BB toughens rules for loans under new scheme

The central bank has toughened rules for borrowers looking to secure fresh loans under a Tk 10,000 crore fund if they fail to repatriate export proceeds.

On January 1, the Bangladesh Bank rolled out the Export Facilitation Pre-finance Fund (EFPF) in order to help exporters gear up their businesses. 

An exporter is allowed to take a loan of a maximum of Tk 200 crore from the fund, which is a pre-finance scheme by nature. 

Under the scheme, the central bank finances businesses through banks. Exporters will have to use the fund to import raw materials.

Clients are not allowed to enjoy new funds from the scheme if they have overdue export bills.

However, it is being seen that companies or related individuals or firms that have secured loans under the Export Development Fund (EDF) against shipment orders but have failed to bring in export proceeds are still accessing credit facilities under the EFPF, said the BB in a new circular today.

But if export bills, or export proceeds, remain unrepatriated even after taking loans under the EDF or the EFPF, the companies or related individuals or companies will not qualify for any fresh loans against the export orders under the EFPF. 

Borrowers would be able to enjoy new funds from the scheme if they failed to repatriate their export bills on time for unforeseen reasons. In such a situation, exporters will have to repay at least 50 per cent of their overdue payments before availing the loan facility, said the BB on January 1.

Banks can avail the fund from the EFPF at an interest rate of 1.5 per cent from the central bank. The end users will pay 4 per cent to avail the fund from banks.