Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has slashed interest rate on Export Development Fund (EDF) loan by 1.5 percentage points, applicable for maximum US$1.50 million credit.
Under the new provisions, a single manufacturer-exporter will be able to take loan under EDF amounting to maximum $1.50 million at six-month London Inter-Bank Offered Rate (LIBOR) plus 1.0 percent interest.
For EDF loans in excess of $ 1.50 million, the interest rate will remain unchanged at six-month LIBOR plus 2.5 percent, Bangladesh Bank (BB), the country’s central bank, officials said.
The revised interest rates have the retrospective effect from January 1 this year and will remain valid till June 30, 2011, according to a central bank circular, issued on Thursday.
"We've revised the interest rate on EDF loans in line with the finance ministry advice," a BB senior official said, adding that it would facilitate the country's export performances.
Manufacturer-exporters drawing EDF loans from more than one commercial bank, officially known as foreign exchange authorized dealer (AD) bank, will be required to furnish information of EDF loan drawings from the other AD banks to enable the ADs to apply the appropriate interest rates, the circular said.
"If in any case it is detected later that the lower interest rate has been applied on EDF borrowing in excess of $1.50 million, the manufacturer-exporter will be charged the higher applicable interest rate on the borrowings beyond $1.50 million," it added.
As for other bank loans, the loan facility from EDF will be admissible only to manufacturer-exporters who are not loan defaulters, including those whose loan accounts have been rescheduled, the BB said.
On December 22 last year, the BB doubled the EDF to $300 million from $150 million aiming to mitigate export losses inflicted by the global meltdown.
The EDF loans from the central bank are payable by the banks upon receipt of exports proceeds within 180 days from the date of disbursement, extendable by the BB up to 270 days in case of a longer period for repatriation of export proceeds.
BBN/SI/SSR-01Oct10-11:53 am (BST)