Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has increased the allocation of Export Development Fund (EDF) scheme significantly to facilitate the country’s exporters for boosting their business activities.
The EDF allocation rose by 20 per cent or US$500 million to $3.0 billion from $2.50 billion earlier, according to officials.
They also said the enhanced EDF scheme will also help boost the inflow of foreign currency in the local market.
Currently, the exporters are allowed to get such foreign currency loan from the commercial banks with paying at the London Inter-bank Offered Rate (LIBOR) plus 2.50 per cent interest.
The Bangladesh Bank (BB) has already introduced automated system instead manual one earlier to provide such refinancing fund through the commercial banks to the exporters smoothly.
“The automated system is encouraging the commercial banks to gear up EDF disbursements to the exporters,” a senior official of a leading private commercial bank (BB) told the BBN in Dhaka.
Such enhancement of EDF scheme helps increase the inflow of foreign exchange in the market, the senior private banker added.
Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LCs) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.
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.