Dhaka, Bangladesh (BBN)– Deputy Governor of Bangladesh Bank (BB) SK Sur Chowdhury has advised the banks and non-banking financial institutions (NBFIs) to come forward for financing the readymade garment (RMG) factories for remediation.
“The sustainability of this industry not only brings benefit to the RMG owners and workers, but also gives enormous opportunities of future business to our banking community. So, the bankers need to be more proactive for financing the garment owners under this project,” the deputy governor said while addressing at the inaugural session of the training programme held at the central bank headquarters in Dhaka on Monday.
Mr. Sur Chowdhury also said timely decision and investment for remediation measures will make the sector more vibrant, and also make local RMG products more attractive to international buyers.
As per inspection and recommendation of three national and international platforms-Alliance, Accord and National Action Plan- many factories require remediation measures.
Certainly, RMG sector has enormous contribution to Bangladesh’s rise to today’s prestigious position, the deputy governor added.
“The RMG Industry is now the lifeline to Bangladesh economy. Around 80 per cent of the country’s export earnings come from RMG; and 16 per cent of GDP of Bangladesh is contributed by this sector,” he explained.
Among others, Abdur Rahim, Executive Director of BB, Anis A Khan, Chairman of Association of Bankers, Bangladesh (ABB) and Managing Director (MD) & Chief Executive Officer (CEO) of Mutual Trust Bank Limited, and Swapan Kumar Roy, General Manager of SME & Special Programmes Department of BB, also spoke on the occasion.
Meanwhile, eight garment owners have submitted applications to the participating financial institutions (PFIs), seeking low-cost fund under Urban Building Safety Project (UBSP) for improving their working conditions.
Talking to BBN, a BB senior official said Public Works Department (PWD) under Ministry of Housing and Public Works is now assessing technical aspects of the applications.
After assessing the applications PWD will send those back to the PFIs concerned with recommendations, he added.
A total of 25 banks and 10 non-banking financial institutions (NBFIs) signed participatory agreements with the central bank on February 13 to disburse funds under a project of Japan International Cooperation Agency (JICA).
The main objective of UBSP is to strengthen safety of RMG buildings through short to long-term financing for retrofitting, rebuilding, relocation, fire safety and working capital facilities.
The flagship project in the sector, worth BDT 2.68 billion, also helps in building a complete ecosystem of environment-friendly apparel factories by ensuring workers’ safety through improvement in working conditions.
Under UBSP, the owners of RMG factories in Dhaka, Narayanganj and Gazipur districts and Chittagong city areas, are eligible for receiving loan amounting to maximum BDT 350 million from the PFIs at maximum 6.0 per cent interest.
The loan will be sanctioned for maximum 15 years, including maximum three years grace period, according to the BB official.
On December 13, 2015, the government signed UBSP with JICA to ensure workplace safety in the apparel industries, a concern that surfaced following several tragedies.
As the implementing agency of the project, the central bank of Bangladesh will disburse funds through selected banks and NBFIs.