Economic Reporter :
Bangladesh Bank (BB) enhanced the limit of Export Development Fund (EDF) loan for the member factories of the Bangladesh Textile Mills Association (BTMA) with a view to speed up the country’s export sector.
Stakeholders will now be able to borrow up to $20 million a year instead of $15 million from $1.5-billion export development fund of the central bank.
Bangladesh Bank on Wednesday issued a circular in this regard to all authorised dealer branches of all scheduled banks.
According to the circular, the AD branches would be able to borrow up to $20 million a year instead of $15 million from the EDF against their foreign currency financing for bulk import of raw materials by a BTMA member factory.
The EDF was launched in 2005 with an initial amount of $100 million, which was gradually increased to $1.5 billion.
The member factories of the BTMA are now enjoying the top loan ceiling from the EDF.
Currently, the commercial banks take loans from the BB under the EDF scheme at the London Inter-bank Offered Rate (LIBOR) plus 1.0 per cent interest and they are extending credit to exporters at the LIBOR rate plus 2.50 per cent interest.
Experts said, “It will help reduce the overall cost of production and it will also ease the existing financial pressures on the sector”.
“The EDF financing is allowed for input procurement against back-to-back import LCs or inland back-to-back LCs in foreign exchange, by manufactures producing goods for direct export and also by producers of local deliveries to manufacturers of ‘deemed’ export,” a BB official said.
Earlier, Bangladesh Bank on Sunday said local companies in the export processing zones would be allowed to take loans in foreign currency from the export development fund of the central bank.
Bangladesh Bank recently issued a circular in this regard. The central bank has opened the EDF fund to the EPZs companies for the first time by issuing the circular.Bangladesh Bank (BB) has taken the decision to promote local industries.
Earlier, the fund was available for the export related companies. Established in 1989, the EDF is intended to facilitate financing in foreign currency for input procurements by manufacturer-exporters.
The central bank disburses the fund through authorized dealer banks. One of the major features of criteria is the increase of the interest rate, which the central bank considers an encouraging measure for the participating banks to accelerate the loan disbursement process.
The central bank has been raising allocation for the export development fund (EDF) periodically since it was first set up in 1989 with a mere $ 3 million to help exporters in Bangladesh.
The allocations were raised from time to time and touched the $ 1 billion mark in July 2013. In April 2014, it was raised by 20 per cent to US$ 1.2 billion from $ 1 billion to meet the growing demand from the country’s exporters. Later, it was raised to $ 1,5 billion in June 2014.
The increase in EDF allocations follows greater demand of support from our export industries. Earlier only 2-3 exports item like garments qualified for EDF assistance. Now nearly 10 export items qualify for assistance.
The central bank had earlier slashed the interest rate on its EDF scheme for six months by 1.0 percentage point to help exporters recover from loss sustained during sustained spells of political unrest in 2013-14.
The EDF loans from the central bank are payable by the banks upon receipt of export proceeds within 180 days from the date of disbursement. The timeline is extendable by the BB up to 270 days in case of a longer period taken for repatriation of export proceeds.
A senior Bangladesh Bank official told The New Nation recently that the central bank would continue its support to the exporters as well the local companies. Bangladesh Bank has formed the FDF loan to promote local companies to compete the global market.
Meanwhile, the business community appreciated the central banks decision for allocating EDF loan to the local industries in the Export Processing Zones (EPZs). A good number of business leader said that the fund would help the local companies to run their business smoothly.
The Federation of Bangladesh Chamber of Commerce and Industry Director Md. Helal Uddin said, the EDF allocations have positively impacted on the growth of Bangladesh’s export.
“Most exporters now seek assistance from EDF to improve their capacity and volume of exports”, said Helal Uddin.
Bangladesh Bank (BB) enhanced the limit of Export Development Fund (EDF) loan for the member factories of the Bangladesh Textile Mills Association (BTMA) with a view to speed up the country’s export sector.
Stakeholders will now be able to borrow up to $20 million a year instead of $15 million from $1.5-billion export development fund of the central bank.
Bangladesh Bank on Wednesday issued a circular in this regard to all authorised dealer branches of all scheduled banks.
According to the circular, the AD branches would be able to borrow up to $20 million a year instead of $15 million from the EDF against their foreign currency financing for bulk import of raw materials by a BTMA member factory.
The EDF was launched in 2005 with an initial amount of $100 million, which was gradually increased to $1.5 billion.
The member factories of the BTMA are now enjoying the top loan ceiling from the EDF.
Currently, the commercial banks take loans from the BB under the EDF scheme at the London Inter-bank Offered Rate (LIBOR) plus 1.0 per cent interest and they are extending credit to exporters at the LIBOR rate plus 2.50 per cent interest.
Experts said, “It will help reduce the overall cost of production and it will also ease the existing financial pressures on the sector”.
“The EDF financing is allowed for input procurement against back-to-back import LCs or inland back-to-back LCs in foreign exchange, by manufactures producing goods for direct export and also by producers of local deliveries to manufacturers of ‘deemed’ export,” a BB official said.
Earlier, Bangladesh Bank on Sunday said local companies in the export processing zones would be allowed to take loans in foreign currency from the export development fund of the central bank.
Bangladesh Bank recently issued a circular in this regard. The central bank has opened the EDF fund to the EPZs companies for the first time by issuing the circular.Bangladesh Bank (BB) has taken the decision to promote local industries.
Earlier, the fund was available for the export related companies. Established in 1989, the EDF is intended to facilitate financing in foreign currency for input procurements by manufacturer-exporters.
The central bank disburses the fund through authorized dealer banks. One of the major features of criteria is the increase of the interest rate, which the central bank considers an encouraging measure for the participating banks to accelerate the loan disbursement process.
The central bank has been raising allocation for the export development fund (EDF) periodically since it was first set up in 1989 with a mere $ 3 million to help exporters in Bangladesh.
The allocations were raised from time to time and touched the $ 1 billion mark in July 2013. In April 2014, it was raised by 20 per cent to US$ 1.2 billion from $ 1 billion to meet the growing demand from the country’s exporters. Later, it was raised to $ 1,5 billion in June 2014.
The increase in EDF allocations follows greater demand of support from our export industries. Earlier only 2-3 exports item like garments qualified for EDF assistance. Now nearly 10 export items qualify for assistance.
The central bank had earlier slashed the interest rate on its EDF scheme for six months by 1.0 percentage point to help exporters recover from loss sustained during sustained spells of political unrest in 2013-14.
The EDF loans from the central bank are payable by the banks upon receipt of export proceeds within 180 days from the date of disbursement. The timeline is extendable by the BB up to 270 days in case of a longer period taken for repatriation of export proceeds.
A senior Bangladesh Bank official told The New Nation recently that the central bank would continue its support to the exporters as well the local companies. Bangladesh Bank has formed the FDF loan to promote local companies to compete the global market.
Meanwhile, the business community appreciated the central banks decision for allocating EDF loan to the local industries in the Export Processing Zones (EPZs). A good number of business leader said that the fund would help the local companies to run their business smoothly.
The Federation of Bangladesh Chamber of Commerce and Industry Director Md. Helal Uddin said, the EDF allocations have positively impacted on the growth of Bangladesh’s export.
“Most exporters now seek assistance from EDF to improve their capacity and volume of exports”, said Helal Uddin.
