Banks allowed to make equity investment in startups
The Bangladesh Bank (BB) has allowed banks to make equity investments in the startup sector in addition to providing loans at 4 percent interest.
The regulator issued a circular in this regard yesterday, stating that it will establish a venture capital company to facilitate investment. The company will be financed by one percent of the annual net profit of all banks.
The circular details that banks will have to offer the equity investment solely from their self-established startup fund.
Additionally, banks are required to distribute loans by availing refinancing from Bangladesh Bank's Tk 500 crore refinance fund.
No new loans or investments may be disbursed to startups outside this fund, it states, adding that disbursements under previously approved loans or investments may continue.
Furthermore, the loan ceiling for entrepreneurs has been set in phases, ranging from Tk 2 crore to Tk 8 crore, up from the previous limit of Tk 1 crore.
Entrepreneurs must be at least 21 years old, with no upper age limit, to be eligible for the financing, according to the BB circular. Existing businesses will also be eligible for the financing, provided their registration was completed within the last 12 years.
Startup companies play a supportive role in driving growth, generating employment, and fostering innovation in the country's economy, as per the BB circular.
These ventures are contributing to the creation of innovative business infrastructure, establishing connections with global investment opportunities, and opening new avenues for employment, which aligns with one of the core goals of the Sustainable Development Goals (SDGs), it further states.
To ensure more dynamic financing of high-potential startups by banks and financial institutions, several timely amendments and revisions have been made to the existing startup financing policy.
Source:
https://www.thedailystar.net/business/news/banks-allowed-make-equity-investment-startups-3936266
