Bank & Insurance

Low-cost loan for women

Published : 30 Sep 2021 10:19 PM | Updated : 02 Oct 2021 01:37 PM

Banks and financial institutions have started disbursing low-cost loans under the central bank’s 'Small Enterprise Refinancing Scheme' among female entrepreneurs.

As per the Bangladesh Bank guideline, banks and financial institutions can take money from the scheme at 0.5 per cent interest only to give loans to women entrepreneurs at 5 per cent interest across the country.

On August 4, the central bank issued a circular asking chief executives of commercial banks and financial institutions to disburse the loans among women entrepreneurs on priority basis across the country.   

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"We've introduced such a low-cost loan to support women entrepreneurs who are facing a very critical time due to Covid-19. Such loans will help the Covid-19-affected women entrepreneurs revive their business," said a BB official of SME and Special Programme Department. 

He said women entrepreneurs running small businesses are the worst affected during the pandemic and the central bank has taken steps to disburse the special package in line with the government's plan for women empowerment.    

Sources said around 28 banks and financial institutions have already taken funds from the central bank for disbursement of loans among women entrepreneurs.

“As the Covid-19 has affected the small businesses severely, the central bank is attaching priority to women entrepreneurs in providing low-interest loans to help them overcome the situation,” said BB’s chief spokesperson Md Serajul Islam.

Appreciating the government for the scheme, economist Dr Atiur Rahman said, “Female entrepreneurs are the worst victims of the Covid-19 pandemic and such loans will help them survive in businesses.”

He suggested intensifying monitoring and supervision to ensure that only real women entrepreneurs can avail themselves of the loans.

"I’ve borrowed Tk 25,000 at 5 per cent interest from a branch of Sonali Bank in Mohammadpur area last month. I had shortage of funds and this loan has helped me to expand my clothes business," said Tairunnesa, who makes and sells garments for children in a makeshift shop near Dhaka New Market.

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The central bank has set a target of giving at least 15 per cent of the SME loans to women entrepreneurs by 2024 and for this reason, the interest rate of this scheme has been reduced on several occasions.

According to a central bank notification, women entrepreneurs are given refinancing facilities on priority basis under small enterprise refinancing schemes. 

Subsequently, interest rates were re-fixed at 3 per cent at the bank or financial institution level and a maximum of 7 per cent at the consumer level to facilitate the disbursement of loans to women entrepreneurs.

Under the new guideline, the interest rate for refinancing under this scheme has been fixed at 0.5 per cent at the bank and financial institution level and maximum 5 percent at the customer level, said BB in its notification.

Sources said women entrepreneurs are not getting low-interest loans due to lack of necessary papers and documents while entrepreneurs complained that bankers are not interested in lending to women entrepreneurs. 

Due to this reason, bank loans are not adequately reaching the women entrepreneurs across the country.

In the last decade, women have made tremendous strides in Bangladesh, stepping out of the home to participate in the economy. 

In the small and medium enterprise (SME) sector, which accounts for an estimated 25 percent of Bangladesh’s GDP, women have made substantial contributions. SMEs create employment for an estimated 7.8 million people directly and provide livelihoods for 31.2 million people.

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