BB issues terms, conditions for shipbuilding industry

Bangladesh Bank (BB) has issued the terms and conditions for shipbuilding companies to apply for and get loans from its Tk 2,000 crore refinancing scheme, which was announced last month to ensure the industry’s sustainable development.

The central bank’s Department of Off-site Supervision (DOS) issued a circular, with 17 terms and conditions, in this regard on Wednesday.

One of the major conditions is that to get a loan from the refinancing scheme, the applicant company will have to mandatorily insure at least an amount equal to the value mentioned in the work order/export/sale agreement of the ship to reduce the risk during construction.

The circular said refinancing facility will be subject to the availability of funds, loan application for new initiatives will get priority, and money received from this scheme cannot be used to repay or adjust other loans or investments.

Any shipbuilding company with an expired export bill against a ship that has been exported will not be eligible for a loan under the scheme.

The loan will be disbursed by the participatory banks in at least three instalments to ensure proper utilization, said the circular. Banks will inform BB about the previous instalment before disbursing the next one.

In the case of providing the working capital, the banks will keep margins as per their policies. To renew the working capital, the banks’ will need the boards’ approval and will have to apply to the DOS 30 days before the expiration date, said the circular.

BB formed the Tk 2,000 crore refinancing scheme in May this year under the Shipbuilding Industry Development Policy 2021.

A circular issued on May 26 had said that a company will be able to get a loan against a 4.5 per cent interest rate under the scheme.

The loan application deadline is set for June 30, 2024.

Depending on their needs, a customer will be able to get term loans for a maximum of 12 years, where the grace period will be 3 years. However, no loan will be given for the construction of the dockyard, land purchase or lease, said the circular.

The country currently has over 100 shipbuilding yards and most of them serve the local market worth more than Tk 3,000 crore.