Bangladesh Bank to offer up to Tk 20 lakh in collateral-free loans, grants to young entrepreneurs

Bangladesh Bank (BB) is set to launch a programme to provide collateral-free loans to young entrepreneurs to encourage entrepreneurship at the grassroots level and create jobs.

Under the initiative, named UDYOG: Upazila-based Young Entrepreneur Identification, Selection and Financing Programme, banks will use their existing branch networks to identify promising young entrepreneurs at the grassroots level, assess their business ideas and financing needs, and provide financial support, the BB said at a press conference today at its headquarters in Dhaka.

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Representatives from Bangladesh Bank’s media briefing, including its spokesperson and Executive Director Arief Hossain Khan, Md Shahriar Siddiqui, assistant spokesperson, and other officials, were present at the press conference.

Each selected entrepreneur will be eligible for up to Tk 20 lakh, depending on their needs. Half of the package will be a bank loan and the other half a grant.

Beyond financing, selected entrepreneurs will receive training, mentorship, assistance with registration and business plans, and market-linkage support to help create jobs and drive economic growth, BB Spokesperson Arief Hossain Khan said.

Business initiatives, including agriculture, food processing, handicrafts, fisheries, livestock, tourism, services and technology-based ventures, will be considered.

The BB said it will issue a circular on September 16 in this regard, and applications using a prescribed form can be submitted at any bank branch at the upazila level.

Bangladeshi citizens aged 28 or below on the final application date and residing in the relevant upazila will be eligible to apply without prior business experience, provided they have a viable business idea.

Applicants will have one month to apply.

The BB said it will launch the programme across 64 upazilas in eight districts — Manikganj, Feni, Naogaon, Jhenaidah, Bhola, Habiganj, Rangpur and Netrokona — selecting 10 entrepreneurs per upazila, for an initial total of 640.

The central bank will later expand the programme nationwide, targeting 5,000 entrepreneurs annually.

The interest or profit rate on the loan portion will range from 4 percent to 7 percent, and borrowers will not need to provide any collateral, the BB said.

However, if a borrower fails to repay within the stipulated period, the grant portion will be converted into an interest-free loan.

The loan account will then be classified under existing rules, and the borrower will be considered a defaulter and become ineligible for further loans, the BB said.

The scheme has an initial fund of Tk 500 crore, with funds to be sourced from the corporate social responsibility (CSR) accounts of banks to establish a separate, regulated grant fund.