BDT 10,000cr export facilitation pre-finance fund launched
The Bangladesh Bank formed export facilitation pre-finance fund worth BDT 10,000 crore to support export-oriented firms. The amount will be formed from the Bangladesh Bank’s own fund and its banking regulations and policy department will manage the fund. The central bank took the initiative to lessen pressure on its export development fund (EDF) considering the current dollar crisis on the market.
Local export-oriented industries can avail pre-finance facility from the fund for importing raw materials. All scheduled banks of the country will be eligible for availing the loan facility. Banks which are interested in getting pre-financing facility for their clients should sign a participation agreement with the BRPD of Bangladesh Bank by January 22.
The activities of the revolving fund will remain in force until further instruction. Any export-oriented company can apply for the pre-finance facility. The loans from the fund can be used for import of raw materials through back-to-back letters of credit of the exporters.
Local manufacturers and suppliers can also avail the loan facility from the EFPF against back-to-back letters of credit for import of raw materials. Loan defaulters will not be eligible for the fund.
If any borrower has an overdue in export bill, the exporter will not get any new loan from the fund. If any other loan facility of the Bangladesh Bank is availed by the customer against the same LC for the purpose of importing raw materials, the entity will not be eligible for any EFPF loans.
Pre-finance fund will not be given against any LC provided from any shell company or bank.
The interest rate of the loans from the EFPF will be maximum 4 per cent.
No other type of charges or fees can be collected from the customers except the charges mentioned in the existing schedule of charges issued by the Bangladesh Bank, the circular said.
Banks must pay 1.5 per cent interest on loans of the pre-finance fund to the central bank.
Except members of the Bangladesh Garments Manufacturers and Exporters Association, the Bangladesh Knitwear Manufacturers and Exporters Association and fibre-producing members of the Bangladesh Textile Mills Association, other members of the BTMA and firms of type B and type C under the EPZ can get loan of BDT 200 crore or equivalent of the valuation of their raw materials, whichever is lower.
Institutions under the Bangladesh Dyed Yarn Exporters Association will not get a loan exceeding BDT 150 crore, institutions under the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association will get maximum BDT 20 crore, institutions under the Bangladesh Plastic Goods Manufacturers and Exporters Association BDT 10 crore, institutions under the Leather Goods and Footwear Manufacturers and Exporters Association BDT 7 crore and institutions other than the above companies will get maximum BDT 5 crore in loans.
Banks must repay full amount of loans to the BB with applicable interest within 180 days.
The BB will take the amount from reserve money of the bank with it at the end of the loan tenure and banks will have the responsibility to collect the loan amount from customers.