Loan from export dev fund made costlier
02 February 2023
Staff Reporter :
The Bangladesh Bank (BB) on Wednesday raised the interest rate of the Export Development Fund (EDF) loans by 0.50 per cent in a bid to save the foreign currencies to keep the reserve healthy, pushing the borrowing costlier.
"It has been decided that the interest rate on EDF loans to Authorised Dealers (ADs) will be charged by Bangladesh Bank at 3 per cent, while ADs will charge interest to manufacturer-exporters at 4.5 per cent for disbursements until further instructions," BB's Foreign Exchange Policy Department issued a circular in this regard on Wednesday.
Earlier, the interest on EDF loan disbursements to Ads was charged by the Central Bank at 2.50 per cent, with the Ads charging at four per cent on their USD loan disbursements to manufacturers and exporters.
The new guideline will be effective from February 1. Currently the size of the EDF is $7 billion.
The BB reduced the interest rate of EDF loans by 2 per cent for the first time in 7 April 2020 during the pandemic.
The EDF is a pre-shipment incentive aimed at preparing, facilitating and supporting exporters to penetrate the global market. The incentive is available to exporters at a reasonably low rate of interest.
Formed in 1988, the EDF started its journey in 1989 in a bid to boost the export oriented industries by providing loan disbursement facilities at low interest rate.
The exporters can receive EDF loans and the repayment has to be made within 270 days. The members of the BGMEA received the highest loan facilities from the EDF.
The Central Bank has recently created a separate fund with the size of Tk 10,000 crore to assist the exporters.
A total of 49 banks on 30 January signed a deal with BB to receive loans from this newly created fund.
The Central Bank has taken this initiative to redesign the loan scheme for exporters.
