Bangladesh Bank has opened its 5,000 crore taka working-capital refinancing fund for cottage, micro, small and medium enterprises to finance companies, widening the scheme beyond scheduled banks.
The move gives CMSMEs another route to relatively low-cost working-capital finance through non-bank lenders, which already have a significant presence in the sector.
Finance companies disbursed 8,137.53 crore taka in CMSME loans in FY2024 and had 12,264.07 crore taka outstanding at the end of that year, according to Bangladesh Bank data.
In a letter issued on September 20, the central bank said finance companies would be allowed to participate in the CMSME Working Capital Refinance Fund, provided they meet regulatory eligibility requirements.
The decision takes effect immediately.
Bangladesh Bank established the revolving fund on June 8 to provide additional working capital to viable CMSMEs that are unable to operate at full capacity because of financing shortages.
The scheme will remain in place for three years. Bangladesh Bank records show it was established through SMESPD Circular No. 04.
The inclusion of finance companies potentially broadens the reach of the fund to businesses that borrow from non-bank institutions rather than conventional banks.
Access to formal credit has long been a constraint for smaller Bangladeshi businesses. The World Bank has estimated that micro, small and medium enterprises account for about 25% of the country's GDP and roughly a quarter of its labour force, while identifying limited access to finance as a major obstacle to their operation and growth.
Finance companies will not automatically qualify for the refinancing facility.
To participate, they must meet Bangladesh Bank's eligibility requirements for CMSME financing, including keeping classified loans and investments at no more than 20% of their total loans and investments.
Bangladesh Bank revised the applicable classified-loan ratio for CMSME refinance and pre-finance schemes in November 2025. The change was issued through SMESPD Circular Letter No. 02 on November 12.
Participating institutions must also maintain required capital, cash reserve and statutory liquidity ratios, comply with limits on exposure to a single borrower or group, and follow risk-management and anti-money-laundering requirements.
They must have been in business for at least three years.
The eligibility conditions are intended to restrict access to financially and operationally compliant lenders while allowing them to draw cheaper central bank funds for onward lending to smaller businesses.
Under the scheme, Bangladesh Bank will provide refinancing to participating institutions at 4% interest or profit. The rate charged to the ultimate CMSME borrower cannot exceed 9%.
That gives participating lenders a maximum five-percentage-point spread between the refinancing cost and the customer rate, although their actual return will depend on the rate charged and associated lending costs.
Borrowers may receive a grace period of either three or six months, with instalment repayments beginning after the grace period.
Participating lenders cannot impose additional fees or charges beyond those permitted under Bangladesh Bank's existing schedule of charges.
The facility is aimed at active CMSME businesses that need additional working capital to make fuller use of their existing capacity rather than businesses seeking financing simply to cover accumulated losses.
Borrowers identified as defaulters through Bangladesh Bank's Credit Information Bureau will not be eligible.
Bangladesh Bank already operates several refinancing programmes targeting smaller businesses, including schemes for women entrepreneurs, new entrepreneurs, agro-processing businesses and CMSME clusters.
Its January-March 2026 CMSME report shows refinancing programmes remain an important part of the central bank's effort to channel credit towards segments that can struggle to obtain conventional commercial financing.
The September 20 decision does not increase the size of the 5,000 crore taka fund or alter its maximum 9% customer rate. Instead, it expands the pool of institutions able to draw from it — potentially increasing the number of CMSMEs able to access the facility.
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