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The Bangladesh Bank has taken fresh steps to implement its Tk 20,000 crore pre-financing scheme aimed at reviving industrial and service-sector enterprises that have remained closed or are operating partially due to a shortage of working capital.
In a circular issued on Tuesday, the central bank’s Banking Regulation and Policy Department (BRPD-3) outlined the terms, responsibilities and procedures for participation agreements with scheduled banks. It also attached draft copies of the participation agreement, approval letter, debit authority, letter of continuity and promissory note.
The central bank said signing the participation agreement is mandatory for any scheduled bank seeking to access funds under the scheme, which was introduced through a circular issued on June 4.
The scheme is designed to help industrial and service-sector businesses resume full operations by providing working capital. Export-oriented industries and service providers will receive priority to support production, protect jobs and boost export earnings.
Only large industrial and service-sector enterprises that are closed or operating below capacity due to a lack of working capital will be eligible. However, defaulted borrowers will not qualify for financing under the scheme.
Before approving any loan, participating banks must submit a detailed assessment to the central bank covering the borrower’s production capacity, working capital requirements, management capability, marketing challenges, technological limitations and utility-related constraints. A certification from the relevant trade association must also be included.
The Bangladesh Bank said companies involved in money laundering, fraud, misuse of funds or fund diversion will be barred from receiving financing. Participating banks will be responsible for conducting due diligence.
The funds can only be used for specified purposes, including paying workers’ salaries and allowances, utility bills, purchasing raw materials, fulfilling export orders and meeting production costs. Salary payments will be limited to a maximum of four months and must be made through bank accounts or mobile financial services. Cash payments will not be allowed.
The circular also makes it clear that the facility cannot be used to repay or adjust existing loans. The financing is intended solely to meet new working capital needs. Banks may appoint representatives or experts to a company’s board if necessary to ensure proper use of the funds.
Under the scheme, a single borrower or business group can receive up to Tk 200 crore in loans or investment support. The financing will have a maximum tenure of one year, with the option of renewal subject to satisfactory performance and the availability of funds.