The Bangladesh Bank has asked the banks and non-bank financial institutions not to pressurise the micro, cottage, small and medium enterprises (SMEs) for multiple guarantors to avail collateral-free loans.
The SME & Special Programmes Department of the central bank issued a circular on Thursday in this regard.
The central bank in the circular said that banks and non-bank financial institutions are pressurising the micro, cottage, small and medium enterprises for multiple for collateral-free loans. The entrepreneurs are often asked for specific guarantors like government high official, affluent relative or husband.
The Bangladesh Bank cited that bank borrowings, therefore, become difficult for small entrepreneurs and the development of this sector also gets hampered.
"This is not desirable anyway," cited in the Bangladesh Bank circular.
In September this year, the central bank issued a master circular guiding the banks and non-bank financial institutions in credit operations.
In that circular, the Bangladesh Bank ordered banks and non-bank financial institutions to accept single personal guarantor as supporting security for a loan application by the small scale entrepreneurs.
Reminding the master circular, Thursday's notification asked the commercial banks and non-bank financial institutions to comply with it.