Bangladesh Bank cuts interest rate, charges on loans for exporters

Exporters will get loans from the Export Development Fund (EDF) at half of the existing cost as Bangladesh Bank has lowered the interest rate and bank charges on Tuesday. 

The interest rate on the EDF loans granted to manufacturers and exporters has been reduced to 1.50 percent plus Libor (London Interbank Offered Rate) from existing 2.5 percent.  

The Bangladesh Bank issued a circular in this regard which will remain effective until June 20 next year. 

Businessmen have welcomed the central bank's initiative to reduce the interest rate and bank charges.

The Bangladesh Bank will charge 0.50 percent plus Libor instead of 1 percent for the loans granted, reads the circular. 

The EDF had been launched with an initial amount of $100 million in 2005 and was gradually increased to $3 billion.

Apparel and textile exporters can now take low-cost loans of up to $25 million from the EDF.
 
Mohammad Hatem, managing director of MB Knit Fashion Ltd, told The Business Standard: "The central bank's initiative will hugely benefit the apparel industry by helping it to overcome the current unstable situation." 

Mohammad Ali Khokon, president of Bangladesh Textile Mills Association, said: "It is a good sign for the export-oriented industry."

Khokon also demanded the extension of the loan repayment period to 270 days instead of the current 180 days.   

"The textile mill owners are facing trouble as they have a huge stock of unsold fabrics, which is the main barrier to ensuring timely repayment of loans," he elaborated.