Bangladesh Bank has established a Tk 100 crore refinancing fund to provide digital loans aimed at improving the living standards of marginalized and underprivileged communities. Banks participating in the program will be able to disburse micro-loans of up to Tk 50,000 per customer using refinancing facilities from this fund.

The Financial Inclusion Department of Bangladesh Bank issued a notification on Monday, providing directives to restructure and operate the previously launched 'E-Loan' refinancing program under a new framework.

Refinancing Structure

Participating banks will receive refinancing facilities from Bangladesh Bank at an annual interest rate of 1 percent. However, the maximum interest or profit rate at the customer level has been set at 9 percent. According to the notification, Tk 100 crore will be allocated from Bangladesh Bank's own fund for this program.

The fund will be operated on a revolving basis, meaning that repaid amounts will be recycled for further lending. This mechanism is expected to ensure sustainable financial inclusion over the long term.

Digital Loan Process

Under this program, loans will be disbursed to customers through digital channels, making banking services more accessible to marginalized and underprivileged groups. Borrowers will benefit from a faster and more transparent loan processing system through digital platforms, reducing paperwork complexities.

Separately, in a parallel initiative, private sector City Bank continues to offer personal loan products. City Bank's personal loan program requires salaried individuals to have a minimum monthly income of Tk 40,000.

However, some relaxation in salary requirements has been granted for government employees. City Bank offers personal loans of up to Tk 40 lakh.

Financial Inclusion Objectives

The new fund from Bangladesh Bank is being viewed as a significant step for marginalized communities. The digital loan program is expected to open the doors of financial services to those who have remained outside the conventional banking system.

Analysts consider the 9 percent interest rate to be reasonable and sustainable for micro-borrowers. At the same time, the 1 percent refinancing rate is expected to be attractive for banks, which will positively contribute to the program's implementation.