Written by The Banking Post
Three days after the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) request, Bangladesh Bank (BB) has re-launched the expired pre-shipment credit refinance scheme to facilitate exports.
The five-year-tenure refinance scheme involving Tk 50 billion initiated in 2020 got expired on April 12 last year. But business leaders of the country’s apex trade body in their recent meeting with the BB governor on Monday last appealed for resumption of the fund to boost exports amid ongoing geopolitical tensions particularly in the Middle East.
The central bank in a circular issued on Thursday stated that the importance of re-launching of such fund is felt as the country seeks to sustain export growth, maintain production continuity, and strengthen foreign currency inflows at a time when global trade remains affected by geopolitical tensions in the Gulf Countries.
Under the revolving arrangement, according to the circular, an amount of Tk 50 billion from the Tk 10-billion Export Facilitation Pre-finance Fund (EFPF) will be allocated to operate the refinance pre-shipment credit scheme which tenure is now extended upto 2030 with immediate effect.
Loans from the refinance fund will be distributed to borrowers through participating commercial banks on a ‘First-Come-First-Served’ basis. Regarding the maximum ceiling of exposure, it mentioned that no company or business group will be allowed to hold more than Tk 2.0 billion at a single point of time.
All scheduled banks will be eligible to access the facility but they must sign a fresh participation agreement with the banking regulator in availing the fund, it said.
The central bank also mentioned that the Banking Regulations and Policy Department-3 will oversee the management and administration of the fund and issue operational instructions where necessary.
Commercial banks will have to apply for refinancing within one week of disbursing pre-shipment credit to exporters. If delayed, they may still apply within an additional 15 days by explaining the reasons for the delay.
To improve monitoring, participating banks must submit quarterly reports on loan disbursement and recovery within 15 days after the end of each quarter.
Regarding the interest rate, BB assistant spokesperson Mohammad Shahriar Siddiqui said the rate will remain same. “The participating banks will avail the fund at the rate of 2.0 per cent and lend it at 5.0 per cent.”
President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem said they recently met with the BB governor and resumption of the reshipment credit facility was one of their demands in the discussion.
Welcoming the decision, he said the present governor was a businessman. “So, he knows all the factors that hurt businesses. The decision will hugely help facilitate exporters particularly on the current geopolitical context.”
