Jute sector gets block account facility in NBFIs too

Now non-bank financial institutions (NBFIs) will also have to provide block account facilities against outstanding loans for the jute industry.

In a circular on Thursday, the central bank said according to the notification of the Financial Institutions Division, banks as well as NBFIs must provide the facility.

The block facility means as long as a loan remains as a block, no interest will be charged on it for a specific period of time. The amount of interest stockpiled before getting the block benefit has to be paid though.

The notification of the Financial Institutions Division on 17 December last year said the block facility could be given on the basis of bank-customer relationship considering the merits of each case in case of outstanding loans in the jute sector.

After transferring the outstanding loan and interest till 30 June 2020, to the block account, the installment of that loan will not have to be repaid for two years.

The loan will have to be repaid with previous interest during the following eight years.

The circular said that this facility has been given considering the contribution of jute to the national economy.

The Financial Institutions Division has said that borrowers will have to make a 2% down payment to get the block facility.

On the instructions of the Financial Institutions Division, the Bangladesh Bank earlier in December asked the banks to provide this facility.

In the first seven months of the current financial year, the total exports decreased compared to the same period of the previous fiscal year, but the exports of jute and jute products have increased by more than 27%.

Total exports amounted to $765 million. Although the exports of raw jute have dropped, the foreign exchange earnings from jute yarn and twine, jute sacks, and bags have increased considerably.