Factories get more time to apply for loans to pay workers

The deadline to submit applications for soft loans from the government-announced Tk5,000 crore stimulus package to provide wages to workers of export-oriented factories during the Covid-19 crisis has been extended to April 26.

The Bangladesh Bank on Sunday issued letters to different trade associations, confirming the extension.

As per the previous instruction, today (Monday) was the last date for coronavirus-affected export-oriented industries to submit applications for the loans.

Till Sunday, only 155 out of a total of 833 members of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) took a certificate from the association to apply for the loans.

The central bank had instructed export-oriented industries to collect certificates from respective trade associations and apply for the loans within April 20.

BKMEA First Vice President Mohammed Hatem said most of their member factories could not complete the opening of mobile banking accounts of their workers and employees.

"Moreover, every factory is facing difficulties in preparing salary sheets for the last three months," he added.

At present, all factories are closed due to the countrywide public holidays. Most of their buy orders have been cancelled or are pending. Export payments have also not been remitted.

The government declared general holidays from March 26, and these were later extended to April 25.

On March 25, Prime Minister Sheikh Hasina declared Tk5,000 crore incentives for the export sector to provide salaries to their workers and employees.

The government said it would provide the central bank with the money from its budget allocation to distribute to banks based on demand from affected industries.

The Bangladesh Bank will not charge any interest against the loans, but commercial banks can take maximum 2 percent service charge for the lending.

The incentive will go directly to employees' bank accounts, including mobile banking accounts. If any employee does not have an account, respective banks can open a new account for payments.

Borrowing factories can pay three months salaries with the loan.

The loan repayment period is two years, including a six-month grace period – from July to December 2020. From January 2021 to June 2022, borrowers will have to pay the loan in 18 equal instalments. 

As per the central bank, the loan can only be used for salary payments by factories that export at least 80 percent of their products.