Bangladesh signs $100mn loan deal with ADB to boost SME sector

The soft loan comes with a 2 percent annual interest rate, a five-year grace period, and 25 years for repayment

The Asian Development Bank (ADB) is extending a loan of $100 million, equivalent to nearly Tk 12.17 billion, to develop and promote Bangladesh’s small and medium enterprises (SME) sector.

The deal was signed on Thursday in Dhaka under the second phase of the 2nd Small and Medium Enterprise Development Project.

Md Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), signed the agreement on behalf of the interim government.

Hoe Yun Jeong, ADB’s country director for Bangladesh, signed for the lender, according to a media statement issued by ERD.

A separate project agreement was also signed between ADB and Bangladesh Bank. The central bank’s Executive Director SM Abdul Hakim signed on behalf of the regulator.

The project will run from September 2025 to March 2030.

Its objective is to expand access to medium and short-term loans for private SMEs located in areas outside Dhaka and Chattogram city corporations.

According to ERD, the loan is part of ADB’s regular low-interest lending programme. It comes with a 25-year repayment term, including a five-year grace period, and a fixed annual interest rate of 2 percent.

In 2017, the then government, with ADB support, set up a $240 million refinancing fund to boost access to finance for cottage, micro, small, and medium enterprises (CMSMEs).

Under the SMEDP-2 project, banks and financial institutions borrowed from the fund at 2 percent interest and lent to customers at 6 percent.

The earlier phase of the project also benefited underserved entrepreneurs in rural and semi-urban areas outside the two major cities.