Shahadat Hossain's tissue bag business had been going well for the last seven years. But, he suffered losses during the Covid-19 pandemic and had to fire 11 of his employees. After that, he was somehow managing to operate his business with the help of his five family members instead of the employees. In this situation, Karmasangsthan Bank (employment-generating bank) stood beside him.
He was given a loan of Tk2 lakh without collateral. He then started his business in full swing again. He brought back his employees, too.
Shahadat Hossain told The Business Standard that he used to make shopping bags and food delivery bags for various elite restaurants. He took the loan from the Karmasangsthan Bank last month to overcome the crisis.
"I had been looking for money for two months before but no bank wanted to lend to me at such a low interest rate. If I did not get this loan, I would not be able to keep my business afloat," said Shahadat.
Karmasangsthan Bank has given loans without collateral to 41,613 youths at an 8% interest rate, according to the bank.
On the occasion of the birth centenary of Bangabandhu Sheikh Mujibur Rahman, the bank took up the Bangabandhu Youth Loan programme last year.
The programme has indirectly created employment for more than one crore people, according to the bank.
Till 9 February, Tk617 crore had been disbursed.
Under the programme, the bank has adopted an action plan to create self-employment for two lakh trained unemployed youths in 2020 and 2021.
The budget has been fixed at Tk3,000 crore.
An entrepreneur can take a loan from Tk20,000 to a maximum of Tk5 lakh.
Shahadat has set up a new outlet for his business in Dhaka's Khilkhet Nama Para. In addition to the five employees, his father, mother, elder brother and two sisters are working for his business.
Shadahadat said his business is going well.
"Now I am getting orders for tissue bags from different organisations. Work is going on in two shifts all through the day and night. I have also paid the first installment of the bank after paying the salaries of the employees," he added.
Kaniz Fatema, chairman of Karmasangsthan Bank, told The Business Standard that the programme was adopted at the beginning of last year.
"We are creating a district-based database for the self-employment of unemployed youths. We are campaigning for loan disbursement through 255 branches across the country. Women entrepreneurs are our first priority," she said.
"Already 15,450 women have received the loans. Further, loans are given to those whose businesses are about to close due to the losses during the pandemic," she added.
Rafzan Jani took a loan from the bank four months ago to set up a cattle farm in Kanchkura area of Uttarakhan in Dhaka.
"I did the training from the Department of Youth Development. That is why I got this loan easily," he said.
Rafzani, 26, has built a cattle farm with the loan. Now the farm has 11 cows. He has an employee with a salary of Tk10,000.
He sells milk worth Tk30,000 per month.
Meanwhile, Karmasangsthan Bank has so far recovered 99% of the loans, according to the bank.
Eligibility to get the loan
In order to obtain the loan, the borrower must be a citizen of Bangladesh and his or her age must be between 18 and 35 years. In special cases, the age limit is up to 40 years. He or she should have a minimum of primary education. Though the loan is given without collateral, the borrower must have a guarantor. Defaulters will not be eligible for the loan.
If the borrower fails to pay the installments in due time, the interest is taken at the rate of 10%. Loans can be repaid in: monthly, quarterly, semi-annual, and annual installments.
Apart from this, in order to get a loan, one has to have training from the Department of Youth Development, Bangladesh Small and Cottage Industries Corporation, Bangladesh Industrial and Technical Assistance Centre, BIDA, Social Development Foundation (SDF), or other government-approved institution.
According to a survey by the bank conducted in 2017, entrepreneurs, who started their businesses with the loans from the bank, directly and indirectly have employed an average of 3.6 people each.