Staff Correspondent:

A latest regulatory move makes it a must-do for banks and nonbanks to lend minimum 27 per cent of their credits to cottage, micro, small and medium enterprises, as new government policy pivots to job-generating economic growth.

Bangladesh Bank (BB) issued financing-related master circular for the CMSME sector, which employs the largest segment of the country’s workforce after the apparel sector, with the lending ceiling for next five years.

The regulator also redefined female entrepreneurial ownership and set credit slabs for the businesses in the CMSME category.

Unveiling the master circular at a press conference at the BB headquarters, officials concerned at SME and Special Programmes Department of the central bank said the minimum loan-disbursing target has been fixed at 25 per cent of the entire loans to be provided by banks and financial institutions by this calendar yearend.

“And the financing target has been fixed at 27 per cent up to 2029 with inclusion of an annual growth of 0.5 per cent,” director of the department Nawshad Mustafa told reporters at the conference.

Under the new policy focused on the largest sector of the economy, people involved with f-commerce and e-commerce will be eligible for loans of up to Tk 0.5 million under the CMSME scheme.

The revised master circular also provides that small traders having no trade licences will be eligible for credits.

Furthermore, the definition of woman entrepreneur has been updated in the new policy. A company will now be considered woman-led if the woman holds at least 20-percent ownership and 51 per cent of its employees are women. Earlier, the threshold for ownership was high at 51 per cent.

Besides, banks are required to establish separate departments to manage CMSME loans and assess the risks associated with the small-and medium-scale financing.

With the master firman from the banking regulator, the maximum ceiling of CMSME loans have been enhanced to Tk 0.5 million for informal/marginal entrepreneurs, Tk 2.0 million for cottage, Tk 20 million for micro enterprises, Tk 250 million for small enterprises, and Tk 1.0 billion for medium enterprises.

There have long been criticisms of what independent economists dubbed “job-less economic growth” pursued under the deposed government by undertaking megaprojects involving huge investments.

According to the Planning Division, CMSMEs make up 90 per cent of industrial units and 80 per cent of industrial employment.

The current interim government is faced with a daunting task of creating employment to provide jobs for a large number of unemployed educated youths in particular.

Mustafizur Rahman, Executive Director of Bangladesh Bank, and Mohammad Shahriar Siddiqui, an assistant spokesperson for the central bank, were present at the press conference.