Tk100 bn export facilitation fund: Spinning mills deprived

Bangladesh Bank

Jehangir Hussain

Bangladesh Bank has created a revolving Tk 100 billion Export Facilitation Pre-finance Fund (EFPF) for speedier and diversification of exports as well as for absorption of post covid-19 shocks.

The fund has been designed to face future  challenges for Bangladesh in becoming a developing country in post LDC days.

In a circular issued on Sunday, BB’s Banking regulation and Policy Department (BRPD) listed the export oriented industries, the main recipients from the for buying and importing raw materials.

The participatory scheduled commercial banks have been asked to contact BB’s concerned department  within January 22 to sign participatory agreements.

The fund would remain available to the export oriented industries until further notice for importing and buying raw materials against back to back letters of credit.

The Bank Company Act 1991 disqualifies loan defaulters from applying from the fund.

The BB circular listed other terms and conditions to borrow from the fund.

The EFPF’ end level receivers would be required to   pay a maximum interest of 4 per cent to BB.

The participatory banks would have to pay 1.54 per cent interest to BB.

In other words, the lending banks would charge 2.5 per cent cost of business fee from their clients.

Members of Bangladesh Garments Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and Bangladesh Textile Mills Association except its spinning units would be entitled to avail Tk 2 billion  from the fund against back to back letters of credit.

The members of Bangladesh Dyed Yarn Exporters Association would be entitled to apply for a maximum loan of Tk1.5 billion from the fund.

Single borrower exposure limit policy would be applicable to all the borrowers.

The BB circular says the loan will be for 180 days but BB can allow extra time for repayments  if the borrowers apply seeking extra time citing logical grounds.

After assessing the grounds cited BB would provide no-objection certificates to the borrowers.

The circular set a series of terms and conditions for  repayment by the banks’ clients.

According to this agreement, the Private Finance Initiative (PFI) would be required to  submit  Demand Promissory Note (DP Note) in favour of  Bangladesh Bank before it disburses pre-finance to the PFI to ensure repayment with interest.

In case of violations/deviations/non-compliance of the rules/regulations/notifications/ guidelines/circular/circular letters by the PFI will be immediately cancelled on approval from the pre-finance and BB would immediately deduct the pre-financed amount with penal interest (rate of which in mentioned in the related circular) from the noncompliant PFI‟s current account maintained with Bangladesh Bank.

A senior BGMEA leader said that the fund would  help  export oriented industries to grow and face  coming hurdles during the country’s post LDC days.

He said, “Due to covid-19 and regional conflicts exports are facing turbulence and as our competitor countries are providing different facilities to their exporters, BB’s new fund will support the country’s export sector.”

A textile mill owner said, “I can’t say why the cotton yarn manufactures will get facilities from this.”

He said spinning mills have been illogically deprived of the fund though this sector has been supporting exporters by providing yarns.

jehangirh01@gmail.com