Abu Sazzad :
Local companies in the Export Processing Zones (EPZs) would be allowed to take loans in foreign currency from the Export Development Fund (EDF) 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.
The volume of EDF fund is now $1.50 billion and the fund is disbursed to speed up the country’s export sector. 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.
After that, exporters started getting foreign currency loans through commercial banks at the interest rate of London Inter-bank Offered Rate (LIBOR) plus 1.50 per cent instead of 2.50 per cent as before.
Later the LIBOR plus 2.50 percent interest rate was restored after the six-month period but even then the EDF loans are available at lesser interest.
In 2013-14, despite waves of political unrest and global uncertainties, Bangladesh’s export registered an 11.69 percent growth.
Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LC) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.
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.
BB was also providing re-financing facility to the exporters through commercial banks as a short-term liquidity support.
The rate of interest against the loan from the fund will be 1.5 percent higher than the present rate as the BB suggested banks to charge their clients the interest, calculating the six-month average rate of LIBOR (London Inter bank Offer Rate) plus 2.5 percent.
Presently, the banks charge LIBOR plus one percent to their clients when the BB charges the banks the interest at six month LIBOR rate.
The banks, however, will have to pay one percent extra on LIBOR from January when they will increase their interest rate for lending from EDF.
The interest rate would be 3.5 percent with the increase, which is much lower than the present market rate of 12 to 13 percent. Abu Sazzad
Local companies in the Export Processing Zones (EPZs) would be allowed to take loans in foreign currency from the Export Development Fund (EDF) 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.
The volume of EDF fund is now $1.50 billion and the fund is disbursed to speed up the country’s export sector. 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.
After that, exporters started getting foreign currency loans through commercial banks at the interest rate of London Inter-bank Offered Rate (LIBOR) plus 1.50 per cent instead of 2.50 per cent as before.
Later the LIBOR plus 2.50 percent interest rate was restored after the six-month period but even then the EDF loans are available at lesser interest.
In 2013-14, despite waves of political unrest and global uncertainties, Bangladesh’s export registered an 11.69 percent growth.
Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LC) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.
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.
BB was also providing re-financing facility to the exporters through commercial banks as a short-term liquidity support.
The rate of interest against the loan from the fund will be 1.5 percent higher than the present rate as the BB suggested banks to charge their clients the interest, calculating the six-month average rate of LIBOR (London Inter bank Offer Rate) plus 2.5 percent.
Presently, the banks charge LIBOR plus one percent to their clients when the BB charges the banks the interest at six month LIBOR rate.
The banks, however, will have to pay one percent extra on LIBOR from January when they will increase their interest rate for lending from EDF.
The interest rate would be 3.5 percent with the increase, which is much lower than the present market rate of 12 to 13 percent.
Local companies in the Export Processing Zones (EPZs) would be allowed to take loans in foreign currency from the Export Development Fund (EDF) 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.
The volume of EDF fund is now $1.50 billion and the fund is disbursed to speed up the country’s export sector. 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.
After that, exporters started getting foreign currency loans through commercial banks at the interest rate of London Inter-bank Offered Rate (LIBOR) plus 1.50 per cent instead of 2.50 per cent as before.
Later the LIBOR plus 2.50 percent interest rate was restored after the six-month period but even then the EDF loans are available at lesser interest.
In 2013-14, despite waves of political unrest and global uncertainties, Bangladesh’s export registered an 11.69 percent growth.
Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LC) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.
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.
BB was also providing re-financing facility to the exporters through commercial banks as a short-term liquidity support.
The rate of interest against the loan from the fund will be 1.5 percent higher than the present rate as the BB suggested banks to charge their clients the interest, calculating the six-month average rate of LIBOR (London Inter bank Offer Rate) plus 2.5 percent.
Presently, the banks charge LIBOR plus one percent to their clients when the BB charges the banks the interest at six month LIBOR rate.
The banks, however, will have to pay one percent extra on LIBOR from January when they will increase their interest rate for lending from EDF.
The interest rate would be 3.5 percent with the increase, which is much lower than the present market rate of 12 to 13 percent. Abu Sazzad
Local companies in the Export Processing Zones (EPZs) would be allowed to take loans in foreign currency from the Export Development Fund (EDF) 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.
The volume of EDF fund is now $1.50 billion and the fund is disbursed to speed up the country’s export sector. 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.
After that, exporters started getting foreign currency loans through commercial banks at the interest rate of London Inter-bank Offered Rate (LIBOR) plus 1.50 per cent instead of 2.50 per cent as before.
Later the LIBOR plus 2.50 percent interest rate was restored after the six-month period but even then the EDF loans are available at lesser interest.
In 2013-14, despite waves of political unrest and global uncertainties, Bangladesh’s export registered an 11.69 percent growth.
Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LC) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.
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.
BB was also providing re-financing facility to the exporters through commercial banks as a short-term liquidity support.
The rate of interest against the loan from the fund will be 1.5 percent higher than the present rate as the BB suggested banks to charge their clients the interest, calculating the six-month average rate of LIBOR (London Inter bank Offer Rate) plus 2.5 percent.
Presently, the banks charge LIBOR plus one percent to their clients when the BB charges the banks the interest at six month LIBOR rate.
The banks, however, will have to pay one percent extra on LIBOR from January when they will increase their interest rate for lending from EDF.
The interest rate would be 3.5 percent with the increase, which is much lower than the present market rate of 12 to 13 percent.
