Bangladesh Bank has expanded its pre-shipment credit refinance facility for export-oriented industries from Tk5,000 crore to Tk7,000 crore. At the same time, the central bank has raised the maximum customer-level interest rate on new loans under the facility from 5% to 6%.
The central bank announced the decision in a circular issued on Thursday by its Banking Regulation and Policy Department-1. The bank stated that the measure aims to sustain export operations and bolster foreign exchange earnings amid prevailing economic realities.
To facilitate the expansion, the central bank reallocated Tk2,000 crore from its Tk10,000-crore Export Facilitation Pre-finance Fund (EFPF) into the pre-shipment scheme, bringing the remaining balance of the EFPF down to Tk3,000 crore.
Under the revised structure, participating commercial banks are permitted to charge end borrowers a maximum interest rate of 6% per annum.
Correspondingly, the refinancing rate charged by Bangladesh Bank to participating institutions has been raised to 3% from the previous 2%, maintaining a 3% margin for the intermediary banks.
According to the directive, participating banks that fail to repay refinanced sums according to the scheduled timeline will face penalty charges calculated at the prevailing bank rate for the overdue duration.
However, banks have been granted the flexibility to settle their refinanced obligations fully or partially prior to maturity.
All other existing terms and conditions under the scheme remain unchanged, and the new guidelines take effect immediately.
Why it matters
The expansion of the refinance fund aims to sustain export operations and bolster foreign exchange earnings for export-oriented industries in Bangladesh.