep 1.0 per cent from their annual profit to form the refinancing fund," the central banker explained.
Professor Muhammad Mahboob Ali, Coordinator, Entrepreneurship Economics Programme of the Dhaka School of Economics, suggested the authorities concerned to utilise the fund properly.
"Definitely, it will help develop entrepreneurship in the country if the fund is used properly," Dr. Ali said.
The startup ecosystem that began its journey in Bangladesh in early 2010s has experienced a remarkable transformation.
At present, the number of startups stands over 1,000 and is estimated to grow multifold in tandem with the digital ecosystem, according to a LightCastle Partners report.
The consulting firm had also pointed out that the startups in Bangladesh, despite being the most potent engine for growth, face challenges at three levels.
First, absence of proper mentorships and access to funds make it difficult for early stage startups to escalate. Through proper implementation of accelerator and incubator programmes and circumvention of capital needs through investors' network, this challenge can be addressed.
Second, due to market malpractices, the financial cost rises manifold resulting in closing down of ventures at an early stage.
Finally, the older generations have a negative outlook towards entrepreneurship and assume that one only does business if fails to get a respectable job. Therefore, the younger generation often prefers waiting to get a job rather than creating it.