BM Desk : Bangladesh Bank released a new master circular today (9 July) that allows Bangladeshi individuals who are 21 years of age or older to apply for startup loans from commercial banks with a minimum interest rate of just 4%.

The updated policy describes significant changes to the current startup funding structure, such as higher loan ceilings and more expansive qualifying requirements. Startups that are already up and running will also qualify, according to the circular, as long as they are under 12 years old on the registration date. Additionally, the central bank established a Tk500 crore ‘Startup Fund’ to provide these loans to banks and other financial institutions for refinancing assistance.

Additionally, the central bank raised the maximum loan ceiling from Tk1 crore to Tk2 crore to Tk8 crore, contingent on the startup’s stage of development. The addition of equity financing is among the policy’s most significant modifications. In addition to offering conventional loans, banks will be permitted to invest equity in startups for the first time.
In order to make this easier, Bangladesh Bank has said that it has established a venture capital firm that will allow banks to contribute all of their initial beginning money as equity. The financial statements of the banks will reflect these investments as equity. The master circular went on to say that borrowers’ interest rates might be assessed on a quarterly basis and would be limited to 4%. Banks and financial institutions will have to use their own loanable funds to finance these startups.

The new circular, however, prohibits them from using the existing startup funds they had established internally to make new loans. It further stated that “loans already approved under the previous method may still be disbursed.” Bangladesh Bank underlined that by making it simpler for high-potential companies to obtain financing, the updated regulations seek to promote innovation, jobs, and sustainable growth. By encouraging global investment connections and entrepreneurial ecosystems, the master circular also supports the Sustainable Development Goals (SDGs).
The central bank stated that a subsequent circular will contain further rules pertaining to the establishment and functioning of the future venture capital firm.