Startup loans offered by the central bank at a 4% interest rate to individuals aged 21 years from Bangladesh.
In a significant move to support the growth of startups in Bangladesh, the Bangladesh Bank has issued a new master circular, allowing for both loan and equity financing for startups. This policy change marks a significant step in fostering the country's startup ecosystem.
Under the new guidelines, each scheduled bank is required to establish a 'Startup Fund' dedicated to equity investment in startups. This fund will provide a source of capital for startups, allowing them to access necessary funds for growth and development.
Banks are encouraged to allocate funds specifically for equity investments in startups. This move aims to ensure that startups have access to capital beyond traditional loan structures. The circular allows for both loan and equity financing, providing startups with the flexibility to choose the financing method that best suits their needs.
The policy includes regulatory guidelines that banks must follow when providing equity financing. While specific requirements are not detailed in the search results, the establishment of these guidelines is expected to ensure that equity investments are made in a structured and compliant manner.
The age limit for applying for startup loans has been lowered to 21 years, and the eligibility criteria for startup loans have been broadened. Startups that are already operating, but are not older than 12 years from the date of registration, can also apply for loans.
The loan limits for startups have been raised from Tk1 crore to between Tk2 crore and Tk8 crore. Banks and financial institutions must use their own loanable funds to finance startups. Banks cannot issue new loans from the old startup funds they had created internally.
The interest rate for borrowers has been capped at 4% and can be charged on a quarterly basis. Loan repayments are to be made quarterly.
The revised policies also aim to stimulate innovation, employment, and sustainable growth by enabling easier access to finance for high-potential startups. By boosting startup financing, the policy also aims to enhance youth employment opportunities, as growing startups often create new job positions.
While the search results do not outline specific requirements for startups seeking equity investment, typical requirements might include a comprehensive business plan, legal and regulatory compliance, demonstrating a healthy financial position, and a persuasive investment pitch that highlights the startup's competitive advantage and growth potential.
Further guidelines regarding the formation and operation of the upcoming venture capital company will be released in a separate circular. The central bank has allowed for equity investment via this planned venture capital company.
This new master circular aligns with the Sustainable Development Goals (SDGs) by fostering entrepreneurial ecosystems and global investment connectivity. The revised policies aim to create a more vibrant and resilient startup ecosystem in Bangladesh, ultimately contributing to the country's economic growth and development.
The new master circular requires each scheduled bank to establish a 'Startup Fund' for equity investment in startups, serving as a capital source for growth and development. Banks are also encouraged to allocate funds specifically for investing in startups, aiming to provide capital beyond traditional loan structures.
