Interest rate of EDF loans same for extended period

The central bank will charge the same interest rate for the extended period of loans made from the Export Development Fund (EDF) like it imposes during the initial repayment period.

EDF loans from the Bangladesh Bank are repayable by authorised dealer banks within 180 days from the date of disbursement, extendable up to 270 days.

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In the case of an extension of tenure beyond 180 days, the interest rate prevailing at the time of such extension will be applicable for the extended period, said the BB in a notice yesterday.

The interest rate is 4.5 per cent.

Established in 1989, the EDF facilitates access to financing in foreign exchange for input procurement by manufacturer-exporters. Authorised dealer banks can borrow US dollar funds from the fund against their foreign currency loans to manufacturer-exporters.

The central bank has brought down the volume of the EDF to slightly over $5 billion from about $7 billion seen before Bangladesh's foreign currency reserves started to come under pressure owing to a surge in import bills in the middle of 2022.

Under the facility, members of the Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers and Exporters Association can borrow up to $20 million and $15 million, respectively.

The ceiling is $15 million for individual exporters of leather goods and footwear sectors, $20 million for the members of the Bangladesh Textile Mills Association, and $10 million for the members of the Bangladesh Dyed Yarn Exporters Association.