Loans from export dev fund to be cheaper
Bangladesh Bank has brought down the interest on its export development fund (EDF) even more so that you can help exporters get over the financial impact of Covid-19.
Exporters of the manufacturing sector can now avail of loans at 1.75 percent instead of the previous rate of 2 %, according to a central bank notice issued yesterday.
Lenders will receive the fund from Bangladesh Bank with a 0.75 % interest rate and will be allowed to charge no more than 1.75 percent in interest from borrowers, it said.
On April 7 earlier this season, the central bank slice the interest rate on its EDF for the very first time carrying out a downturn in the country's economic activities. Before that, the interest charged was a six-month London Interbank Offered Rate (LIBOR) plus 1.50 percent.
The six-month LIBOR stood at 0.25 % as of yesterday although it was 1.93 % through the same period this past year.
Interest rates on lending in the global market have already been on the decline as companies are now reluctant to use loans to expand their businesses amid the ongoing financial uncertainty.
The declining trend of rates of interest globally encouraged the central bank to cut its EDF rate even further, a central bank official said.
In addition, the most recent cut will boost the country's export sector, he added.
Bangladesh Bank has instructed all local lenders to check out the brand new rate until March 31, 2021.
On April 7, the central bank also increased the EDF's volume to $5 billion from the prior $3.50 billion as part of the government's ongoing efforts to improve exports.
"The new rate gives a positive signal to the country's exporters," said Md Arfan Ali, managing director of Bank Asia.
Beyond a doubt, that is a time-befitting decision as lower interest rates will help exporters to an excellent extent.
The country's export competitiveness will be more robust due to this initiative, Ali added.
The revolving fund was introduced at only $100 million in 2006. The central bank little by little increased the fund's volume due to rising demand and swelling forex reserves, which is currently more than $40 billion.
