BB raises EDF loan limit to $30m

The members of BGMEA and BTMA will get up to $30 million in loan finance from the export development fund (EDF) instead of the previous limit of $25 million.

“It has now been decided to enhance the EDF limit of $25 million to $30 million for member mills of BGMEA and BTMA,” said a Bangladesh Bank circular issued on Sunday.

Under the existing provision, the EDF financing is allowed for input procurements against back-to-back import letters of credit or inland back-to-back LCs in foreign exchange by manufactures producing final output for direct export.

Authorised Dealer (AD) banks can borrow US dollar funds from the EDF against their foreign currency loans to manufacturer-exporters for input procurements. At their option, the ADs can also lend to some extent from their own foreign exchange funds for input procurements.

The EDF loans from the central bank are payable by the banks upon receipt of export proceeds within 180 days from the date of disbursement. The timeframe is extendable by the central bank up to 270 days in case of a longer period taken for repatriation of export proceeds.

The enhanced portion shall, effective for disbursements until December 31, 2020, be considered by ADs on a case-by-case basis, depending on the actual needs of the mills concerned.

Earlier, the central bank increased EDF size from $3.50 billion to $5 billion and fixed the interest rate at 2 percent, to help the exporters in the crisis arising out of Covid-19 pandemic.

hr/at