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The Ministry of Industries has sought Tk 11 billion as seed money to provide loan to the micro and small entrepreneurs that remain outside the banking system.
The ministry sent a letter to the Ministry of Finance on April 30 seeking the financial assistance from the government’s announced stimulus package for SME sector.
“With the seed money, the SME Foundation and Bangladesh Small and Cottage Industries Corporation (BSCIC) will implement two separate loan programmes of Tk 5.0 billion and 6.0 billion for micro and small entrepreneurs,” an industries ministry statement issued on Wednesday said.
The initiative has taken considering the sufferings of the micro, small and cottage industries that are affected most due to COVID-19 outbreak.
Bangladesh Bank issued a circular on April 13 to disburse the stimulus package of Tk 200 billion announced on April 5 for the SME sector, the letter read.
According to the circular, commercial banks will conduct provide loans on the basis of bank-customer relationship and the borrowers will get special benefits in case of taking loans, it said.
Earlier, on April 16 the industries ministry formed an 11-member committee, headed by one of its additional secretary to formulate effective measures and recommendations on how the micro and small entrepreneurs could revive post-corona situation.
The committee at its first meeting held on April 22 informed that at present about 15 per cent entrepreneurs in small and cottage industries are doing business with loans from banks.
The remaining 85 per cent of entrepreneurs are not involved in formal lending activities and they do not maintain formal accounts in conducting business activities, the industries ministry letter said.
The meeting was also informed that much support is needed for micro and small entrepreneurs and others involved with them to help survive during the corona virus outbreak.
To help them survive, the meeting decided for collecting seed money as an emergency basis and disburse them as loan by SME Foundation and BSCIC, the letter added.
In line with the committee decisions, the ministry has sought Tk 11 billion from the finance ministry to implement the special loan programmes through SME Foundation and BSCIC.
According to Bangladesh Bureau of Statistics 2019, about 87 per cent out of the 46,291 manufacturing units are micro and cottage industry.
The micro and cottage industry create employment for about 1.39 million people and contribute about 33 per cent of the country’s total manufacturing.