BB expands export refinance scheme to Tk 7,000 crore

Bangladesh Bank (BB) has increased the size of its pre-shipment credit refinance scheme for exporters by Tk 2,000 crore to Tk 7,000 crore and raised the interest rate to 6 percent from 5 percent.

The central bank issued a circular in this regard, saying the scheme's allocation from the Export Facilitation Pre-finance Fund (EFPF) had been raised from Tk 5,000 crore.

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The cost of borrowing has also increased. Banks can now charge exporters a maximum of 6 percent on new loans under the scheme, up from 5 percent.

Participating banks must pay Bangladesh Bank 3 percent on the refinance they draw, up from 2 percent. The central bank's stated aim is to keep export earnings flowing and support economic activity.

Banks that fail to repay on schedule will have to pay the bank rate for the period of default. They may now settle their loans fully or partially before maturity. All other terms of earlier circulars remain unchanged.

The refinance facility was introduced through a 2022 circular. In April this year, the central bank revived it, citing global economic uncertainty stemming from the wars in the Middle East and Europe, which have hit export-oriented sectors, particularly the garment industry.

That circular also barred any single entity or group from holding more than Tk 200 crore in outstanding loans under the facility at any one time.