Small entrepreneurs without a taxpayer identification number (TIN) will now be eligible for collateral-free loans of up to Tk5 lakh, according to the latest SME financing policy introduced by Bangladesh Bank.
Instead of TIN, borrowers can use alternative business-related certifications to access these loans.
The newly formulated policy, designed for the next five years, introduces a new category called "informal entrepreneurs", ensuring access to financial support for those operating outside the formal sector.
Bangladesh Bank has set a target to increase SME loan distribution to 27% of total bank lending by 2029, up from the current 10-12%.
In a circular issued on Monday (17 March), the central bank outlined the policy’s key objectives, including enhancing the contribution of SMEs to economic growth and expanding employment opportunities.
The policy has been finalised through consultations with banks, financial institutions, SME entrepreneurs, and local chambers of commerce.
According to the guidelines, banks and financial institutions must raise the share of SME loans to at least 25% of their total credit portfolio by the end of 2025 and increase it annually by at least 0.5% to reach the 27% target by 2029.
The policy also defines who qualifies as an informal entrepreneur. In line with the National Industrial Policy 2022 and the Digital Commerce Guidelines 2021, businesses with a Unique Business Identification (UBID), Digital Business Identification (DBID), or a Bangladesh Bank-approved Personal Retail Account (PRA) will be considered informal or marginal entrepreneurs.
These businesses, often labour-intensive and micro-scale, typically have fewer than 10 employees, including family members, and fixed assets (excluding land and factory buildings) valued below Tk5 lakh.
Under this policy, entrepreneurs engaged in production, services, or trading can obtain loans of up to Tk5 lakh without meeting a turnover requirement.
Meanwhile, the financing limits for various SME categories have been revised, with cottage enterprises eligible for loans of up to Tk20 lakh, micro-enterprises up to Tk2 crore, small businesses up to Tk25 crore, and medium-sized enterprises up to Tk100 crore.
Labour-intensive industries with 121 to 300 workers, such as garment factories, or those with 1,000 employees in other sectors, will also qualify for loans under the new framework.
The revised policy also aims to enhance financial support for women entrepreneurs. Banks have been instructed to grant loans exceeding Tk5 lakh without collateral based on banker-customer relationships.
For female entrepreneurs, collateral-free loans of up to Tk25 lakh will be available, with refinancing support increased to Tk50 lakh.
Additionally, refinancing for new entrepreneurs has been raised from Tk10 lakh to Tk30 lakh.
In a further easing of regulations, Bangladesh Bank has waived the Credit Information Bureau (CIB) charge for SME loan applications of up to Tk10 lakh, reducing the financial burden on borrowers.
This new policy replaces the previous five-year SME financing guidelines issued on 5 September 2019, which expired earlier this year. The updated framework will remain in effect until 2029.
