$9 lakh IFC grant for BB credit guarantee scheme

International Finance Corporation signed an agreement with Bangladesh Bank recently to provide $900,000 as technical assistance grant to efficiently implement a credit guarantee scheme for cottage, micro, small and medium enterprises to better face the pandemic's challenges.     

The fund under the December 14 deal will be spent to, among others, improve skills of officials assigned to implement the scheme and create a vibrant IT platform and help the central bank take time-befitting policies to support the small-scale businesses.

The credit guarantee scheme (CGS) offers a risk-sharing arrangement for participating banks and non-bank financial institutions.

It enables better access to finance for the enterprises that are often deprived of getting funds due to their high-risk profile, according to a central bank press release.

At present, cottage, micro, small and medium enterprise loans valued from Tk 2 lakh to Tk 50 lakh are eligible for the CGS. A total of 31 banks and NBFIs have signed up for the CGS facility.

With about 78,00,000 units employing over 2 crore people, the small-scale enterprises account for almost 25 per cent of gross domestic products and 30 per cent of total industrial employment in Bangladesh.

However, limited access to finance has impeded sustaining this labour-intensive sector that is critical for the country's sustained growth, said the BB press release.

Qamar Saleem, IFC's regional manager for Financial Institution Group (Asia and Pacific), and SM Mohsin Hossain, general manager of the BB's CGS unit, signed the agreement through a virtual event.

Abu Farah Md Nasser, deputy governor of the central bank, Robert Chatterton Dickson, British high commissioner to Bangladesh, and Nuzhat Anwar, IFC acting country manager for Bangladesh, Bhutan and Nepal, were present.