Tk 10 Billion Fund for Youth

Bangladesh Bank has moved to create a Tk 10 billion special fund to develop young people into technology-driven, innovative and sustainable entrepreneurs. The proposed fund will offer low-interest loans on easy terms, alongside grants based on business performance and loan repayment records. The initiative aims to create at least 5,000 new entrepreneurs across technology, e-commerce, manufacturing, trade and other sectors.

Under the preliminary plan, Tk 5 billion from the special fund will be used for loans and the remaining Tk 5 billion for grants. The programme is primarily intended for young people who want to start businesses but cannot do so because of a lack of capital.

Bangladesh Bank Governor Md Mostakur Rahman held a meeting with leaders of the Association of Bankers, Bangladesh (ABB) on Tuesday afternoon (August 11) to discuss implementation of the initiative for young entrepreneurs. The meeting discussed the fund's structure, loan disbursement, entrepreneur selection and procedures for providing grants.

After the meeting, ABB Chairman and City Bank Managing Director Mashrur Arefin told journalists that work was underway to introduce a special refinancing and grant package for young people.

He said the programme was being designed to bring under its coverage young people interested in starting businesses but unable to take the initiative because they lack the required capital.

Mashrur Arefin said an entrepreneur can receive a maximum loan of Tk 1 million under Bangladesh Bank's refinancing scheme. The authorities are considering keeping the interest rate between 4 and 6 percent.

With bank lending rates currently ranging from around 11 to 15 percent and borrowing costs from NGOs also comparatively high, people concerned believe the initiative would significantly reduce financing costs for young entrepreneurs.

However, the programme's key feature is not limited to low-interest loans. Bangladesh Bank is also planning to provide grants based on business success and records of timely loan instalment repayments.

Mashrur Arefin said that if an entrepreneur takes a Tk 1 million loan, the person's business performance and repayment capacity could later be considered for a grant of an equivalent amount, meaning up to another Tk 1 million. Banks are planning to provide such grants from their Corporate Social Responsibility, or CSR, funds.

People concerned believe this would encourage young entrepreneurs to repay loans on time and operate their businesses sustainably. It would also create opportunities to expand businesses beyond dependence on loans.

Sources concerned said there are plans not to require collateral against loans from the proposed fund. As a result, eligible young people would have an opportunity to start businesses even if they do not have land or other assets to mortgage.

Local-level selection will also receive importance in choosing entrepreneurs. The meeting emphasised identifying genuine entrepreneurs at the upazila level. Potential entrepreneurs will be screened and selected through local bank branch managers or designated committees.

Those concerned believe this process could reduce the risk of unqualified individuals obtaining loans through lobbying, political influence or other forms of pressure.

The ABB chairman said banks would share responsibilities among themselves across more than 500 upazilas nationwide to identify promising entrepreneurs. Business potential, an individual's skills and genuine capacity to undertake an enterprise will be prioritised during the selection process.

The proposed fund is not planned to be limited to any specific business sector. Both manufacturing and trading ventures may come under the programme.

Potential sectors include fish farming, livestock, food production, handicrafts, satranji production and other small and medium-sized businesses. The initiative is expected to create opportunities for young people in upazilas and rural areas, alongside cities, to become entrepreneurs and to support further growth in technology-enabled businesses and the e-commerce sector.
//DBTech/BNO/MSI//