The government has introduced an Entrepreneurship Support Fund (ESF) for agro-based industrial, food processing and ICT sectors by abolishing the Equity and Entrepreneurship Fund (EEF), as clients did not pay back loans on time despite enjoying equity at zero interest.

The ESF fund would provide eightyear term loans at 2 percent simple interest, the central bank said in a

circularyesterday.

It has a four-year grace period, after which clients will have to pay 25 percent principle and interest every year, according to the statement.

Clients themselves have to provide 51 percent as equity of the project cost and invest it within one year after securing the approval from the Investment Corporation of Bangladesh (ICB). They must also submit mortgage against the loans.

The loans will be disbursed in three

instalments, the first through the ICB. Clients will have to invest the whole of the first instalment within one and a half years. They would otherwise have to pay back the fund including interest.

No other bank loan will be allowed as equity of the projects and no defaulter can get the loan, according to the guideline.

The central bank will continue to frame policy-related rules of the fund as needed and the ICB will work as the operator.