Export Development Fund loan interest hiked
The usance period for import bills payment has been increased from 180 days to 360 days
The Bangladesh Bank has increased the interest on loans taken from the Export Development Fund (EDF) to 3% from 2%.
Besides, the usance period for import bill payment for industrial raw materials, agricultural implements, and chemical fertilisers under supplier's or buyer's credit has been increased from 180 days to 360 days. The extended period is also applicable for back to back import of industrial raw material.
The Foreign Exchange Policy Department of the Bangladesh Bank issued two separate circulars in this regard on Wednesday.
One of the circulars said interest rate on EDF loans to banks will be charged by the Bangladesh Bank at 1.5%, while banks will charge interest to manufacturer-exporters at 3% for disbursements until further instructions.
Earlier, the interest on EDF loan disbursements to Banks was charged by Bangladesh Bank at 1%, with the banks charging at 2% on their loan disbursements to manufacturer-exporters.
In March 2022, the size of EDF was increased to $7 billion from $6 billion to meet the growing demand among exporters. In June 2021, the EDF went up to $6 billion from $5.5 billion while the fund rose to $5.5 billion from $5 billion in March of the year. It increased to $5 billion from $3.5 billion in April 2020.
In another circular, the usance period for import bill payment has been extended from 180 days to 360 days.
Usance period is the allowable period of time between the date of the import bill and its payment.
The extended usance period will be effective till 31 December this year and it will not be applicable for imports under EDF loans, said the circular.
Earlier, in a circular published in January this year, the usance period was extended to 270 days, which was generally 180 days. This facility expired on 30 June this year. The time period was extended again through new instructions on Wednesday.