BB extends small digital loans fund to Tk 500 crore, considering growing demand

Bangladesh Bank's internal evaluation said that digital small loans are being popular to meet the urgent needs of fixed-income groups of people, as it's hassle-free and gets loans just using mobile devices.

As per Bangladesh Bank (BB) approval, Mobile Financial Service Provider bkash and city bank jointly introduced such digital loans with an amount of Tk100 crore in December 2021.

In one and a half years under the microcredit distribution programme, bkash disbursed so far Tk300 crore.

According to BB, the City Bank disbursed Tk100 crores to small and micro-loans through bkash in the last two months. Borrowers have also repaid Tk 203 crore of the Tk 275 crore loans on time. At present there is an outstanding loan of Tk72 crore in the market.

Considering the need of lower and fixed-income groups of people, Bangladesh Bank (BB) on Sunday reconstructed a refinancing fund of Tk100 crore to Tk500 crore for 'digital microcredit' facilities to raise the scope of these small loans in the country.

The central bank’s notification in this regard said that the size of the refinancing fund for the 'Digital Microcredit' facility has been increased to improve financial inclusion and the quality of life of marginalized people.

The BB provides a refinancing facility from the fund at 1.0 percent interest to the banks of the country to provide micro and small loans in digital mode. Such loans provided by banks using Internet banking, mobile apps, mobile financial services, and e-wallets are supported by refinancing funds.

Bangladesh Bank has provided the facility of very small microloans from Tk 500 to Tk 50,000 for general customers. However, considering the risk of the banks, the maximum loan limit can be set below Tk 50,000. The loan tenure will be a maximum of six months.